THE  LIBRARY 
OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 


^/-//j^ 


LAW  Ll^V^RY 

LOS  ANGELES  Cejft^Y 


A  TREATISE  ON 

MONOPOLIES  AND  UIJLAWFUL 
COMBINATIONS -,!^^4^ 

OR  *       ^   ^  ^ 

RESTRAINTS 


BMBRACINQ 


EVERY  CONTRACT,  COMBINATION  IN  THE  FORM   OF 

TRUST,    POOL   OR  OTHERWISE    IN    RESTRAINT 

OF   TRADE   OR   COMMERCE 


THE    FEDERAL    AND    STATE    CONSTITUTIONS 
APPLICABLE  AND  ANTI-TRUST  STATUTES 

ALSO 

TRADE  OR  LABOR  UNIONS 

AND 

PROCEDURE,  DEFENSES  AND  DAMAGES 


JOSEPH  A.   JOYCE 


OF   THE    NEW    YORK,    CALIFORNIA     AND    CONNECTICUT    BARS,"    AUTHOR 

OF    "  JOYCE    ON    INSURANCE  "    AND    JOINT    AUTHOR    OF 

"  JOYCE    ON    ELECTRIC    LAW,"    ETC. 


THE  BANKS  LAW  PUBLISHING  CO. 

NEW    YORK 

1911 


r 

19/1 


CoPYRIGnT,     1911,    BY 

THE  BANKS  LAW  PUBLISHING  COMPANY 


11 


PREFACE 


One  of  the  most  if  not  the  most  important  cf  the  sub- 
jects which  for  some  time  has  occupied  the  attention  of 
the  Bench  and  Bar  throughout  the  United  States  is  that 
of  monopoUes,  and  other  unlawful  combinations  in  the 
form  of  a  trust,  pool,  holding  company  or  otherwise,  or  of 
conspiracies  in  restraint  of  trade  or  commerce;  and  this  is 
especially  so  at  the  present  time  in  view  of  the  late  ''Rulci 
of  Reason"  and  "Light  of  Reason"  decisions  rendered  by 
the  United  States  Supreme  Court  in  the  Standard  Oil 
Company  and  American  Tobacco  Company  cases.  The 
author,  therefore,  believing  that  a  treatise  covering  this 
branch  of  the  law  will  be  of  value  to  this  profession  has 
endeavored  to  logically  and  as  concisely  as  is  consistent 
with  an  exhaustive  and  clear  treatment  to  cover  the  above 
subject  including  the  common  law,  the  Federal  Consti- 
tution, so  far  as  appUcable,  and  anti-trust  statutes;  also 
the  State  constitutional  prohibitions  against  monopoUes, 
trusts,  etc.,  as  well  as  all  the  State  anti-trust  enactments, 
as  to  monopoUes,  trusts  and  combinations  to  control 
articles  of  necessity,  prices,  production,  cost  of  exchange 
or  transportation,  or  to  prevent  competition;  also  the 
subject  of  trade  or  labor  unions;  also  procedure,  parties, 
pleading,  defenses,  evidence  and  damages  in  connection 
with  the  above.  Principles  and  illustrative  cases,  in- 
cluding all  the  latest  decisions,  are  given.  The  author 
trusts  that  the  work  will  meet  with  approval. 

Joseph  A.  Joyce. 
New  York  City,  1911. 


m 


734 C9 9 


TABLE  OF  CONTENTS 


CHAPTER  I 


GENERAL  TERMS  AND   DEFINITIONS 


1.  Combination  Defined.  §    7. 

2.  Competition  Defined.  8. 

3.  Conspiracy  Defined.  9. 

4.  Civil  Conspiracy  Defined.  10. 

5.  Engrossing  Defined.  11. 

6.  Exclusive  Right  or  Privilege         12. 

Defined, 


Forestalling  Defined. 
Monopoly  Defined. 
Monopolist  Defined. 
"Pooling"  Defined. 
Regrating  Defined. 
"Trust"  Defined. 


CHAPTER  II 


TERMS  AND  DEFINITIONS  UNDER  SHERMAN  ANTI-TRUST  ACT 


§13. 

Sherman  Anti-Trust  Act. 

14. 

Anti-Trust    Amendments    to 

Wilson  Tariff  Act— Trusts, 

§21 

etc.,  in  Restraint  of  Import 

22 

Trade  Declared  Void — Pen- 

alty. 

23 

15. 

Terms    and    Definitions    In- 

volved in  Meaning  and  Ap- 

24 

plication  of  Sherman  Anti- 

Trust  Act. 

16. 

Commerce — Interstate    Com- 

merce —  Commerce     with 

25 

Foreign  Nations  Defined. 

26. 

17. 

Intrastate  Commerce  Defined. 

27. 

18. 

Commodity  —  Commodities 
Defined. 

28. 

19. 

Competing  Line  Defined. 

29. 

20. 

Conspiracy    Defined  —  Con- 

spiracy  in  Restraint  of 
Trade  Defined. 

Contract  Defined. 

Monopoly  "Monopolize"  De- 
fined. 

Contract  in  Restraint  of 
Trade  Defined. 

"Restraint  of  Trade" — "Re- 
straint " — "  In  Restraint  of 
Trade  or  Commerce  "  De- 
fined. 

Trade  Defined. 

Traffic  Defined. 

Transportation  Defined. 

"Transportation  Within  the 
State  " — Meaning  of. 

"Trust"  —  "Holding"  Cor- 
poration or  Company. 


VI 


TABLE    OF   CONTENTS 


CHAPTER  III 

TERMS   AND   DEFINITIONS  RELATING   TO   LABOR   OR  TRADE 

UNIONS 


§  30.  Blacklist  Defined. 

31.  Boycott  Defined. 

32.  Boycott — Essential  Elements 

of. 

33.  Boycotting  Defined. 

34.  Secondary  Boycott  Defined. 

35.  Picket  Defined. 

36.  "Picketing"  Defined. 

37.  Closed  Shop  Defined. 

38.  Labor  Union — Labor  Organ- 


ization— Trade  Union  De- 
fined. 
§  39.  Lockout  Defined. 

40.  Open  Shop  Defined. 

41.  Strike  Defined. 

42.  "  Legal  Strike  "  Defined. 

43.  Strikes  and  Boycotts  Distin- 

guished. 

44.  Trade  Union  Defined. 

45.  Union  Shop  Defined. 


CHAPTER  IV 


DISTINCTIONS  AND   SYNONYMS  GENERALLY 


§  46.  Distinctions — Monopolies  Re- 
sulting from  Grant  or  Con- 
tract. 

47.  Distinctions    —    Monopolies 

and  Engrossing. 

48.  Distinctions    —    Monopolies 

and  Combinations. 

49.  Distinctions — Exclusive  Priv- 

ilege and  Monopoly. 

50.  "Monopolize"  Used  in  Stat- 

ute Synonymous  with  "Ag- 
gregate" or  "Concentrate." 

51.  Combination  in  the  Form  of 

Trust  Used  in  Statute  Sjm- 
onymous  with  "Pooling." 


52.  Distinction     Between     State 

Anti-Trust  Statute  and 
Contracts  in  Restraint  of 
Trade. 

53.  Distinction     Between     Con- 

tracts Per  Se  in  Restraint  of 
Trade  and  Contracts  Which 
Tend  to  Destroy  Competi- 
tion and  Create  Mo- 
nopolies. 

54.  Distinctions  —  "RestrictionB 

in  Trade"  in  State  Not 
Synonymous  with  "Re- 
straint of  Trade." 


CHAPTER  V 


DISTINCTIONS  AND  SYNONYMS — SHERMAN  ANTI-TRUST  ACT 


55.  Distinctions  —  Combination      §  57. 

and    Sale — Sherman    Anti- 
Trust  Act. 

56.  "Combination"     or     "Con- 

spiracy "     Synonymous  — 
Sherman  Anti-Trust  Act.  58. 


Distinctions — Conspiracy  in 
Restraint  of  Trade  and  Con- 
tract in  Restraint  of 
Trade  —  Sherman  Anti- 
Trust  Act. 

Sherman    Anti-Trust    Act — 


TABLE   OF   CONTENTS 


VU 


"In  Restraint  of  Trade" 
Synonymous  with  "Trade 
or  Commerce"  —  "Trade" 
and  "Commerce"  Synony- 


mous— "Contract  in  Re- 
straint of  Trade"  Analo- 
gous to  "Monopolize." 


CHAPTER  VI 


NATURE   ESSENTIALS   OR   TEST   OF   CONSPIRACY 


§  59.  Unlawfulness 


Exclusive      §  Gl.  Motive  or  Intention. 


Combination — Restraint  of 
Trade. 
60.  Combination     or    Confedera- 
tion and  Unlawful   Design 
or  Means  Employed. 


02.  Overt  Acts. 

63.  Overt  Acts — New  York. 

64.  Conspiracy    to    Commit    Of- 

fense Against  or  to  Defraud 
United  States — Overt  Act. 


CHAPTER  VII 


NATURE    ESSENTIALS   OR   TEST   OF   MONOPOLIES 


§  65.  Restraint  of  Competition- 
Control  of  Production, 
— Commodities  and  Prices. 

66.  Same  Subject. 

67.  Monopoly  —  To    "Monopo- 

lize "  Power  to  Raise  Prices 
or  Exclude  Competition  Dis- 
tinguished— Motive. 

68.  What  Degree  of  Restraint  of 

Competition  Essential  — 
Monopoly  and  Restraint  of 
Competition  Distinguished. 

69.  Effect  of  Personal  Service  or 

Occupation. 


§  70.  Monopoly  as  Essential  Fea- 
ture of  Charter  or  Franchise 
—Whether  Such  Grant  Ex- 
clusive in  Nature. 

71.  Same  Subject — Rule  of  Con- 

struction of  Grants  Appli- 
cable. 

72.  When  Grants  of  Charters  or 

Franchises  Are  Exclusive. 

73.  Same  Subject. 

74.  When  Grants  of  Charters  or 

Franchises  Are  Not  Exclu- 
sive. 


CHAPTER  VIII 

NATURE  ESSENTIALS  OR  TEST  UNDER  SHERMAN  ANTI-TRUST 

ACT 


§  75.  Sherman  Anti-Trust  Act — 
Unlawful  Restraints  and 
Monopolies— What  Is  Em- 
braced— Generally. 


§  76.  Labor   Combinations    Within 
Prohibition      of      Sherman 
Anti-Trust  Act. 
77.  Regulation    or    Restraint    of 


Vlll 


TABLE   OF   CONTENTS 


§78. 
79. 

80. 


81. 
82. 


Commerce — Intrastate,  In- 
terstate or  Foreign. 

Monopoly — Exclusive   Right. 

Monopoly — Size  or  Magni- 
tude of  Business. 

Direct  and  Necessary  Effect 
Upon  Competition  in  In- 
terstate or  Foreign  Com- 
merce. 

Same  Subject. 

Fair  Regulation  of  Business 
— Indirect  or  Incidental  Ef- 
fect Upon  Competition  in 


Interstate  or  Foreign  Com- 
merce. 
§  83.  Reasonable  and  Unreasonable 
Restraints. 
83a.  The  "  Rule  of  Reason  "  and 
"  Light  of  Reason "  De- 
cisions. 

84.  Conspiracy — Test    or    Essen- 

tials   of,    Under    Sherman 
Anti-Trust  Act  Generally. 

85.  Conspiracy — Test   or   Essen- 

tials  of.     Under    Sherman 
Anti-Trust  Act — Overt  Act. 


CHAPTER  IX 

NATURE    ESSENTIALS   OR   TEST — CONTRACTS   IN   RESTRAINT 

OF   TRADE 


§86. 


88 


89 


PubUc  Policy  as  Test — Gen- 
erally. 
87.  Public    Policy    as   Test— De- 
gree of  Injury  to  Public. 

Public  Policy  as  Test — Gener- 
al and  Partial  Restraint  of 
Trade. 

Pubhc  Policy  as  Test — Con- 
tracts in  Restraint  of  Trade 

—  Contracts  Tending  to 
Create  Monopolies — Useful 
Commodities. 

90.  Public  Policy  as  Test— Con- 
tracts Affecting  Articles  of 
Prime  Necessity. 

What  Contracts  Not  Void  as 
Against  Pubhc  Pohcy. 

Public  Policy  Test — Public 
Service  Corporations. 

Same  Subject. 

Effect  of  Changed  Conditions 
as  to  Trade,  Commerce,  etc. 

—  Public  Policy  —  English 
Courts. 

Same  Subject  —  Federal 
Courts. 

96.  Same  Subject — State  Courts. 

97.  Extent  of  Illegality  of  Con- 

tract in  Restraint  of  Trade 
— New  Rule. 


9L 
92. 

93. 

94. 


95 


§   98. 
99. 


100. 
101. 


102. 


103. 


104. 

105. 
106. 


107. 

108. 
109. 


EfTect  of  State  Statute  Upon 
Illegahty  of  Such  Contract. 

Restraint  of  Trade— Monop- 
olies— Degree  of  Competi- 
tion. 

Same  Subject. 

What  Degree  of  Competi- 
tion Permissible. 

Circumstances  Are  to  Be 
Considered  in  Determining 
Legality  of  Restraint. 

Whether  Contract  Is  in  Re- 
straint of  Trade  is  Ques- 
tion for  Court. 

Consideration  of  Contract  in 
Restraint  of  Trade. 

Motive. 

Reasonable  and  Unreason- 
able Restraints  —  Gener- 
ally. 

Where  Contract  in  Restraint 
of  Trade  Is  One  of  a  Sys- 
tem of  Contracts — Rea- 
sonable and  Unreasonable 
Restraint. 

Reasonableness  as  to  Ter- 
ritory or  Area  Covered. 

Test  of  Reasonableness — 
F'air  Protection  to  Cove- 
nantee. 


TABLE    OF   CONTENTS 


IX 


CHAPTER  X 


SHERMAN   ANTI-TRUST   ACT — CONSTRUCTION   OF 


§  110.  Power  of  Congress — Gener- 
ally. 

111.  Constitutionality  of  Act.  §117, 

112.  Purpose  of  Act. 

113.  Scope  of  Act — Generally. 

114.  Construction  of  Act — Gener-         118. 

ally. 

1 15.  Construction  of  Act — "  Com- 

merce" and  "Restraint  of  119, 

Trade"  Construed. 

116.  Construction      of     Act    — 


Should  Not  Be  Narrow  or 
Forced. 

Statute  Does  Not  Extend  to 
Acts  Done  in  Foreign 
Countries. 

The  Question  of  Reasonable- 
ness or  Unreasonableness 
of  Restraint. 

Conspiracy  May  Have  Con- 
tinuance. 


CHAPTER  XI 


SHERMAN   ANTI-TRUST  ACT — VIOLATIONS — GENERALLY 


§  120.  Test  of  Legality  of  Contract      §  125. 
or  Combination. 

121.  Where  Chief  Object  Is  to  In-  126. 

crease  Trade. 

122.  Where  Separate  Elements  of         127. 

Scheme  Lawful. 

123.  Violations— What    Essential 

to  Constitute.  128. 

124.  Violations  —  Essentials     of 

Contracts     in     Order     to 
Constitute.  129. 


Violations  —  What  Consti- 
tute— Generally. 

Violations — Size  or  Extent  of 
Business  Not  Alone  a  Test. 

Violations  —  Combinations 
Entered  Into  Before  Pas- 
sage of  Act. 

Violations  —  By  Combina- 
tions —  Stockholder  Not 
Criminally  Liable. 

Defenses — Generally. 


CHAPTER  XII 


SHERMAN    ANTI-TRUST    ACT  —  VIOLATIONS 
CONTRACTS   CONSTRUED 


PARTICULAR 


130.  Purchase  of  Good  Will  and 

Business. 

131.  Where    Corporation     Holds 

Majority  of  Stock  of  An- 
other Corporation. 

132.  Exchange      of      Shares    of 


Stock-Holding       Corpora- 
tions. 
§  133.  Contracts    Between   Owners 
of  Copyright. 
13^.  Contracts  Between  Holders 
of  Patents. 


TABLE   OF   CONTENTS 


§  135.  Patents —  Licenses  —  Condi- 
tions Generally. 

136.  Patents  —  Licenses — Partic- 

ular Conditions. 

137.  Patents— Right    to    Modify 

Terms  of  Licenses. 

138.  Proprietary      Medicines    — 

Contracts  as  to. 

139.  Acts   and   Combinations   of 

Labor  Organizations. 

140.  Manufacturing    and    Other 

Contracts — Generally. 

141.  Contracts  as  to  Manufacture 

Within  a  State. 

142.  By  Manufacturers  of  Shin- 

gles. 

143.  By   Manufacturers   of   Iron 

Pipes. 


§  144.  By  Tobacco  Manufacturers 
and  Jobbers. 

145.  By    Manufacturers    of    Liq- 

uorice Paste. 

146.  By    Association    Deahng   in 

Tiles,  Mantels  and  Grates. 

147.  By  Sugar  Refining  Compan- 

ies. 

148.  By  Dealers  in  Fresh  Meats. 

149.  By    Association    of    Cattle 

Dealers. 

150.  By  Board    of    Trade— Con- 

tract as  to  Quotations. 

151.  By  Railroad  Companies. 

152.  By  Owners  of  Vessels. 

153.  Mining  Contracts. 

154.  Contracts     Between      Coal 

Companies. 


CHAPTER  XIII 

SHERMAN    ANTI-TRUST    ACT — VIOLATIONS    AS    DEFENSE    TO 
ACTION   BY   COMBINATION 


155.  Contract  with  Combination 

—  Voluntary  Purchaser — 
Illegality  of  Combination 
no  Defense. 

156.  Contract  with  Combination 

—  Voluntary  Purchaser — 
Application  of  Rule. 

157.  Contract  with  Combination 

— When  Illegality  of  Com- 
bination a  Defense. 


158.  Suit  by  Combination  for  In- 

fringement of  Patent — Il- 
legality of  Combination  as 
Defense. 

159.  Suit  by  Combination  for  In- 

fringement of  Trade- 
Mark  or  Copyright  —  Il- 
legality of  Combination  as 
Defense. 


CHAPTER  XIV 


SHERMAN   ANTI-TRUST   ACT — PROCEDURE   AND   DAMAGES 


IGO.  Who   May   Sue— When    In-      §  162. 

dividual   May — Injury  to 

"Business  or  Property."  163. 

161.  Who   May  Sue — Injunction 

—Right    of    Individual—  164. 

Suit  by  Attorney  General. 


Who  May  Sue— Right  of 
Stockholder — Creditor. 

Who  May  Sue— Right  of 
Member  of  Combination. 

Who  May  Sue — Municipal 
Corporation  a  "Person." 


TABLE    OF   CONTENTS 


XI 


165.  Who  May  Sue— State  Not  a 

"Person"  or  "Corpora- 
tion." 

166.  Who  May  Sue— Right  of  Re- 

ceiver. 

167.  Time  of  Entering  into  Com- 

bination as  Affecting 
Right  to  Recover. 

168.  JuriKciiction  of  Courts — Gen- 

erally. 

1 69.  Jurisdiction — Pari  ies —  Sum- 

moning of. 

170.  Jurisdiction —  Parties — Sum- 

moning of  —  Not  Re- 
stricteil  by  Judiciary  Act. 

171.  Jurisdiction  —   E.xercise     of 

Not  Discretionary — Sum- 
moning Parties. 

172.  Jurisdiction    —    Extent    of 

Judgment. 

173.  SuflBciency  of  Complaint  or 

Petition — General  Rules. 

174.  Sufficiency    of    Complaint — 

Rules  in  Force  in  State 
Where  Action  Brought — 
Practice  Act. 

175.  Sufficiency    of    Complaint — 

Particular  Cases. 

176.  Sufficiency   of   Complaint — 

Duplicity. 

177.  Sufficiency    of   Complaint — 

Joinder  of  Defendants — 
Election. 

178.  Sufficiency  of  Indictment — 

General  Rules. 


§  179.  Sufficiency  of  Indictment — 
Charging  Officers,  Agents 
or  Siockholders. 

180.  Indictment    Charging    Con- 

spiracy —  Denial    Under 
General  Issue. 

181.  Indictment   Not  Concluflive 

— Removal  Proceeding. 

182.  Evidence  —  Admissibility  — 

Weight. 

183.  Evidence — As    to    Intent — 

When  Essential. 

184.  Evidence — Burden  of  Proof. 

185.  Evidence  —  Presumption  in 

Respect  to  Combination. 

186.  Evidence  —  Documents  — 

Witnesses  —  Power    of 
Court. 

187.  Witness — Examination  of  a 

"Proceeding." 

188.  Damages  —  Recovery    of  — 

Generally. 

189.  Damages — Nature  of  Action 

for — Jury  Trial. 

190.  Damages  —  Action   for   — 

Statute  of  Limitations — A 
Civil  Remedy. 

191.  Damages — Where    Payment 

of  Higher  Price  Compelled. 

192.  Damages    Cannot    Be     Set 

off. 

193.  Distribution    of    Assets    of 

Holding    Corporation    — 
Right  to  Return  of  Shares. 


CHAPTER  XV 


INTERSTATE  COMMERCE   ACT — POOLING  OF  FREIGHTS,   ETC. 


§  194.  Pooling  of  Freights  or  Divi- 
sion of  Earnings  Prohibit- 
ed— Interstate  Commerce 
Act. 

195.  Pooling      of       Freights    — 

"Freights"  Defined. 

196.  Pooling    of    Freights  —  Na- 

ture and   Scope  of   Stat- 
ute. 


§197.  What  Constitutes  "Pooling 
of  Freights." 

198.  What  Does  Not  Constitute 

"Pooling  of  Freights." 

199.  Pooling  of  Ocean  or  Water 

Freights  Not  Witliin  Stat- 
ute or  Within  Jurisdiction 
of  Interstate  Commerce 
Commission. 


Xll 


TABLE   OF  CONTENTS 


200.  Combinations     to     Prevent  §201.  Interstate     Commerce     Act 

Continuous    Carriage    of  Not      Inconsistent      with 

Freight     to     Destination  Sherman       Anti-Trust 

Prohibited    —    Interstate  Act. 
Commerce  Act. 


CHAPTER  XVI 


CONSTITUTIONAL   LAW — FEDERAL   CONSTITUTION 


202.  Preliminary  Statement. 

203.  Constitution    and    Laws    of 

United  States  Supreme 
Law  of  Land — AppUcation 
to  Combinations,  Trusts, 
etc. 

204.  Constitutional  Vestment  of 

Powers  in  Congress. 

205.  Commerce   Clause   of   Con- 

stitution— Power  of  Con- 
gress. 

206.  Purpose  of  Vestment  in  Con- 

gress of  Power  to  Regulate 
Commerce. 

207.  Regulation  of  Commerce  — 

Extent  of  Interference 
with  Private  Contracts 
or  Combinations  —  Inter- 
state and  Intrastate  Com- 
merce. 

208.  Obligation       of       Contract 

Clause  Not  a  Limitation 
on  Congress. 

209.  Impairment  of  Obligation  of 

Contracts — Whether  State 
Constitution  a  "Law." 

210.  Impairment    of     Obligation 

of  Contracts  —  Whether 
"Law"  Applies  Only  to 
State  Legislative  Enact- 
ments. 

211.  Impairment  of  Obligation  of 

Contracts — Whether  Mu- 
nicipal Ordinance  a 
"Law." 

212.  Impairment  of  Obligation  of 

Contracts — Word  ' '  Law ' ' 
Does   Not   Apply    to  Ju- 


dicial Decisions,  etc., 
Unless. 
§  213.  ObUgation  of  Contract 
Clause  Refers  to  Subse- 
quently Enacted  "Law" 
of  State. 

214.  Same    Subject — Change    of 

Remedy  or  Procedure. 

215.  Nature  of  Laws  Prohibited 

by  ObUgation  of  Contracts 
Clause. 

216.  Nature    of    Contracts    Em- 

braced by  Obligation  of 
Contracts  Clause  —  Be- 
tween What  Parties. 

217.  Nature  of  Contracts— Obli- 

gation of  Contracts  Clause 
Embraces  Implied  and  Ex- 
press Contracts. 

218.  Obligation    of    Contracts — 

Legal  and  Legislative  Con- 
tracts —  Construction  of 
Contract  —  Authority  of 
Federal  Supreme  Court. 

219.  Bridges — Exclusive  Grant  or 

Privilege — Impairment  of 
Contract  Obligation. 

220.  Ferry  —  Exclusive   Grant — 

Impairment  of  Contract 
Obligation. 

221.  Railroad  Charter — Provision 

Against  Competing  Lines 
— Impairment  of  Contract 
Obligation. 

222.  Telephone    Company's    Ex- 

clusive Grant  —  Impair- 
ment of  Contract  Obliga- 
tion. 


TABLE   OF   CONTENTS 


XIU 


§  223.  Electric  LiRhting — Exclusive 
Grant  or  Privilege — Im- 
pairment of  Contract  Ob- 
ligation. 

224.  Exclusive  Right  to  Supply 

Gas — Impairment  of  Con- 
tract Obligation. 

225.  Water  Companies  —  E.xclu- 

sive  Contracts,  Grants  or 
Privileges— Impairment  of 
Contract  Obligation. 

226.  Powers     Reserved     to     the 

States. 

227.  Fifth  Amendment  —  Gener- 

ally. 

228.  Fourteenth   Amendment  — 

Generally. 

229.  Fourteenth  Amendment  — 

No  State  to  Abridge  Privi- 
leges or  Immunities. 

230.  Fourteenth   Amendment  — 

Due  Process  Clause  — 
Fifth  Amendment. 

231.  Liberty  to,   or  Freedom  of 

Contract  —  Generally  — 
Fourteenth  Amendment — 
Fifth  Amendment. 


§  232.  Liberty  to,  or  Freedom  of 
Contract  Continued  — 
Power  of  Government  to 
Restrict,  Regulate  or  Con- 
trol. 

233.  Liberty   to,   or   Freedom   of 

Contract  Continued  — 
Power  of  Congress  Under 
Commerce  Clause  to  Re- 
strict, etc. 

234.  Liberty   to,   or  Freedom  of 

Contract  Continued — Po- 
lice Power  of  States. 

235.  Liberty  to,   or  Freedom  of 

Contract  Continued  — 
Standard  Oil  Company's 
Case. 

236.  Liberty  to,   or  Freedom  of 

Contract  Continued  — 
State  Statutes  Prohibiting 
Combinations,  etc.  —  In- 
stances. 

237.  Fourteenth   Amendment  — 

Equal  Protection  of  the 
Laws. 

238.  Same  Subject  —  Power  of 
Congress  and  of  States. 


CHAPTER  XVII 


CONSTITUTIONAL  LAW — STATE   CONSTITUTIONS 


239.  Creation    of    Monopolies — 

State  Constitutions  Pro- 
hibiting Monopohes  — 
Generally. 

240.  Alabama  Constitution — Leg- 

islative Duty  as  to  Mo- 
nopohes, Combinations, 
etc.,  to  Control  Articles  of 
Necessity,  etc.,  or  to  Pre- 
vent Competition. 

241.  Alabama  Constitution  Con- 

tinued— Effect  Upon  Com- 
petition —  Meaning  of 
"Unreasonably"  and 

"Reasonable  Competi- 
tion." 


§  242.  Arkansas      Constitution    — 
Monopolies  Prohibited. 

243.  Idaho     Constitution — Com- 

binations to  Control 
Prices,  Regulate  Produc- 
tion, etc.,  Prohibited  — 
Duty  of  Legislature. 

244.  Kentucky    Constitution    — 

Legislative  Duty  as  to 
Trusts,  Combinations, 

etc.,  to  Control  Prices. 

245.  Louisiana    Constitution    — 

Combinations,  etc.,  to 
Control  Prices,  Unlaw- 
ful —  Duty  of  Legisla- 
ture. 


XIV 


TABLE   OF   CONTENTS 


I  246.  Marj'land    Constitution    — 
Monopolies  Prohibited. 

247.  Minnesota    Constitution    — 

Combinations  to  Control 
Food  Products  a  Criminal 
Conspiracy — Duty  of  Leg- 
islature. 

248.  Mississippi   Constitution   — 

Duty  of  Legislature  to  Pre- 
vent Trusts,  Combina- 
tions, etc. 

249.  Montana    Constitution     — 

Combinations,  Trusts, 

etc.,  to  Fix  Prices  or 
Regulate  Production  Pro- 
hibited —  Duty  of  Legis- 
lature. 

250.  Montana  Constitution  Con- 

tinued —  Necessity  of 
Showing  Intent. 

251.  Montana  Constitution  Con- 

tinued —  Meaning  of 
"Trust"  Therein. 

252.  North  Carolina  Constitution 

— Monopolies  Prohibited. 

253.  North  Dakota  Constitution 

— Combinations  to  Con- 
trol Prices,  Cost  of  Ex- 
change or  Transportation 
Prohibited  —  Franchises 
Forfeited. 

254.  Oklahoma    Constitution    — 

Monopolies  Prohibited — 
Duty  of  Legislature  as  to 
Combinations,  Monopo- 
Ues,  etc. 

255.  South   Dakota  Constitution 

— Monopolies  and  Trusts 
Prohibited  —  Combina- 
tions to  Control  Prices, 
Production,  Transporta- 
tion, or  to  Prevent  Com- 
petition Prohibited — Duty 
of  Legislature. 


§  256.  Tennessee    Constitution    — 
Monopohes  Prohibited. 

257.  Texas    Constitution  —  Mo- 

nopolies Prohibited. 

258.  Utah    Constitution  —  Com- 

binations to  Control 
Prices,  Cost  of  Exchange 
or  Transportation  Pro- 
hibited— Duty  of  Legisla- 
ture. 

259.  Washington    Constitution — 

Monopolies  and  Trusts 
Prohibited  —  Combina- 
tions to  Control  Prices, 
Production,  Transporta- 
tion or  to  Prevent  Com- 
petition Prohibited — Duty 
of  Legislature. 

260.  Washington        Constitution 

Continued — Its  Provisions 
Not  Self-Executing. 

261.  Washington        Constitution 

Continued — Combinations 
of  Common  Carriers  to 
Share  Earnings  Prohibit- 
ed. 

262.  Wyoming    Constitution    — 

Monopolies  Prohibited — 
Combinations  to  Prevent 
Competition,  Control  Pro- 
ductions or  Prices,  etc., 
Prohibited. 

263.  Constitutional        Provisions 

Prohibiting  Granting  Spe- 
cial or  Exclusive  Privi- 
leges, Immunities  or  Fran- 
chises, etc. 

264.  Same  Subject — General  In- 

stances. 

265.  Constitutional        Provisions 

Prohibiting  Creation  of 
Corporations  by  Special 
Act.  etc. 

266.  Same  Subject — General  In- 

stances. 


TABLE    OF   CONTENTS 


XV 


CHAPTER  XVIII 

FEDERAL  AND   STATE    LEGISLATIVE  POWERS — MONOPOLIES, 

ETC. 


§  267.  Power  of  Congress  to  Pro- 
hibit Restraints  Upon 
Competition  —  Railroad 
Corporations. 

268.  Legislative  Powers  of  State 

— Generally. 

269.  Federal  and  State  Legislative 

Powers  Distinguished. 

270.  Same    Subject  —  Interstate 

and  Intrastate  Commerce. 

27L  Police  Power  —  Definition 
and  General  Principles — 
Monopolies  May  Be  Pro- 
hibited, etc. 

272.  Grant  of  Monopoly — Sover- 
eign   Power   or   State  Is 


Source  of  Grant  or  Fran- 
chise. 
§  273.  Test  of  Legislative  Power  to 
Grant. 

274.  Legislative  Power  of  State  to 

Grant. 

275.  Monopoly   Cannot   Be   Im- 

plied from  Mere  Grant — 
Public  Grants  of  Yran- 
chiscs,  Privileges,  etc. — 
Construction  Again.«t 

Grantee. 

276.  Legislative    Power    to    Pro- 

hibit Combinations,  Mo- 
nopolies, etc. — Anti-Trust 
Acts. 


CHAPTER  XIX 


POWERS   OF  MUNICIPAL  CORPORATIONS — MONOPOLIES,  ETC. 


§  277.  Rule  as  to  Powers  of  Munic- 
ipal Corporations. 

278.  Delegation     of     Legislative 

Power    to     Municipal- 
ities. 

279.  Municipal  Ordinances  Must 

Not  Conflict  with  Consti- 
tution. 


§  280.  Power  of  Municipality  to 
Create  Monopolies  or  to 
Make  Contracts  Tending 
to  Create  a  Monopoly. 
281.  Same  Subject — Municipal- 
ity May  Adopt  Reasonable 
Measures  —  Although 
SHght  Inequalities  Exist 
as  to  Benefits  Conferred. 


CHAPTER  XX 

FEDERAL     LEGISLATION — PATENTS,      COPYRIGHTS,      TRADE- 
MARKS  AND    POST   ROADS   ACT 


§  282.  Patents — Source  and  Nature 
of — Whether     Monopohea 
or  Contracts. 
283.  Same  Subject. 


§284.  Patents— PoHce     Power     of 
States. 
285.  Source  of  Copyright — Rxclu- 
sive  Right  or  Monopoly. 


XVI 


TABLE   OF   CONTENTS 


§  286.  Copyright  Law  Secures  Ex- 
clusive Right  or  Monop- 
oly. 

287.  Copyright  —  Statutory  and 

Common-Law  Right  Dis- 
tinguished —  Exclusive 
Property. 

288.  Trade-Marks     and     Trade- 

Names  —  Monopoly — Ex- 
clusive Right. 

289.  Unfair   Competition— WTien 

Cannot  Be  Predicated 
Solely  on  Use  of  Trade- 
Name. 


§  290.  Loss  of  Right  to  Individual 
Appropriation — Intent  of 
Injunction  Bill  to  Extend 
Monopoly  of  Trade-Mark 
or  Trade-Name. 

291 .  Expiration  of  Patent — Use  of 

Generic  Name — Loss  of 
Trade-Mark  Rights. 

292.  Post    Roads    Act    Prohibits 

State  Monopohes  in  Com- 
mercial Intercourse  by 
Telegraph. 

293.  Railroad    Right    of    Way- 

Telegraph  Line — Exclu- 
sive Contract — Monopoly. 


CHAPTER  XXI 


STATE  AND  MUNICIPAL  LEGISLATION  OR  CONTRACTS- 
TICULAR   INSTANCES 


-PAR- 


§  294.  Exclusive  Grants  or  Con- 
tracts— Monopohes — Gen- 
erally. §  304. 

295.  Booms — Logs  and  Logging — 

Monopoly. 

296.  Bridges— Monopohes.  305. 

297.  When  Contract  by  City,  as 

Owner  of  Ferry  Franchise, 
with  Bridge  Company 
Creates  no  Monopoly.  306. 

298.  Electric  Lighting — Exclusive 

Right — Contract  Power  of         307. 
City  as  to. 

299.  Electric     Lighting— Control         308. 

of  Streets  —  Exclusive 
Grants,  etc. — MunicipaU- 
ties.  Towns,  etc.  309. 

300.  Ferries — Monopolies,  Exclu-         310. 

sive  Privileges,  etc. 

301.  Ferries — Exclusive    Grant — 

Mimicipal    Ordinance    —         311. 
Delegated  Authority.  312. 

302.  Exclusive     Right     to     Use 

Wharf  for  Ferry  Pur- 
poses. 313. 

303.  Gas— Grant  by  State  of  Ex- 


clusive Privilege  or  Mo- 
nopoly— Police  Power. 

Gas — Grant  by  Municipal- 
ity of  Exclusive  Privilege 
or  Monopoly. 

Municipal  Lease  to  Private 
Corporation  to  Supply  Gas 
— Exclusive  Right — Mo- 
nopoly. 

Gas — Void  Grants  and  Con- 
tracts— Monopoly. 

Gas — Purchasers  of  Exclu- 
sive Rights. 

Intoxicating  Liquors — "Dis- 
pensary System"  —  Mo- 
nopoly. 

Irrigation — Monopoly. 

Market  House — Contract  for 
by  City  or  Town — Monop- 
oly. 

Navigable  Canal— Monopoly. 

Omnibuses — Grant  of  Privi- 
lege to  Run — Where  a  Mo- 
nopoly. 

Railroads — Exclusive  Privi- 
leges. 


TABLE   OF   CONTENTS 


XVll 


§31 


I' 


School  Text-Book  Statutes — 
Exclusive  Privilege — Mo- 
nopoly— Contracts. 

315.  Slaughter  House  or  Market 

House — When  Municipal- 
ity or  Village  Cannot 
Create. 

316.  Street  Railways — Control  of 

Streets — Exclusive  Grants 
— Municipalities. 

317.  Telephone   Companies — Ex- 

clusive Grants  or  Privileges. 

318.  Telegraph    Comijanies — Ex- 

clusive Grants. 

319.  Toll     Bridges  —   Exclusive 

Grants. 

320.  Toll     Roads  —    Municipal 

Grant — Monopoly. 

321.  Toll    Wharf    —    Exclusive 

Grant. 

322.  Union  Label  on  City  Print- 

ing. 

323.  Requirement      That      Only 

Union  Labor  or  Union 
Shops  Be  Employed  — 
Award  of  Contract. 

324.  Warehouses — Monopoly. 

325.  Waterworks  or  Water  Sup- 

ply— Power  of  Municipal- 
ity. 

326.  Waterworks  or  Water  Sup- 

ply— Exclusive  Right  of 
Municipahty  and  of  Pri- 


vate Corporation  Distin- 
guished. 
§  327.  Waterworks  or  Water  Sup- 
ply —  Grant  by  State  of 
Exclusive  Privilege  or  Mo- 
nopoly. 

328.  Waterworks  or  Water   Sup- 

ply— Grant  by  Municipal- 
ity of  Exclusive  Right  or 
Monopoly. 

329.  Waterworks  or  Water   Sup- 

ply— Instances  of  Valid 
Contracts  by  Municipal- 
ity— Exclusive  Privilege  or 
Monopoly. 

330.  Waterworks  or  Water   Sup- 

ply— Instances  of  Void 
Contracts  —  Exclusive 
Privilege  or  Monopoly. 

331.  Waterworks   or  Water   Sup- 

ply— Defense  That  Con- 
tract Creates  Monopoly. 

332.  Injunction  Restraining  Mu- 

nicipahty— Water  System. 

333.  Contract  with    State  Water 

Company —  Constitutional 
Law — Due  Process. 

334.  Waterways      —     Exclusive 

Right  to  Collect  Tolls- 
Monopoly. 

335.  Consolidation    of    Corpora- 

tions —  Exclusive  Privi- 
leges— Monopoly. 


CHAPTER  XXII 


POWER  OF  STATE — POLICE   POWER — GENERALLY 


336.  Police  Power  of  State — Re- 

straining Right  of  Con- 
tract— Generally. 

337.  Pohce  Power  of  State— As  to 

Contract  and  Combina- 
tions in  Restraint  of  Trade 
— Generall}'. 

338.  Police  Power  of  State— Pre- 

vention of  Discrimination. 

339.  Pohce  Power  of  State — Pro- 


hibiting Giving  of  Re- 
bates. 
§  340.  Police  Power  of  State— Cor- 
porations— Limitations  in 
Federal  Constitution  — 
Fourteenth     Amendment. 

341.  Police  Power  of  State — For- 

eign   Corporations — Four- 
teenth Amendment. 

342.  Power  of  State  to  Pronde 


xvm 


TABLE    OF   CONTENTS 


Mode  and  Means  of  Pro- 
cedure to  Enforce  Statute 
— Power  of  Supreme  Court 
of  United  States. 


§  343.  Power  of  Legislature  as  Af- 
fected by  Constitutional 
Provision  Requiring  Pas- 
sage of  Laws. 


CHAPTER  XXIII 

STATE    STATUTES — CONSTITUTIONALITY  AND  CONSTRUCTION 
— GENERALLY 


344.  State     Statutes  —  Constitu- 

tionality of — Generally. 

345.  Constitutionality  —  Liberty 

of  Contract — Due  Process 
of  Law. 

346.  Constitutionality    —    Class 

Legislation  —  Liberty  of 
Contract. 

347.  Constitutionality — Discrim- 

ination. 

348.  Constitutional  Provision  Re- 

quiring Legislature  to 
Enact  Laws  —  Not  a  Re- 
peal of  a  Prior  Law. 

349.  Contract  Prior  to  Passage  of 

Act  Does  Not  Render  It 
Unconstitutional. 

350.  Construction     —      General 

Rules. 

351.  Construction — As  to  Intent 

of  Legislature. 

352.  Construction — Where     Part 

of  Act  Unconstitutional. 

353.  Construction — As    to    Title 

and  Body  of  Act. 

354.  Construction — Rule     as    to 

Statutes  in  Pari  Materia. 

355.  Construction  as  to  Statutes 

in  Pari  Materia — Special 
and  General  Statutes — 
Excepted  Class. 


356.  Construction — Rule  as  to 
Additional  and  Descrip- 
tive Words. 

Word  "Arrangement"  Con- 
strued. 

Word  "Combination"  Con- 
strued. 

Words  "Commodity"  and 
' '  Convenience ' ' — Personal 
Services  Not — Telephone 
Service  Is. 

Word  "Court"  Construed. 

Words  "In  Restraint  of 
Trade"  Construed. 

Word  "Monopoly"  Con- 
strued. 

Word  "Person"  Construed 
—  Whether  Corporations 
Included. 

Words  "Real  Value"  Con- 
strued. 

365.  Word  "Trade"  Construed. 

366.  Application     of     Statute — • 

Generally. 

Penalty  Provisions  of  Act — 
Review  by  United  States 
Supreme  Court. 

Territorial  Legislature  — 
Power  of  Congress — Dele- 
gation of  Power  to  Sub- 
ordinate Bodies. 


357. 


358. 


359. 


360. 
361. 

362. 

363. 


364. 


367. 


368. 


TABLE    OF   CONTENTS 


XIX 


CHAPTER  XXIV 


STATE  STATUTE  S- 


-PARTICULAR  CONSTITUTIONAL  AND  STAT- 
UTORY  PROVISIONS 


§  369.  Confltitutional  Provision 
Prohibiting  Consolidation 
of  Parallel  and  Competing 
Lines  of  Railroad. 

370.  Combination  to  Fix  or  Limit 
the  Price  or  Premium 
for  Insuring  Property  Pro- 
hibited. 

37L  Statute  Prohibiting  Condi- 
tion of  Sale  Not  to  Sell 
Goods  of  Any  Other  Per- 
son. 

372.  Statute      Forbidding      Dis- 

crimination  in    Prices  for 
Petroleum. 

373.  Purchaser  from  Combination 


— Statute  Relieving  from 
Liabihty. 
§  374.  Provisions  as  to  Punishment 
— Fine  or  Imprisonment — 
Forfeiture  of  Charter — 
Revocation  of  Permit. 

375.  Statute   Permitting   Pooling 

by  Farmers  of  Farm  Prod- 
ucts. 

376.  Exception   in   Statute — Sale 

of  Good  Will  of  Business — 
Agricultural  Products  or 
Live  Stock. 

377.  Donnelly  Anti-Trust  Act- 

New  York. 


CHAPTER  XXV 


STATE   STATUTES — VIOLATIONS — GENERAL   PRINCIPLES 


§  378.  Contracts  and  Combinations 
— Legality  and  Illegality — 
General  Principles. 

379.  Intention  as  Affecting — Pre- 

sumption as  to. 

380.  All   Provisions  of   Contract 

Should  Be  Considered  — 
Presumption  as  to  Legal- 
ity. 

381.  Mere  Form  of  Association  or 

Combination  Not  Control- 
ling Test  of  Legality. 

382.  Combination  to  Carry  Out 

Restrictions  Prohibited — 
Where  Combinations  May 
so  Operate — Result  Is  Im- 
material— Each  Case  Con- 
trolled by  Own  Facts. 


§  383.  WTiere  Contract  Legal  but 
One  of  Several  Links  in 
Illegal  Combination. 

384.  Where  By-Laws  of  Associa- 

tion Show  Illegality. 

385.  Where  Contract  or  Combina- 

tion Involves  Interstate 
Commerce  Not  Subject  to 
State  Anti-Trust  Law. 

386.  Where    Contract    Made    or. 

Combination  Formed  Out- 
side of  State. 

387.  Combination     Formed     Be- 

fore Passage  of  Statute. 

388.  Foreign    Corporations    Sub- 

ject to  State  Anti-Trust 
Laws. 

389.  What  Constitutes  a  Trust- 

Texas  Statute. 


XX 


TABLE    OF   CONTENTS 


CHAPTER  XXVI 


STATE    STATUTE- 


-VIOLATIONS — PARTICULAR   CONTRACTS 
AND   COMBINATIONS 


')  390.  Consolidation  of  Several  Cor- 
porations —  Transfer  of 
Property  to  One. 

391.  Contract      Between     Rival 

Corporations  Each  Ob- 
taining Interest  in  Other. 

392.  Where   Statute   or   Charter 

Permits  Consolidation  of 
Corporations. 

393.  Purchase  of  Assets  of  Cor- 

porations. 

394.  Mining  Corporation  —  Pur- 

chase by  of  Stock  in  An- 
other Mining  Corporation. 

395.  Contracts  Between  Common 

Carriers — Consohdation  of 
Railroad  Companies  — 
Parallel  and  Competing 
Lines. 

396.  Contract  Between  Railroad 

Company  and  Palace  Car 
Company. 

397.  Merger  of  Street  Railways. 

398.  Contracts  Between  Railroad 

Companies  and  Express 
or  Transfer  Companies — 
Exclusive  Right. 

399.  Car      Service      Association 

Merely  Agent  of  Several 
Railroads. 

400.  Agreements  Between  Steam- 

boat Companies. 

401.  Contract     Between     Manu- 

facturer and  Purchaser 
Not  to  Resell  Below  Cer- 
tain Price  —  Proprietary 
Medicines — Uniform  Job- 
bing Price. 
2.  Exclusive  Rights — Contracts 
Between  Vendor  and  Pur- 
chaser— When  a  Violation. 
403.  Exclusive  Rights — Contracts 
Between  Vendor  and  Pur- 


chaser— When  Not  a  Vio- 
lation. 
§  404.  Exclusive  Contract — Sale  of 
By-Product  Distinguished 
from  Sale  of  Entire  Out- 
put. 

405.  Contract    Giving    Exclusive 

Right  to  Sell  Goods  on 
Certain  Premises. 

406.  Agreement  Restraining  Pur- 

chaser Using  Premises  for 
Certain  Purpose. 

407.  Agreement    Between   Agent 

of  Seller  and  Purchaser — • 
Coal  Oil. 

408.  Contracts  Between  Principal 

and  Agent. 

409.  Sale  of  Business  and  Good 

Will — Contracts  Not  to 
Engage  in  Competition. 

410.  Sale  of  Business  and  Good 

Will— Contract  Not  to  En- 
gage in  Competition — Ex- 
ception in  Statute  as  to. 

411.  Sale  of  Business  and  Good 

Will  —  Laundry  Not  a 
Manufacturing  Establish- 
ment. 

412.  Agreement  to  Refrain  from 

Entering  Into  Business. 

413.  Agreements  Between  Brewers 

Not  to  Sell  to  One  In- 
debted— To  Praise  Price. 

414.  Agreement    Between    Brick- 

layers' Union  and  Mason 
and  Builders'  Association. 

415.  Associations  of  Cattle  Own- 

ers, Buyers  and  Sellers — 
By-Laws  and  Rules. 

416.  Agreement  Between  Cotton 

Seed  Oil  Manufacturers — 
Withdrawal  of  Agent  by 
One. 


TABLE    OF   CONTENTS 


XXI 


§  417.  Corporation  Composed  of 
Crushed  Granite  Dealers 
— Agreement  as  to  Blue- 
stone. 

418.  Consolidation  of  Gas  Com- 

panies —  Agreements  Be- 
tween. 

419.  Agreement    Limiting    Right 

to  Buy  Grain. 

420.  Agreement      Between      Ice 

Companies. 

421.  Agreements  Between  Insur- 

ance Companies  or  Agents 
to  Fix  Rates. 

422.  Agreements   Between   Lum- 

ber Dealers. 

423.  Contracts  Between  Proprie- 

tors of  Newspapers  and 
Job  Printing  Establish- 
ments. 

424.  Contracts    Between    News- 

paper Publisher  and  Car- 
riers. 

425.  Agreements  Between  Pack- 

ing Companies  to  Control 
Price  of  Meat. 

426.  Contracts     in     Respect     to 

Patented  Articles. 

427.  Agreement   Between   Physi- 

cians— Schedule  of  Price. 

428.  Physicians  —  Dissolution  of 

Partnership  —  Agreement 
Not  to  Practice. 


429.  Agreements  Between  Dealers 

in  Plumbers'  Supplies  and 
Master  Plumbers'  Afisocia- 
tion. 

430.  Agreements    Between    Pub- 

lishers— Price  at  Retail — 
Not  to  Sell  to  Certain 
Class. 

431.  News    Association   for    Dis- 

tributing. 

432.  Agreement  Between  Retail- 

ers Not  to  Purchase  from 
Certain  Wholesalers. 

433.  Agreements     Between     Salt 

Manufacturers. 

434.  Contracts  Relating  to  Tele- 

phone Service. 

435.  Telegraph     Companies     — 

Service  of  Is  Not  a  Com- 
modity. 

436.  Agreement  Between  Theatri- 

cal Owners  or  Managers — 
Plays  Not  Commodities. 

437.  Combination  to  Induce  Em- 

ployees to  Break  Con- 
tracts with  Employers. 

438.  Undertaking     by     Corpora- 

tions to  Induce  Employees 
to  Trade  with  Another. 

439.  Contract     to     Instruct     in 

Treatment  of  Scalp  and 
Hair— To  Use  Only  Cer- 
tain Remedies. 


CHAPTER  XXVII 


STATE  STATUTE — PROSECUTIONS,  REMEDIES  AND  DEFENSES 


§  440.  Parties    Defendant  —  Who 
Subject  to  Prosecution. 

441.  Remedy  Provided  by  Stat- 

ute Exclusive. 

442.  Statutes  Providing  for  Pun- 

ishment— Fine — Imprison- 
ment. 

443.  Liability  ^Miere   Agreement 

Legal  When  Made — 
E  ff  e  c  t  of  Subsequent 
Statute. 


§  444.  Statute  Construed  by  High- 
est Court  of  State— Re- 
view by  United  States  Su- 
preme Court. 

445.  Annulment  of  Charter — For- 

feiture of  Franchise  — 
Right  of  Stockholder  to 
Enforce. 

446.  Application  to  Annul  Char- 

ter— Granting  of  in  Dis- 
cretion of  Court. 


xxu 


TABLE   OF   CONTENTS 


i  447.  Foreign  Corporation — Oust- 
er of — When  Court  no 
Discretion. 

448.  Foreign    Corporations — Na- 

ture of  Right  to  Transact 
Business — Ouster  of. 

449.  Foreign  Insurance  Company 

— Authority  of  Insurance 
Commission  to  Revoke 
Certificate. 

450.  Suit  for  Injunction  by  Per- 

son Injured — Defense. 

451.  Violation  of  Law  as  Prevent- 

ing Relief  Against  Ordi- 
nance —  Ceasing  Viola- 
tions. 

452.  Action  for  Damages — Person 

Injured  by  Conspiracy. 

453.  Action  by  Party  to  Illegal 

Contract  or  Combination. 

454.  Enjoining  Acts    Done  After 

Combination  Declared  Il- 
legal. 

455.  That    Corporation    Foreign 

One  Is  no  Defense. 

456.  That  Prices  Not  Raised  Is  no 

Defense. 

457.  No  Defense  That  Complete 

Monopoly  Not  Obtained. 

458.  Motives  of  Those  Instigating 

Suit  Are  Immaterial. 

459.  Good   Motives  or  Intent  no 


Defense  Where  Statute 
Violated. 
§  460.  Illegahty  of  Combination  or 
Contract  as  Defense — In- 
dependent of  Statute — 
Collateral  Contract. 

461.  Illegahty  of  Combination  or 

Contract  as  Defense 
Where  Permitted  by  Stat- 
ute. 

462.  Illegality  of  Combination  or 

Contract  as  Defense  Con- 
tinued— Instances. 

463.  Illegality  of  Combination  or 

Contract  as  Defense — Ac- 
tion for  Rent. 

464.  Illegahty  of  Combination  or 

Contract  as  Defense  — 
Contract  Made  Prior  to 
Statute. 

465.  Illegahty  of  Combination  or 

Contract  as  Defense — 
Where  Statute  Prescribes 
No  Mode  of  Procedure  for 
Determining  Illegahty. 

466.  Combination  to  Raise  Prices 

— Defense  That  Law  Does 
Not  Favor  Increased  Sale 
of  Article. 

467.  Illegality  of  Association  as 

Defense  to  Action  by  for 
Penalty. 


CHAPTER  XXVIII 


STATE  STATUTES — PLEADING 


468.  Rule  as  to  Certainty. 

469.  General   Rule  —  Indictment 

or  Information  in  Lan- 
guage of  Statute  Suffi- 
cient. 

470.  Legal  Conclusions. 

471.  Joinder  of  Defendants. 

472.  Not  Necessary  to  Allege  a 

Combination  in  a  Position 
to  Control  Market. 

473.  Necessity  of  Averring  Intent, 

Purpose  or  Effect. 


§  474.  Averring  Terms  of  Agree- 
ment— Particular  Articles 
Subject  of. 

475.  Conspiracy    —    Means    by 

Which  to  Be  EfTectuated 
Need  Not  Be  Charged. 

476.  Conspiracy      —      Averring 

Names  of  Persons  to  Be 
Injured. 

477.  In  Proceeding  by  Informa- 

tion to  Forfeit  Corporate 
Franchise, 


Table  of  contents 


XXlll 


§  478.  Complaint  in  Action  to  Re- 
strain— New  York. 
479.  Necesaity  of  Averring  Acta 
to     Be    in     Restraint    of 
Trade. 


§  480.  Rule  as  to  Party  Seeking  to 
Enforce  Forfeiture  —  De- 
fense That  Member  of  Il- 
legal Combination. 
481.  Complaint  to  Recover  Pen- 
alty. 


CHAPTER  XXIX 


EVIDENCE 


482.  Proof  of  Illegality  —  Evi- 

dence of  Circumstances  in 
Connection  with  Making 
of  Contract— Acts  of  Par- 
ties— Declarat  ion . 

483.  Evidence  as  to  Intent. 

484.  Same  Subject — Positive  Evi- 

dence Not  Necessary. 

485.  Letters  a.s  pjvidence  of  Con- 

spiracy —  Statements  of 
Parties. 

486.  Combination  to  Raise  Prices 

— Evidence  to  Show  Rea- 
son for  Increase — Rebut- 
tal of. 

487.  By-Laws  of   Association   or 

Corporation  as  Evidence. 

488.  Presumption    as    to    Inno- 

cence. 

489.  Burden  of  Proof— Illegality 

of  Contract — Partnership 
Accounting. 


§  490.  Sufficiency  of  Evidence — 
Proof  of  Conspiracy  to 
Raise  Price. 

491.  Sufficiency     of     Evidence — 

Time  of  Entering  Into 
Conspiracy. 

492.  Damages — Conspiracy — Er- 

roneous Exclusion  of  Evi- 
dence as  to  Intent  to  In- 
jury. 

493.  Evidence    of    Disloyalty    aa 

Tending  to  Prove  Non- 
Existence  of  Trust. 

494.  Requiring      Production      of 

Books  and  Documents. 

495.  Compelling  Witness  to  Testi- 

fy— Immunity  Statute. 

496.  Taking  of  Testimony  Before 

Trial  —  Examination  of 
Witnesses  —  Constitution- 
ality of  Statute. 


CHAPTER  XXX 


LABOR   OR   TRADE   UNIONS 


497.  Right  of  Workingmen  to  Or- 

ganize. 

498.  Right  of  Workingmen  to  Or- 

ganize —  Expressions   of 
Courts. 

499.  Labor    Union — Presumption 

ns  to  Being    Law-Abiding 
Body. 


500.  Right  to  Organize  E.xtends 

to  Labor  Whether  Physi- 
cal or  Intellectual. 

501.  Right    of    Workingmen    to 

Strike. 

502.  Right  to  Strike — Limitationa 

on. 

503.  Picketing  —  Legality   of  — 

General  Rule. 


XXIV 


TABLE   OF   CONTENTS 


504.  Picketing — Decisions    Hold-      §  524. 
ing  Unlawful. 

605.  Picketing  —  When      Unlaw- 
ful. 

506.  Picketing— Whether  Lawful         525. 

Depends  on  Facts  and  Cir- 
cumstances— Rule  as  Sup- 
ported by  Authority. 

507.  Picketing — No  Injunction  to 

Protect.  526. 

508.  Picketing — Ordinances  as  to 

VaUd.  527. 

509.  Right  to  Strike— Refusal  to 

Work     with     Non-Union         528, 
Man     —     Massachusetts 
Rule. 

510.  Right  to  Strike— Refusal  to         529. 

Work  with  Non-Union 
Man — Pennsylvania  Rule. 

511.  Right  to  Strike — Refusal  to 

Work  with  Non-Union 
Man — New    York     Deci- 


530, 
531. 
532, 


eions. 

512.  Right  to  Strike— Refusal  to 

Work     with     Non-Union 
Man — Other  Decisions. 

513.  Right  to  Strike — Refusal  to 

Work     with     Non-Union 
Man — Conclusion. 

514.  Use  of  Persuasion  by  Strik-         533. 

ers. 

515.  Use    of     Persuasion  —  Em-         534. 

ployees  Under  Contract. 
616.  Use  of  Violence,  Threats  or 
Intimidation  by  Strikers. 

517.  Threats  —  Intimidation  — 

What  Constitute. 

518.  Boycotts  Generally. 

519.  Boycott      Circulars  —  When 

Held  Legal.  535. 

520.  Boycott    Circulars  —  When 

Held  Illegal. 

621.  Boycott     Circulars — Consti- 

tutional   Provision  as   to         536. 
Freedom  of  Speech. 

622.  Contracts      Between     Em- 

ployer and  Employee. 
523,  Contracts  Between  Employ-         537. 
er  and  Employee  Contin- 
ued. 


Officers — Power  of  Trade 
Union — Board  of  Directors 
or  Committees  to  Con- 
tract. 

Injunction  —  SuflBciency  of 
Complaint  for  Threatened 
Injury  to  Persons  and 
Property  —  New  York 
Code. 

Parties — Process — Service — 
Injunction. 

Injunction — Right  to  in  New 
York. 

Injunction  to  Restrain  Pay- 
ment of  Strike  Benefits — 
Specific  Performance. 

Injunction — Evidence  of  Un- 
lawful Acts  of  Members 
During  Strike. 

Injunction  —  No  Defense 
That  Act  a  Crime. 

Injunction  —  Question  of 
Law  and  Fact. 

Prehminary  Injunction  — 
When  Vacated  as  to  Union 
but  Permitted  to  Stand 
as  to  Individual  Members 
but  Not  so  as  to  Prevent 
Peaceful  Picketing. 

Injunction  — Contract — Na- 
ture of  Proceeding. 

Constitutional  Law  —  Con- 
gress no  Power  to  Make 
it  a  Criminal  Offense  for 
Carrier  to  Discharge  Em- 
ployee Because  Member  of 
Labor  Union  —  Fifth 
Amendment  —  Contract 
— Interstate  Commerce. 

Statute  Prohibiting  Dis- 
charge of  Employee  Be- 
cause Member  of  Labor 
Union. 

Statute  as  to  Becoming 
Member  of  Labor  Union 
—  Condition  of  Employ- 
ment. 

Statute  Prohibiting  Granting 
of  Injunction  Against  Un- 


TABLE    OF   CONTENTS 


XXV 


538.  Statute  as  to  Suits  Against       §540.  Legality    of    Union    as    Af- 

Unincorporated     Associa-  fected  by  Confltitution  of 

tions.  Union. 

539.  Statute    as    to    Labels    and 

Stamps. 


APPENDIX  A 

Standard  Oil  Company  of  New  Jersey  v.  United  States,  221  U.  S. 
Headnotes  (Official)  Opinion 

Dissenting  Opinion 
United  States  v.  American  Tobacco  Company,  American  Tobacco  Com- 
pany V.  United  States,  221  U.  S.  106 
Headnotes  (Official) 


I  (Official) 


TABLE  OF  CASES  CITED 


[References  are  to  Sections] 


Abbott  V.  City  of  Duluth  (104  Fed. 

833),  222 
Aberthaw  Construction  Co.  v.  Cam- 
eron (194  xMaas.  208),  515 
Adair  v.  United  States  (208  U.  S. 

161),  231,  534,  536 
Adams  v.  Standard  Oil  Co.  of  Ky. 

[(Miss.,  1910),  53  So.  692,]  13 
Adams   E.xpress   Co.    v.    Kentucky 

(214  U.  S.  218),  270,  271 
Adams  Expros.s  Co.   v.  State  (161 

Ind.  328),  336 
Addyston    Pipe    &    Steel    Co.    v. 

United   States   (175   U.   S.   211) 

(see  "Appendi.x  A"),  77,  80,  81, 

82,  111,  125,  141,  143,  157,  172, 

205,  207,  233,  270 
Adee  v.  Nassau  Electric  R.  Co.  (72 

N.  Y.  Supp.  992),  316 
.(Etna   Fire   Ins.   Co.    v.   Kennedy 

(161  Ala.  600),  271 
/Etna  Ins.  Co.  v.  Commonwealth 

(106  Ky.  864),  18,  421 
Ahem,  Matter  of,  v.  Elder  (195  N. 

Y.  493),  269 
Alabama  &  V.  Ry.  Co.  v.  Turner 

[(Miss.,  1910),  52  So.  261,]  277 
Albertype   Co.    v.    Gust-Feist   Co. 

(102  Tex.  219),  385 
Alexander  v.  United  States  (201  U. 

S.  117),  186 
Alger    V.    Thacher    [19  Pick.  (236 

Mass.,)  51],  86,  88,  89,  106 
Allegheny  County  v.   McKeesport 

Diamond    Market    (123    Pa.    St. 

164),  272 
Allen  V.  Hunter  (6  McLean,  303), 

9,  282 


Allers  Commission  Co.  v.  Spencer 

(205  Mo.  105),  441 
Allgeyer  v.   Louisiana   (165    U.   S. 

578),  82,  231,  271 
Allis-Chalmers  Co.  v.  Iron  Mould- 
ers' Union  (150  Fed.  155),  505 
Allis-Chalmers     Co.     v.     Rehable 

Lodge  (HI  Fed.  264),  503 
Allyn,  Appeal  of  (81  Conn.  534), 

230,  269,  271 
Altgelt  V.  City  of  San  Antonio  (81 

Tex.  436),  326,  328 
American    Banana  Co.   v.    United 

Fruit  Co.  (213  U.  S.  347),  64,  85, 

117 
American   Banana   Co.    v.    United 

Fruit  Co.  (166  Fed.  261),  173 
American    Banana   Co.    v.    United 

Fruit  Co.  (160  Fed.  184),  167 
American   Biscuit   &   Mfg.   Co.   v. 

Klotz  (44  Fed.  721),  10,  46,  50, 

51,  65,  67 
American  Can  Co.  v.  Agricultural 

Ins.  Co.  (12  Cal.  App.  133),  21 
American  Casualty  Ins.  Co's.  Case 

(Boston   &   Albany   Rd.    Co.    v. 

Mercantile  Trust  &  Deposit  Co.) 

(82  Md.  535)  86. 
American  E.xpress  Co.  v.  Southern 

Indiana   E.xpress   Co.    (167    Ind. 

292),  336 
American  Steel  &  Wire  Co.  v.  Wire 

Drawers'  &  Die  Makers'  Unions, 

Nos.  1  and  3  (90  Fed.  608),  503 
American  Strawboard  Co.  v.  Halde- 

man  Paper  Co.  (S3  Fed.  619),  406 
Aroerican  Strawboard  Co.  v.  Peoria 

Strawboard    Co.    (65    111.    App. 

.502),  463 
American  Teleph.  &  Telcg.  Co.  v. 

xxvii 


XX  via 


TABLE    OF   CASES   CITED 


[References  are  to  Sections] 


Morgan     County    Teleph.     Co. 

(13S  Ala.  597),  317 
American  Tobacco  Co.  v.  Common- 
wealth  [(Ky.)    115   S.  W.   745,] 

473 
American  Tobacco  Co.   v.  United 

States,  see  United  States  v.  Amer- 
ican Tobacco  Co. 
American  Tobacco  Co.  v.  Werck- 

meister  (207  U.  S.  284),  285,  286, 

287 
American  Union  Coal  Co.  v.  Penn- 
sylvania R.  Co.  (159  Fed.  278), 

188 
American  Union  Teleg.  Co.  v.  West- 
em   Union   Teleg.   Co.    (67   Ala. 

26),  271 
American  Waterworks  &  Guarantee 

Co.    V.   Home   Water   Co.    (115 

Fed.  171),  211 
Ames    V.    American    Telephone    & 

Telegraph   Co.    (166   Fed.    820), 

162,  166 
Ames  V.  Union  Pacific  Ry.  Co.  (64 

Fed.  165),  270 
Anchor    Electric    Co.    v.    Hawkes 

(171  Mass.  101),  109 
Anders  v.  Gardner  (151  N.  C.  604), 

106 
Anderson  v.  Louisville  &  Nashville 

R.  Co.  (62  Fed.  46),  16 
Anderson  v.  Shawnee  Compress  Co. 

(17  Okla.  231),  87,  106,  109 
Anderson  v.  United  States  (171  U. 

S.  604),  80,  82,  123,  149 
Andrews  v.  Kingsbury  (212  111.  97), 

88,  106 
Angehca   Jacket    Co.    v.    Angelica 

(121  Mo.  App.  226),  109 
Ansley  v.  Ainsworth    (4   Ind.   Ty. 

508),  208 
Anton  V.  Greenhow  (107  U.  S.  769), 

214 
Appeal  of.     See  particular  name. 
AppUcation     of.      See     particular 

name. 
Arkansas  Brokerage  Co.  v.  Dunn 

&  Powell  (173  Fed.  899),  140 
Arkansas  Stave  Co.  v.  State  [(Ark., 

1910)  125  S.  W.  1001,]  21,  231 


Arnold  &  Co.  v.  Jones'  Cotton  Co. 

(152  Ala.  501),  109 
Arnot  V.   Pittston  &  Elmira  Coal 

Co.  (68  N.  Y.  558),  80 
Arthur  v.  Oakes  (63  Fed.  310),  41, 

498,  505 
Asbell  V.  Kansas  (209  U.  S.  251), 

270 
Association  v.   Starkey    (84   Mich. 

76,  80),  86,  87,  88,  102,  106,  108, 

406 
Atchison,  T.  &  S.  F.  Ry.  Co.  v.  Gee 

(139  Fed.  582),  504 
Atkins   V.    Disintegrating    Co.    [18 

Wall.  (U.  S.)  272],  170 
Atkins  V.  Fletcher  Co.   (65  N.  J. 

Eq.  658),  507,  518 
Atlanta   v.    Chattanooga   Foundry 

&  Pipeworks  (127  Fed.  23),  164, 

188,   189,   190,   191 
Atlanta,  City  of,  v.  Stein  (111  Ga. 

789),  322 
Atlantic    Coast    Line    Rd.    Co.    v. 

Beasley  (54  Fla.  311),  86 
Atlantic    Coast    Line    Rd.    Co.    v. 

Riverside  Mills  (219  U.  S.  186), 

200,  205,  232,  270 
Attorney  General  v.   A.   Booth  & 

Co.  (143  Mich.  89),  229,  330,  335, 

341 
Attorney  General  v.  Consolidated 

Gas  Co.   [.56  Misc.   (N.  Y.)  49], 

377 
Attorney  General  v.  Detroit  Com- 
mon   Council    (150    Mich.    310), 

277 
Attorney   General   v.   Preston    (53 

Mich.  177),  269 
Attorney     General     v.     Rumford 

Chemical  Works  (32  Fed.  591), 

282 
Attorney    General,  Matter  of  [124 

App.  Div.  (N.  Y.)  401],  418,  446 
Attorney  General,  Matter  of  (155 

N.  Y.  441),  496 
Attorney  General's  Appeal,  Matter 

of  [22  App.    Div.    (N.  Y.)  285], 

496 
Aurora  Water  Co.  v.  City  of  Aurora 

(129  Mo.  540),  277 


TABLE    OF   CASES   CITED 


XXIX 


[References  are  to  Sections] 


B 


Badger  Brass  Mfg.  Co.  v.  Daly  (137 

Wis.  601),  515 
Bagg  V.  Wilmington,  Columbia  & 

Augusta  R.  Co.  (109  N.  C.  279), 

16 
BagUn  V.  Cusenier  Co.  (221  U.  S. 

580),  288 
Bailey  v.  City  of  Philadelphia  (184 

Pa.  St.  594),  305 
Bailey   v.    Master   Plumbers    (103 

Tenn.  99),  384,  467 
Bailey  v.  Phillips  (159  Fed.  535), 

106 
Ball    V.    Texarkana    Water    Corp. 

[(Tex.   Civ.   App.,   1910),  127  S. 

W.  1068],  277 
Ballantine  v.  Cummings   (220  Pa. 

St.  621),  3 
Baltimore,  City  of,  v.  Chesapeake 

&  Potomac  Teleph.  Co.  (92  Md. 

692),  71 
Baltzer  v.  North  Carolina  (161  U. 

S.  240),  212 
Bancroft  v.  Union  Embossing  Co. 

(72  N.  H.  402),  106,  109 
Bank  of  Augusta  v.  Earle  [13  Pet. 

(638  U.  S.)  519],  272 
Bank  of  California  v.  San  Francisco 

(142  Cal.  276),  272 
Bank  of  Commerce  v.  New  York 

City  [2  Black  (67  U.  S.),  620],  203 
Bank  of  Commerce,  In  re  Apphca- 

tion  of  (153  Ind.  460),  264,  266 
Bank  of  Toledo  v.  City  of  Toledo 

(1   Ohio   St.    622),    70,   71,   72, 

275 
Banks  v.   Manchester   (128  U.  S. 

244),  285 
Bannon  &  Mulkey  v.  United  States 

(156  U.  S.  464),  64 
Baratario  Canning  Co.  v.  Jouhan 

(80  Miss.  555),  402 
Barbee  v.  Plank  Road  Co.  (6  Fla. 

262),  8 
Barbier  v.  Connolly  (113  U.  S.  27), 

370 
Barnes  v.   Chicago  Typographical 

Union  (232  111.  424),  504 


Barnes  &  Co.  v.  Berry  (157  Fed. 

883),  524,  528 
Bamett    v.     Powell     [16    Ky.     (6 

Littell)  409],  18 
Barr  v.  Craven  (89  L.  T.  574),  106 
Barr  v.  Essex  Trades  Council  (53 

N.  J.  Eq.  101),  31,  502,  517 
Barrett  v.  State  [(Ind.,   1911),  93 

N.  E.  543],  227,  271 
Barron   v.    Baltimore    [7   Pet.    (32 

U.  S.)  243],  227 
Bartholomew  v.  City  of  Austin  (85 

Fed.  3.59),  8,  257,  275,  328 
Barton  v.  Mulvane  (59  Kan.  313), 

461 
Bauer  v.  State  (3  Okla.  Cr.  529),  3 
Beal  V.  Chase  (31  Mich.  490),  109 
Beales  v.  Amador    County   Super- 
visors (35  Cal.  624),  269 
Bear    v.    City    of    Cedar    Rapids 

[(Iowa,  1910),    126  N.  W.    324], 

277 
Beard  v.  Dennis  (6  Ind.  200),  106, 

109 
Beattie  v.  Callanan  (81  N.  Y.  Supp. 

413),  515,  516 
Beatton  v.  Tarrant  (102    111.  App. 

124),  505,  506 
Beck  V.  Railway  Teamsters'  Pro- 
tective Union   (118  Mich.  497), 

31,  35,  497,  498,  502,  505,  509, 

518,  519,  521 
Beechley   v.    MulviUe    (102    Iowa, 

602),  18,  421,  452,  453 
Beekman  v.  Third  Ave.   Rd.   Co. 

(153  N.  Y.  144),  316 
Beetham  v.  Frazer  (21  T.  L.  R.  8), 

106 
Beinecke  Coal  Min.  Co.  v.  Wood 

(112  Fed.  477),  516 
Bell,  In  re  (69  Kan.  855),  495 
Belmont  Bridge  Co.  [18  How.  (59 

U.  S.)  421],  270 
Bement   v.    National   Harrow   Co. 

(186  U.  S.70),  (see  "Appendix  A") 

134,  135,  136,  157 
Bennett  v.  Nichols  (9  Ariz.  138), 

264 
Berea  College  v.  Kentucky  (211  U. 

S.  46),  534 


XXX 


TABLE  OF  CASES  CITED 


[References  are  to  Sections] 


Berlin    Machine    Works    v.    Perry 

(71  Wis.  495),  lOG 
Bessemer,    City    of,    v.    Bessemer 

Waterworks  (152  Ala.  391),  277 
Bessne   &   Co.   v.    Corn   Products 

Mfg.  Co.  (Ind.  App.,  1911)  (94 

N.  E.  353),  4.59,  4(50 
Best  V.  Bander  [29  How.  Pr.   (N. 

Y.)  489],  18 
Beyer  v.  National  Building  &  Loan 

Assoc.  (131  Ala.  3(59),  2G4 
Bigelow  V.  Calumet  &  Hecla  Min. 

Co.    (1G7   Fed.    721),    118,    120, 

153,  183 
Bigelow  V.  Calumet  &  Hecla  Min. 

Co.  (155  Fed.  869),  161,  378,  394 
Bigelow  V.  Old  Dominion   Copper 

Mining  &  Smelting  Co.  (74  N.  J. 

Eq.  457),  86 
Bilafsky    v.     Conveyancers'    Title 

Ins.  Co.  (192  Mass.  .504),  60 
Bingham    v.    Brands    (119    Mich. 

255),  344,  402 
Binney  v.  Cumberland  Ely  Coffee 

Co.  (183  Fed.  650),  175 
Binns  v.  Vitagraph  Co.  of  America 

(124  N.  Y.  Supp.  515),  25 
Birmingham  &  Pratt  Mines  St.  Ry. 

Co.  V.  Birmingham  St.  Ry.  Co. 

(79  Ala.  465),  277,  316 
Birmingham    Mineral    R.    Co.    v. 

Parsons  (100  Ala.  662),  271 
Bishop  V.  American  Preservers'  Co. 

(51  Fed.  272),  173 
Bishop  V.  American  Preservers'  Co. 

(105  Fed.  845),  162 
Bishop  V.  Palmer  (146  Mass.  469), 

97,  106 
Blackstone  v.  Miller  (188  U.  S.  189), 

213 
Blackstone's  Estate,  In  re  (171  U. 

S.  682),  213 
Blair  v.  Chicago  (201  U.  S.  400), 

71,  218,  275 
Blake  v.  McClung  (172  U.  S.  239), 

370 
Blake  v.  Winona  &  St.  Peter  Co. 

(19  Minn.  418),  272 
Blankensliip   v.   City   of   Sherman 

(33  Tex.  Civ.  App.  507),  277 


Blanner  v.  Williams  Co.  (69  N.  Y. 

Supp.  165),  106 
Blindell  v.  Hagan  (54  Fed.  40),  161, 

505 
Blocki  V.  People  (220  111.  444),  71 
Bloom  V.  Home  Ins.  Co.  (91  Ark. 

367),  86,  106,  409 
Blount  Mfg.  Co.  V.  Yale  &  Towne 

Mfg.  Co.  (166  Fed.  555),  134,  136 
Board  of  School  Directors  of  Madi- 
son   Parish   v.    Coltharp    [(La., 

1911),  54  So.  299],  266 
Board  of  Trade  v.  Christie  Grain 

&  Stock  Co.  (198  U.  S.  236),  150 
Boasberg    v.    Walker    (HI    Minn. 

445),    60 
Boatmans'  Bank  v.  Fritzlein  (175 

Fed.  183),  461 
Bobbs-Merrill  Co.   v.   Straus   (210 

U.  S.  3.39),  287 
Bobbs-Merrill  Co.  v.   Straus   (147 

Fed.  15),  286 
Bobbs-Merrill  Co.  v.   Straus   (139 

Fed.  155),  133 
Bohmer  v.  Haffen  (161  N.  Y.  390), 

335 
Bohn  Manufacturing  Co.  v.  Hollis 

(54  Minn.  223),  60,  502 
Bong   v.   Campbell   Art   Co.    (214 

U.  S.  236),  287 
Booth  V.  People  (184  U.  S.  425), 

231 
Booth  V.  Town  of  Woodbury  (32 

Conn.  118),  269 
Booth  &  Co.  V.  Davis   (127  Fed. 

875),  130 
Booth  &  Co.  v.  Seibold  [37  Misc. 

R.  (N.  Y.)  10],  409 
Borough  of.    See  name  of. 
Boston  &  Albany  Rd.  Co.  v.  Mer- 
cantile   Trust    &    Deposit    Co. 

(82  Md.,  535,  34  Atl.  778),  86 
Boulton  v.  Bull  (2  H.  Bl.  463),  296 
Bowman  v.  Chicago  &  N.  W.  R. 

Co.  (125  U.  S.  46.5),  16 
Boyce,  Ex  parte  (27  Nev.  299),  269 
Boyd  v.  United  States  (116  U.  S. 

616)    (see  "Appendix  A"). 
Brace  Bros.  v.  Evans  (5  Pa.  Co. 

Ct.  R.  163),  31 


TABLE    OF   CASES   CITED 


XXXI 


[References 

Brady  v.  Daly  (175  U.  S.  148),  189 
Brady    v.    Pennsylvania    Rd.    Co. 

(2  1.  C.  C.  R.  131),  200 
Branson   v.   Industrial  Workers  of 

the  World  (30  Nev.  270),  31 
Brass  v.  Stoeser  (153  U.  S.  391), 

271 
Brenham    v.    Becker    (1    White   & 

Willson's     Civ.     Cas.,     §§  1243, 

1244),  278 
Brenham,    City    of,    v.    Brenham 

Water  Co.    (67  Tex.   542),   257, 

277,  294,  326,  328 
Bridge  Proprietors  v.  Hoboken  Co. 

[1  Wall.  (68  U.  S.)  116],  219 
I^ridges    v.    Shallcross    (6    W.    Va. 

562),  269 
Bridgewater  Ferry  Co.   v.   Sharon 

Bridge  Co.  (145  Pa.  St.  404),  300 
Brimmer   v.    Redman    (138    U.    S. 

78)    (see   "Appendix  A") 
Brine  v.  Insurance  Co.   (96  U.  S. 

627),  214 
Broad  v.  Jollyfe   (Cro.  Jac.  596), 

88 
Broadway   &   Locust   Point   Ferry 

Co.    V.    Hankey    (31    Md.    346), 

302 
Brodnax   v.    Missouri    (219    U.    S. 

285),  234,  271 
Brooklyn  Distilling  Co.  v.  Standard 

Distilling     &     Distributing     Co. 

[120    App.    Div.    (N.   Y.)    237], 

463 
Brooklyn   Elevated   R.    R.   Co.    v. 

Brooklyn,  Bath  &  West  End  R. 

R.  Co.  [23  App.  Div.  (N.  Y.)  29], 

395 
Brothers  v.  Brothers  (29  Colo.  69), 

21 
Brown  v.  Epps  (91  Va.  726),  269 
Brown  v.  Haselman  (79  Ark.  213), 

350 
Brown  v.  Houston  (114  U.  S.  622), 

270 
Brown    v.    Jacobs    Pharmacy    Co. 

(115  Ga.  429),  80 
Brown  v.  Kling  (101  Cal.  295),  108 
Brown    v.    Maryland    [12    Wheat. 

(25  U.  S.)  419],  16,  271 


are  to  Sections] 

Brown  v.  Rounsavell  (78  III.  589), 
82 

Brownsville  Glass  Co.  v.  Appert 
Glfiss  Co.  (136  Fed.  240),  1 

Buckhout  V.  Witner  (157  Mich. 
406),  410 

Buckehom  Plaster  Co.  v.  Consoli- 
dated Plaster  Co.  (47  Colo.  516), 
462 

Budd  V.  New  York  (143  U.  S.  517), 
271 

Bullitt  V.  Sturgeon  (127  Ky.  332), 
269 

Bullock  V.  Johnson  (110  Ga.  486), 
106 

Burroughs  v.  City  of  Cherokee  (134 
Iowa,  429),  277 

Burrows  v.  Interborough  Metro- 
politan Co.  (156  Fed.  3S9),  49, 
397 

Bush  V.  New  York  Life  Ins.  Co. 
(119  N.  Y.  Supp.  796),  264 

Buslmcll  V.  Beloit  (10  Wis.  195), 
269 

Butchers'  Union  Slaughter-House 
&  Live  Stock  Landing  Co.  v. 
Crescent  City  Live  Stock  Land- 
ing &  Slaughter-House  Co.  (Ill 
U.  S.  746),  8,  82,  89 

Butterick  Pubhshing  Co.  v.  Fisher 
(203  iMass.  122),  371 

Butterick  Publishing  Co.  v.  Rowe 
(141  Wis.  533),  426 

Butterick  Pub.  Co.  v.  Typograph- 
ical Union  (100  N.  Y.  Supp.  292), 
505,  519 


Clain  v.  City  of  Wyoming  (104  111. 

App.  538),  272 
Caldwell  v.  Texas  (137  U.  S.  692), 

230 
Caldwell  v.  Vanvlissengen  (9  Harr. 

415),  282 
California  State  Teleg.  Co.  v.  Alt  a 

Teleg.    Co.    (22    Cal.    399),    73, 

318 
Cahfornia    Steam    Navigation    Co, 

V.  Wright  (6  Cal.  258),  82 


xxxu 


TABLE   OF   CASES   CITED 


[References  are  to  Sections] 


Caliga  V.   Inter-Ocean   Newspaper 

Co.  (215  U.  S.  182),  287 
Cameron  Town  Mut.  Fire,  Light- 
ning &  Windstorm  Ins.  Co.,  In 

re  (96  Fed.  756),  26 
Camfield    v.    United    States    (167 

U.  S.  518),  271 
Campbell   v.    Chicago,    Milwaukee 

&   St.   Paul   Ry.   Co.    (86  Iowa, 

587),  16 
Campbell  v.  Haverhill  (155   U.  S. 

610),  189 
Canadian  Pac.  R.  Co.  v.  Western 

Union  Teleg.  Co.  (17  Can.  S.  C. 

151),  94 
Canal  Company  v.  Clark  [13  Wall. 

(80  U.  S.)  311],  288 
Canterberry  v.  Miller  (76  111.  355), 

21 
Cape  May,  Delaware  &  S.  P.  R. 

Co.  V.  City  of  Cape  May  (59  N. 

J.  L.  393),  278 
Capital    City    Dairy   Co.    v.    Ohio 

(183  U.  S.  238),  227 
Capital  City  Light  &  Fuel  Co.  v. 

City  of  TaUahassee  (42  Fla.  462), 

223 
Carew  v.   Rutherford   (106   Mass. 

1),  498,  502,  509 
Carroll  v.  CampbeU  (110  Mo.  557), 

300 
Carroll  v.  Greenwich  Ins.  Co.  (199 

U.  S.  401),  236,  264,  271,  337, 

370 
Carson   River   Lumbering   Co.    v. 

Patterson  (33  Cal.  334),  16 
Carter  v.  Ailing  (43  Fed.  208),  103, 

106 
Carter  v.  Oster  (134  Mo.  App.  146), 

512 
Casey  v.  Cincinnati  Typographical 

Union    (45   Fed.    135),   31,   502, 

505 
Casey    v.    State    (53    Ark.    334), 

350 
Cedar  Rapids  Water  Co.  v.  City  of 

Cedar  Rapids   (118  Iowa,   234), 

325 
Central  Coal  &  Coke  Co.  v.  Hart- 
man  (111  Fed.  96),  188 


Central  Land  Co.  v.  Laidley  (159 

U.  S.  103),  209 
Central  New  York  Teleph.  &  Teleg. 

Co.  v.  Averill  (199  N.  Y.  128), 

88,  92 
Central  New  York  Teleph.  &  Teleg. 

Co.   v.   Averill    (129   App.   Div. 

752),  86,  232 
Central  New  York  Teleph.  &  Teleg. 

Co.  V.  Averill  (114  N.  Y.  Supp. 

129),  86,  232 
Central  New  York  Teleph.  &  Teleg. 

Co.  V.  Averill  (110  N.  Y.  Supp. 

273),  97 
Central  Ohio  Salt  Co.  v.  Guthrie 

(35  Ohio  St.  666),  86,  87 
Central  Passenger  Ry.  Co.  v.  Louis- 
ville Bagging  Manfg.  Co.  (3  Am. 

Elec.  Cas.  2.52)  278. 
Central  Shade  Roller  Co.  v.  Cush- 

man  (143  Mass.  353),  1 
Central    Trans.    Co.    v.    Pullman's 

Palace  Car  Co.   (139  U.  S.  24), 

197,  275 
Central  Trust  Co.   v.   Ohio  Cent. 

R.  Co.  (23  Fed.  306),  197 
Central  Trust  Co.  of  New  York  v. 

Municipal     Traction     Co.     (169 

Fed.  308),  275 
Champer   v.    City   of   Greencastle 

(138  Ind.  339),  271 
Champion  v.  Ames.     See  Lottery 

case. 
Chappel  v.   Brock  way  21    [Wend. 

(N.  Y.)  157],  106 
Charge  to  Grand  Jury,  In  re  (151 

Fed.  834),  16,  114 
Charles  E.  Wisenall,  The  (74  Fed. 

802),  155 
Charles    River    Bridge    v.    Warren 

Bridge  [11  Pet.  (36  U.  S.)  420], 

8,  66,  71,  72,  219,  272,  275,  276, 

296 
Chattanooga     Foundry     &     Pipe 

Works  V.  Atlanta  (203  U.  S.  390), 

160,  164,  191 
Chenango  Bank  v.  Brown  (26  N. 

Y.  467),  269 
Chesapeake   &    Ohio    Fuel   Co.    v. 

United    States    (115    Fed.    610) 


TABLE   OF   CASES   CITED 


XXXUl 


[References  are 

(see  "Appendix  A"),  24,  65,  80, 

82,  83,  112,  118,  121,  154 
Chicago  V.  Sheldon  [9  Wall.  (76  U. 

S.)  50],  212 
Chicago  V.  Northwestern  Rd.  Co. 

Sec  Railroad  Co.  v.  Fuller. 
Chiciigo,  V.    Rumpff    (45    III.    <J0), 

277,  280,  315,  330 
Chicago,   V.  Weber   (216  111.    304), 

271,  274 
Chicago   &    Western   Indiana   Rd. 

Co.  V.  Dunbar  (95  111.  571),  74, 

272 
Chicago,  Burlington  &  Quincy  Rd. 

Co.  V.  Chicago  (166  U.  S.  226), 

228 
Chicago,  Burlington  &  Quincy  Rd. 

Co.   V.   Drainage  Commrs.    (200 

U.  S.  561),  271 
Chicago,  BurUngton  &  Quincy  Rd. 

Co.  V.  McGuire  (219  U.  S.  549), 

231,  271 
Chicago,  Burlington  &  Quincy   Rd. 

Co.  V.  Nebraska  (47  Neb.  549), 

278 
Chicago,  Burlington  &  Quincy  Rd. 

Co.  V.  United  States  (220  U.  S. 

559)    ("Appendi.x  A") 
Chicago  City  Ry.  v.  People  (73  111. 

541),  272 
Chicago  Gaslight  &  Coke  Co.   v. 

People's  Gas  Light  &  Coke  Co. 

(121  111.  530),  92 
Chicago,  Indianapolis  &  Louisville 

Ry.  Co.  V.  Southern  Indiana  Ry. 

Co.  (38  Ind.  App.  234),  395 
Chicago,  Indianapolis  &  Louisville 

Ry.   Co.   V.   United  States   (219 

U.  S.  486),  270 
Chicago,    Milwaukee    &    St.    Paul 

Ry.  Co.  V.  Wabash,  St.  Louis  & 

Pacific  Ry.  Co.  (61  Fed.  993),  197 
Chicago,  Rock  Island  &  Pacific  Ry. 

Co.  V.  Arkansas  (219  U.  S.  453), 

270 
Chicago,  St.  L.  &  X.  G.  R.  Co.  v. 

Pullman  Southern  Car  Co.   (139 

U.  S.  79),  102 
Chicago    Union    Traction    Co.    v. 

City  of  Chicago  (199  111.  484),  278 


to  Sections] 

Chicago  Wall  Paper  Mills  v.  Gen- 
eral Wall  Paper  Co.  (147  Fed. 
491),  155,  455,  460 

Chicago,  Wilmington  &  Vermillion 
Coal  Co.  V.  People  (214  111.  421), 
354,  440,  442,  455,  457,  475 

Church  V.  Kelsey  (121  U.  S.  282), 
209 

Churchill  v.  Gronewig  (81  Iowa, 
449),  21 

Cilley  V.  United  Shoe  Mach.  Co. 
(152  Fed.  726),  173 

Cincinnati,  P.  B.  S.  &  P.  Packet 
Co.  V.  Bay  (200  U.  S.  179)  (see 
"Appendix  A"),   152 

Cincinnati  Street  Ry.  Co.  v.  Snell 
(193  U.  S.  30),  236 

Cincinnati,  W.  &  Z.  R.  Co.  v.  Su- 
pervi.sors  (1  Ohio  St.  77),  269 

Citizens'  Bank  of  Louisiana  v. 
Parker  (192  U.  S.  73),  263 

Citizens'  Gaslight  Co.  v.  Louis- 
ville Gas  Co.,  (81  Ky.  263),  303 

Citizens'  Light,  Heat  &  Power  Co. 
V.  Montgomery  Light  &  Water 
Power  Co.  (171  Fed.  553),  68,  241 

Citizens'  St.  Ry.  Co.  v.  Africa  (100 
Tenn.  26),  71 

Citizens'  St.  Ry.  Co.  v.  Detroit 
(171  U.  S.  48),  294,  316 

City.     See  name  of. 

City  V.  Lamson  [9  Wall.  (76  U.  S.) 
477],  212 

City  Carpet  Beating  Works  v. 
Jones  (102  Cal.  506),  108 

City  Street  Improvement  Co.  v. 
Regents'  University  of  Cali- 
fornia (158  Cal.  776),  269 

Civil  Rights  Cases  (109  U.  S.  3),  228 

Clark  v.  City  of  South  Bend  (85 
Ind.  276),  277 

Clark  V.  Cyclone  Woven  Wire 
Fence  Co.  (22  Tex.  Civ.  App. 
41),  402,  403 

Clark  V.  Needham  (125  Mich.  84), 
86,  87 

Clark,  In  re  (65  Conn.  17),  271 

Clarksburg  Electric  Light  Co.  v. 
City  of  Clarksburg  (47  W.  Va. 
739),  223,  299 


XXXIV 


TABLE    OF   CASES   CITED 


[References  are 

Clark's  Estate,  In  re  (195  Pa.  St. 

520),  263 
Clemmitt  v.  Watson  (14  Ind.  App. 

38),  60 
demons    v.    Meadows    (123    Ky. 

178),  106 
Cleveland,    Columbus,    Cincinnati 

&  Indianapolis  R.  Co.  v.  Closser 

(126  Ind.  348),  92 
Cleveland     Electric    Ry.     Co.     v. 

Cleveland   (204  U.  S.   116),   71, 

275 
Clifford  V.  State  (29  Wis.  327),  26 
Clinton   v.    Englebrecht    [13  Wall. 

(U.  S.)  434],  368 
Coe  V.  Errol  (116  U.  S.  517),  16 
Coeur     D'Alene    Consol.    &    Min. 

Co.  V.  Miners'  Union  of  Wardner 

(51  Fed.  260),  505 
Coffey  V.  Harlan  County  (204  U. 

S.  659),  342 
Coffeyville,  etc.,  Co.  v.  Perry  (69 

Kan.  297),   536 
Cohen  v.  Berlin  &  Jones  Envelope 

Co.  (166  N.  Y.  292),  103 
Cohen  v.  United  Garment  Workers 

(72  N.  Y.  Supp.  341),  518,  519 
Cohens  v.  Virginia  [6  Wheat.  (19 

U.  S.)  264],  203 
Cole  V.  Edwards  (93  Iowa,  477),  108 
Collector,   The,   v.   Day  [11  Wall. 

(78  U.  S.)  113],  226 
Colorado  Telephone  Co.  v.  Fields 

[(N.  M.,  1910),  110  Pac.  571],  275 
Columbia  Carriage  Co.   v.   Hatch 

(19  Tex.  Civ.  App.  120),  402,  462 
Columbus  V.   Mercantile  Trust  & 

Deposit  Co.  of  Bait.  (218  U.  S. 

645),  225,  271 
Combs  V.  Sewell  (23  Ky.  L.  Rep. 

169),  300 
Comer   v.    Burton-Lingo    Co.    (24 

Tex.  Civ.  App.  251),  409 
Commonwealth  v.    Alger  [7  Cush. 

(6  Maes.)  53],  271 
Commonwealth  v.  Bavarian  Brew- 
ing Co.  (112  Ky.  925),  348,  466 
Commonwealth  v.  Bavarian  Brew- 
ing Co.  (23  Ky.  Law  Rep.  2334), 

413 


to  Sections] 

Commonwealth    v.    City   of    Phil- 

adelpliia  (132  Pa.  St.  288),  277 
Commonwealth     v.     Drewry     [15 

Gratt.  (Va.)  1],  269 
Commonwealth    v.     Echpse    Hay 

Press  Co.  (31  Ky.  L.  Rep.  824), 

16 
Commonwealth    v.    Emmers    (221 

Pa.  St.  298),  264 
Commonwealth     v.     Emmers     (33 

Pa.  Super.  Ct.  151),  264 
Commonwealth  v.  Gloucester  Ferry 

Co.  (98  Pa.  St.  105),  16 
Commonwealth  v.  Grinstead   (111 

Ky.  223),  82,  401 
Commonwealth  v.  Grinstead   (108 

Ky.  59),  348,  374,  469 
Commonwealth    v.     Hodges     (137 

Ky.  233),  244,  375 
Commonwealth  v.   Housatonic  R. 

Co.  (143  Mass.  264),  16 
Commonwealth  v.  Hunt  [4  MetC. 

(Mass.)   Ill],  504 
Commonwealth     v.     International 

Harvester    Co.    (131    Ky.    551), 

229,  244,  348,  350,  354,  364,  375, 

473 
Commonwealth  v.  Lancaster  Sav. 

Bk.  (123  Mass.  493),  18 
Commonwealth  v.   Mallet  (27  Pa. 

Super.  Ct.  41),  269 
Commonwealth    v.     Peasler     (177 

Mass.  267),  183 
Commonwealth    v.    People's    Five 

Cent    Sav.    Bank    [5    Allen    (87 

Mass.),  428],   18 
Commonwealth    v.     Strauss     (191 

Mass.  545),  371 
Commonwealth    v.    Strauss     (188 

Mass.  229),  371 
Commonwealth   v.    Telly    (33   Pa. 

Super.  Ct.  35),  60 
Concord  Rd.  v.  Greeley  (17  N.  H. 

47),  269 
Connecticut  Mut.  Life  Ins.  Co.  v. 

Cushman  (108  U.  S.  51),  214 
Connett  v.  United  Hatters  of  North 

America  (76  N.  J.  Eq.  202),  501, 

514,  516 
Connolly  v.  Union  Sewer  Pipe  Co. 


TABLE   OF   CASES   CITED 


XXXV 


[References 

(184  U.  S.  540),   155,   156,   157, 

159,  161,  192,  230,  237,  376 
Conradt  v.  Miller    (2  Alaska,  433), 

277 
Consolidated  Coal  Co.  v.  Schnnis- 

seur  (135  III.  371),  88 
Consolidated    Forwarding    Co.    v. 

Southern  Pac.  Co.  (9  I.  C.  C.  R. 

182),  194 
Consolidated  Grocery  Co.  v.  Ham- 
mond (175  Fed.  641),  182 
Consumers'     Oil    Co.    v.     Nunne- 

maker   (142  Ind.   560),  86,    102, 

103,  106 
Continental    Ins.    Co.    v.    Parkers 

(142  Ala.  650),  271 
Continental  Securities  Co.  v.  Inter- 
borough  Rap.  Transit  Co.    (165 

Fed.  945),  8,  362 
Continental    Wall    Paper    Co.    v. 

Voight  &  Sons  Co.   (212  U.  S. 

227),  13,  125,  145,  157 
Converse  v.   ^Etna    National    Bk. 

(79  Conn.  163),  214 
Cooley    V.    Board    of    Wardens    of 

Pliila.  [12  How.  (53  U.  S.)  299], 

16 
Cooper  V.  Edebom  (31  Pittsb.  Leg. 

J.  (N.  S.)  50],  108 
Coquard   v.    National   Linseed   Oil 

Co.  (171  111.  480),  445 
Corfield  v.  Corj-ell  (4  W^ash.  371), 

16 
Coming,  In  re  (51  Fed.  205),  22, 178 
Cosmopolitan     Shipping     Co.     v. 

Hamburg-American    Packet  Co. 

(13  I.  C.  R.  266),  199 
Cottington  v.  Swan  (128  Wis.  321), 

106,  109 
Coulv  &  Duncan  v.  Skeen  (109  Va. 

6),  269 
Council  Bluffs,  City  of,  v.  Kansas 

City,  St.  Joseph  &  Council  Bluffs 

R.  Co.  (45  Iowa,  338),  16,  27 
Coverly    v.    Terminal    Warehouse 

Co.  (75  N.  Y.  Supp.  145),  86 
Covington  &  Cincinnati  Bridge  Co. 

V.  Kentucky  (154  U.  S.  204),  270 
Cowan  V.  Fairbrother  (118  N.  C. 

406),  86,  92,  106,  109 


are  to  Sections] 

Crandall  v.  Nevada  [6  WaU.  (73  U. 
S.)  35],  270 

Crawford  v.  Wick  (18  Ohio  St.  190), 
87 

Crescent  City  Gaslight  Co.  v.  New 
Orleans  Gaslight  Co.  (27  La. 
Ann.  138),  274,  303 

Cross  V.  North  Carohna  (132  U.  S. 
131),  168 

Crossley  v.  California  (168  U.  S. 
640),  168 

Crowley  v.  Christensen  (137  U.  S. 
89),  231 

Crump  V.  Commonwealth  (84  Va. 
927),  31,  33,  502,  503,  516,  517 

Crump  V.  Ligon  (37  Tex.  Civ.  App. 
172),  409 

Crump,  In  re  (84  Va.  927),  31,  33, 
502,  503,  516,  517 

Crystal  Ice  Co.  v.  Wylie  (65  Kan. 
104),  462 

Crystal  Ice  &  Mfg.  Co.  v.  State  (23 
Tex.  Civ.  App.  293),  420 

Culp  V.  Love  (127  N.  C.  457),  90 

Cumberland  Telephone  &  Tele- 
graph Co.  V.  Attorney  General 
[(Miss.,  1911),  54  So.  670],  361, 
390,  434,  441 

Cumberland  Telephone  &  Tele- 
graph Co.  V.  State  ex  rel.  At- 
torney General  [(Miss.,  1911),  54 
So.  446],  390,  434,  441 

Cummins  v.  Reading  School  Dis- 
trict (198  U.  S.  11),  271 

Cummins  v.  Union  Bluestone  Co. 
(164  N.  Y.  401),  417 

Cummins  v.  Union  Bluestone  Co. 
(44  N.  Y.  Supp.  787),  90 

Curran  v.  .\rkansas  [15  How.  (56 
U.  S.)  304],  214 

Curran  v.  Galen  [77  Hun  (N.  Y.), 
610],  498 

Curran  v.  Galen  (152  N.  Y.  33), 
498,  511 

Curryer  V.  Merrill  (25  Minn.  1),  314 

Curten  v.  Atkinson  (54  N.  C.  133), 
26 

Curtis  V.  Gokey  (69  N.  Y.  300),  106 

Cutting  V.  Florida  Ry.  &  Nav.  Co. 
(46  Fed.  641),  200 


XXXVl 


TABLE   OF   CASES   CITED 


[References  arc  to  Sections] 


D 


Dabs  V.  State  (39  Ark.  355),  271 
Daniel  Ball,  The  [10  Wall.  (77  U. 

S.)  557],  200 
Daniels  v.  Tearncy  (102  U.  S.  415), 

214 
Danville,   City  of,   v.   Noone   (103 

111.  App.  290),  280 
Darcantel  v.  Slaughter-House,  etc., 

Co.  (44  La.  Ann.  632),  8 
Dartmouth  College  v.   Woodward 

[4  Wheat.  (17  U.  S.)  518],  21,  216 
Davenport     v.     Kleinschmidt     (6 

Mont.  502),  6,  8,  239,  272,  277, 

280,  328,  330 
Davenport  Gas  &  Electric  Co.  v. 

City  of    Davenport    (124  Iowa, 

22),  298 
Davidson  v.  New  Orleans  (96  U. 

S.  97),  230 
Davidson,  The  (122  Fed.  1006),  321 
Davies  v.  Barney  [2  Gill  &  J.  (Md.) 

382],  106 
Davies  v.  Racer  [72  Hun  (N.  Y.) 

43],  108 
Davies,  Matter  of  (168  N.  Y.  89), 

377,  442,  495 
Davis  V.  Booth  &  Co.   (131  Fed. 

31),  130,  409 
Davis  V.  Mason  (5  T.  Rep.  118),  94 
Davis  v.  Starrett  (97  Me.  568),  31 
Davis  V.  United  Portable  Hoisting 

Engineers  (51  N.  Y.  Supp.  180), 

511 
Davis  V.  Vories  (141  Mo.  234),  286 
Davis    Machine    Co.    v.    Robinson 

(84  N.  Y.  Supp.  837),  511 
Dawden  &  Pook,  Ltd.,  v.  Pook  [Law 

Rep.  (1904)  1  K.  B.  D.  45],  103 
Dealy  v.  United  States  (152  U.  S. 

539),  64,  85 
Dean  v.  Clark  (30  N.  Y.  Supp.  45), 

86 
Debs,  In  re  (158  U.  S.  564),  114,  503 
Deems    v.    Mayor    &    Council    of 

Baltimore  (80  Md.  173),  271 
Delaware,  Lackawanna  &  Western 

R.  R.  Co.  v.  Bowns  (58  N.  Y. 

573),  41 


Delaware,  L.  &  W.  R.  Co.  v.  Frank 

(110  Fed.  6S9),  163 
Delaware,  L.  &  W.  R.  Co.  v.  Kut- 

ter  (147  Fed.  51),  151 
Delaware,  L.  &  W.  R.  Co.  v.  Switch- 
men's Union  of   North  America 

(158  Fed.  541),  501 
Dennehy  v.  McNulta  (86  Fed.  825), 

155,  460 
Denny  v.  Bennett  (128  U.  S.  489), 

214 
Denver  &  Swansea  Ry.  Co.  v.  Den- 
ver City  Ry.  Co.  (2  Colo.  673), 

272,  316 
Denver,   City  of,  v.  Hubbard   (17 

Colo.  App.  346),  298 
Desbrow   v.    Cass   County   Suprs. 

(119  Iowa,  538),  86 
Detroit  Citizens'  Street  Ry.  Co.  v. 

Detroit  Ry.  (171  U.  S.  48),  277 
Detroit  Citizens'  St.  R.  Co.  v.  De- 
troit (110  Mich.  384),  71 
Detroit  Salt  Co.  v.  National  Salt 

Co.   (134  Mich.   103),  378,  433, 

482 
Diamond  Match  Co.  v.  Roeber  (106 

N.  Y.  473),  88,  99,  108,  109 
Dickinson  v.  Cunningham  (140  Ala. 

527),  314 
Dillon  V.  Erie  R.  Co.   (43  N.  Y. 

Supp.  320),  16 
Disbrow     v.     Creamery     Package 

Mfg.  Co.  (Ill  Minn.  237),  460 
Distilling  &  Cattle  Feeding  Co.  v. 

People  (156  111.  448),  100,  335 
District  of  Columbia  v.  Brooks  (214 

U.  S.  138),  238,  271 
Dodge  V.   Woolsey   [18  How.    (59 

U.  S.)  331],  203 
Doherty  &  Co.,  v.  Rice  (186  Fed. 

204),  392 
Donelson  v.  Beckett  (4  Burr,  2408), 

287 
Dorsey,  In  re  [7  Port.  (Ala.)  293], 

269 
Douglass  v.  Kentucky  (168  U.  S. 

488),  218 
Downes  v.  Bennett  (63  Kan.  653), 

415 
Downing  v.  Lewis  (59  Neb.  38),  86 


TABLE    OF   CASES   CITED 
[References  are  to  Sections] 


XXXVll 


Downing  v.  Lewis  (56  Neb.  386), 

411 
Dozier  v.  Alabama  (218  U.  S.  124), 

207 
Dr.  Miles  Medical  Co.  v.  John  D. 

Park  &  Sons  Co.  (164  Fed.  803), 

138 
Drowin  v.  Boston  &  Maine  Rd.  Co. 

(74  Vt.  343),  313 
Dueber  Watch-Case   Mfg.   Co.   v. 

Howard  Watch  &  Clock  Co.  (66 

F'cd.  637),  24,  168,  173 
Duffy  V.  Stockey  (11  Ind.  70),  109 
Dunbar    v.    American    Teloph.    & 

Telpg.  Co.  (238  III.  456),  106,  335 
Duncan    v.    Atchison,    Topeka    & 

Santa  Fe  Rd.  Co.  (6  I.  C.  C.  R. 

85),  194 
Dunshcc     V.     Standard     Oil     Co. 

[(Iowa,  1910),  126  N.  W.  342],  60 
Dyer  v.  Tuskaloo-sa  Bridge  Co.  [2 

Port.  (.Via.)  296],  72 

E 

Eagle  Insurance  Co.  v.  Ohio  (153 

U.  S.  440),  271 
Earlville,  City  of,  v.  Radley  (237 

111.  242),  277 
East  India  Company  v.  Sandy's  (10 

Howell  State  Trials,  386),  8 
East  Line  &  R.  R.  Co.  v.  Rushing 

(60  Tex.  306),  275 
Eckerson  v.   City  of  Des   Moines 

(137  Iowa,  452),  269 
Economic  Power  &  Const.  Co.  v. 

City  of  Buffalo  (112  N.  Y.  Supp. 

1127),  265 
Edgar  Lumber  Co.  v.  Cornie  Stave 

Co.  [(Ark.,  1910),  130  S.  W.  452], 

106,  109 
Edgerton  v.  Hodge  (41  Vt.  676),  21 
Edwards  v.  Kearzey  (96  U.  S.  595), 

21,214 
Edwards  v.  National  Window  Glass 

Jobbers'  Assn.  (139  Fed.  795),  166 
Edwards  County  v.   Jennings    (89 

Tex.  618),  330 
Eisel  V.  Hayes  (141  Ind.  41),  108 
Elder  v.  Whitesides  (72  Fed.  724), 

505 


Elkhart,  City  of,  v.  Lipschitz  (164 

Ind.  671),  277 
Ellorman  v.  Chicago  Junction  Rys. 

and    Union   Stockyards  Co.    (49 

N.  J.  E(i.  217),  108,  109 
Elliman  v.  Carrington  [L.  R.  (1901) 

2  Ch.  275],  86 
Ellis  V.  Inman   Poulsen  &  Co.  (131 

Fed.  182),  173 
Elsey  Development  Co.  v.  Powell 

(147  Ala.  300),  269 
Embrj-    v.     Hargadine-McKittrick 

Dry  Goods  Co.   (127  Mo.   App. 

383),  21 
Emerson    v.    Commonwealth    (108 

Pa.  St.  Ill),  71,275 
Emery  v.  Ohio  Candle  Co.  (47  Ohio 

St.  320),  92 
TCmploying  Printers  Club  v.  Doctor 

Blosaer  Co.  (122  Ga.  .509),  437 
Enders  v.  Enders  (164  Pa.  St.  266), 

86 
Enfield  Toll  Bridge  Co.  v.  Hartford 

&  New  Haven  Rd.  Co.,  17  Conn. 

40),  296 
Engel  V.  O'Malley  (219  U.  S.  128), 

271 
Engles  V.  Morginstem  (85  Neb.  51), 

52,  86,  106 
Equitable  Life  Ins.  Society  v.  Com- 
monwealth (113  Ky.  126),  231 
Equitable  Loan  Investment  Assn.  v. 

Peed  (153  Ind.  697),  464 
Erdman  v.  Mitchell    (207    Pa.  St. 

79),  510 
Ertz  V.  Produce  Exchange  Co.  (82 

Minn.  173),  384,  453 
Espenson   v.    Koepke    (93    Minn. 

278),  106,  409 
Eureka  v.  Wilson  (15  Utah,  53),  278 
Evers  v.  Hudson  (36  Mont.  135), 269 
Ex  parte.    See  particular  name. 
Expre.ss  Cos.,  In  Matter  of  (1  I.  C. 

C.  R.  349),  194 


Fanning  v.  Gregour  [16  How.  (57 

U.  S.)  524],  301 
Fanning  v.  Osborne  (102  N.  Y.  441), 

316 


XXXVIU 


TABLE   OF   CASES  CITED 


[References  arc  to  Sections] 


r.  A.  Patrick  &  Co.  v.  Doschamp 

[(Wis.,  1911),  129  N.  W.  1093],  16 
Farmers'  Canal  Co.  v.   Frank   (72 

Neb.  136),  309 
Farmers'    Loan    &    Trust    Co.    v. 

Northern  Pac.  R.  Co.   (60  Fed. 

803),  41,  76,  50.5 
Farren  v.  Close  (Law   Rep.  4  Q.  B. 

602),  41,  97 
Farris  v.  Henderson  (1  Okla.  384), 

16 
Fearnley  v.  De  Main  villa  (5  Colo. 

App.  441),  86 
Fechteler  v.  Palm  Bros.  Co.   (133 

P^ed.  462),  391 
Ferris    v.    American    Brewing    Co. 

(159  Ind.  539),  88 
Field  V.  Barber  Asphalt  Co.   (194 

U.  S.  618),  112 
Finch  V.  Schneider  Granite  Co.  (187 

Mo.    244),    344,    349,    383,   417, 

465 
Finklea  v.  Farish   (160  Ala.  230), 

269 
Fire  Insurance  Companies  v.  State 

(75  Mi.ss.  24),  476 
Firemen's  Fund  Ins.  Co.  v.  Hellner 

(159  Ala.  447),  271 
First  Methodist  Episcopal  Church 

of  Chicago  V.  Dixon  (178  111.  260), 

263 
Fishburn  v.  City  of  Chicago  (171 

111.  338),  65 
Fisheries  Co.  v.  Lennen  (116  Fed. 

217),  86,  106 
Fisk  V.  Jefferson  Police  Jury  (116 

U.  S.  131),  217 
Fiske  V.  The  People  ex  rel.  Ray- 
mond (188  111.  206),  323 
Flaccus  V.  Smith  (199  Pa.  St.  128), 

515 
Flaherty  v.  Hanson  (215  U.  S.  515), 

271 
Flannagan  V.  Buxton  [(Wis.,  1911), 

129  N.  W.  642],  277 
Fleckenstein  Bros.  v.  Fleckenstein 

(76  N.  J.  L.  613),  88 
Flint  V.  Stone  Tracy  Co.  (220  U.  S. 

108),  268 
Florida  Central  &   P.   R.   Co.   v. 


Ocala  St.  &  S.  R.  Co.   (39  Fla. 

306),  316 
Ford  V.    Chicago    Milk    Shippers' 

Assoc.  (155  111.  166),  335,  344,  440 
Forrest  Photographic  Co.  v.  Hutch- 
inson  Grocery   Co.    [(Tex.    Civ. 

App.,  1908),  108  S.  W.  768],  403 
Fort  Worth  &  Denver  City  Ry.  Co. 

V.  Whitehead  (6  Tex.  Civ.  App. 

595),  26 
Foster  v.  Retail  Clerks'  Protective 

Assoc.  (78  N.  Y.  Supp.  860),  503, 

516,  517 
Prowls  V.  Park  (131  U.  S.  88),  102, 

108,  109 
Frank   v.    City   of   Decatur  [(Ind., 

1910)  92  N.  E.  173],  277 
Frank  Menne  Factory  v.  Harback 

(85  Ark.  278),  373,  480 
Franklin  County  Grammar  School 

V.  Bailey  (62  Vt.  467),  21 
Franklin  Union  v.  The  People  (220 

111.  355),  3,  60 
Freight  Bureau  v.  Cincinnati,  New 

Orleans  &  Texas  Pac.  Ry.  Co.  (6 

I.  C.  C.  R.  195),  194 
Freudenthal   v.    Espey     (45    Colo. 

488),  106,  109 
Fry  V.  State  (63  Ind.  552),  16 
Ft.  Smith  Light  &  Power  Co.  v. 

Kelley  (94  Ark.  461),  99, 101, 106, 

418 
Ft.  Worth  &  Denver  City  Ry.  Co.  v. 

State  (99  Tex.  34),  396 
Fuller  V.  Chicago  &  N.  W.  R.  Co. 

(31  Iowa,  187),  16 
Fullington   v.    Kyle    Lumber    Co. 

(139  Ala.  242),  87 
Fuqua,  Hinkle  &   Davis  v.   Pabst 

Brewing  Co.  (90  Tex.  298),  402 

G 

Gadsden  v.  City  of  Mitchell  (145 

Ala.  137),  325 
Gage  V.  State  (24  Oliio  Cir.  Ct.  R. 

724),  229 
Gale  V.  Village  of  Kalamazoo  (23 

Mich.  344),  280,  298,  310,  315, 

330 


TABLE    OF   CASES   CITED 


XXXIX 


[References  arc  to  Sections] 


Galindo  v.  Walter  (8  Cal.  App.  234), 

277 
Garland  v.  State  (112  Md.  83),  60 
Garsed  v.  City  of  Greensboro  (126 

N.  C.  lo9),  308 
Gates  V.  Hooper  (90  Tex.  563),  358, 

389,  409 
Gatzow  V.  Buening   (106  Wis.   1), 

502 
Gay  V.  Board  of  Commissioners  of 

Cumberland    County,    etc.    (122 

N.  C.  471),  308 
Geise  v.  Pennsylvania  l''ire  Ins.  Co. 

[(Tex.  Civ.  App.,  1908),  107  S.  W. 

555],  25 
General  Electric  Co.  v.  Wise  (119 

Fed.  922),  158 
General  Lumber  Co.  v.  Mississippi 

(217  U.  S.  433),  336 
Georgia,  Macon  &  Western  Ry.  v. 

Davis  (13  Ga.  68),  71 
Gerino,  Ex  parte  (143  Cal.  412),  263 
German  Alliance  Ins.  Co.  v.  Hale 

(219  U.  S.  307),  230,  271,  337,  370 
Germania  Sav.  Bank  v.  Darlington 

(50  S.  C.  337),  277 
Getz  Bros.  &  Co.  v.  Federal  Salt 

Co.  (147  Cal.  115),  106,  433 
Gibbons  v.  Ogden  [9  Wheat.    (22 

U.  S.)  1],  16,  17,  210 
Gibbs  V.  Consolidated  Gas  Co.  of 

Bait.  (130  U.  S.  396),  92,  102,  109, 

197,  406 
Gibbs  V.  McNeeley  (118  Fed.  120), 

80,  120 
Gibbs  V.  McNeely  (107  Fed.  211), 

141,  142 
Gillespie  v.  Ft.  Wayne  &  Southern 

R.  Co.  (17  Ind.  243),  265 
Gillespie  v.  People   (188  111.   176), 

536 
Gilman  v.  Philadelphia  [3  Wall.  (70 

U.  S.)  713],  270 
Gladish  v.  Kansas  City  Live  Stock 

Exchange   (113   Mo.   App.   726), 

415 
Gleason  v.  McKay  (134  Mass.  419), 

18 
Gloucester  Ferry  Co.   v.   Penn.syl- 

vania  (114  U.S.  196),  16,  270  " 


Gloucester  Isinglass  &  Glue  Co.  v. 

Russia  Cement   Co.    (154   Mass. 

93),  101 
Godfrey   v.   Roessele   (23  W'aah.  L. 

Rep.  120),  109 
Godfrey  v.  Roessele  (5  D.  C.  App. 

299),  108 
Goldberg,  Bowen  &  Co.  v.  Stable- 
men's Union  (149  Cal.  429),  537 
Goldfield    Consol.    Mines    Co.    v. 

Goldfield     Miners'     Union     (159 

Fed.  500),  4,  501,  505,  523,  531, 

536 
Goodman    v.    Henderson    (58    Ga. 

567),  106 
Gordon  v.  Mansfield  (84  Mo.  A[)p. 

367),  86,  109 
Goshen    Rubber   Works    v.    Single 

Tube  Automobile  &  Bicycle  Tire 

Co.  (166  Fed.  431),  137 
Covin  v.  City  of  Chicago  (132  Fed. 

848),  218 
Grace  v.  State  (40  Ark.  97),  350 
Grand  Ave.  Ry.  Co.  v.  People's  R}'. 

Co.  (132  Mo.  34),  316 
Grand  Rapids  Elect.  Light  &  Power 

Co.  v.  Grand  Rapids  Edison  Elec- 
tric Light  &  Fuel  Gas  Co.  (33  Fed. 

659),  277,  298,  299,  304,  310 
Grand  Trunk  Ry.  Co.  of  Canada, 

In  re  Investigation  of  (3  I.  C.  C. 

R.  89),  200 
Grand  Union  Tea  Co.  v.  Lewitsky 

(153  Mich.  244),  109 
Grassville  v.  Lowdin   (11  Ohio  St. 

349),  106,  109 
Gray  v.  Board  of  Commissioners  of 

Cumberland    County,   etc.    (122 

N.  C.  471),  252 
Gray  v.  Building  Trades  Council  (91 

Minn.  171),  31,  32,  497,  501,  514, 

516,  518,  519 
Gray  v.  Minneapolis  <fe  St.  Louis  R. 

Co.  (110  Minn.  527),  16 
Green  v.  Bennett  [(Tex.  Civ.  App., 

1908),  110  S.  W.  108],  3,4.60 
Green    v.    Biddle    (8    \Mieat.    (21 

U.  S.)  1],  215,  210 
Green    v.    Elbert    (63    Fed.    309), 

228 


xl 


TABLE   OF   CASES   CITED 


[References  are  to  Sections] 


Green  v.  Price  (13  Mees.  &  W.  695), 

97 
Greene,  In  re  (52  Fed.  104),  8,  16, 

22,  78,  82,  178,  179,  181 
Greenwich  Ins.  Co.  v.  Carroll  (125 

Fed.  121),  236,  264 
Greer  Mills  &  Co.  v.  Stoller  (71  Fed. 

1),  161 
Greite  v.  Henricks  [71  Hun  (N.  Y.), 

7],  108 
Grenada  Lumber  Co.  v.  Mississippi 

(217  U.  S.  4.33),  60,  98,  105,  208, 

230,  234,  2.36,  237,  271,  340,  307, 

432,  444 
Grice,  In  re  (79  Fed.  627),  82 
CJriffith  V.  Connecticut  (218  U.    S. 

563;,  216,  271 
Griswold  v.  Hepburn  [2    Duv.  (63 

Ky.)  20],  269 
Griswold  v.  Illinois  Cent.  R.  Co.  (90 

Iowa,  265),  86 
Grogan  v.  Chaffee  (150  Cal.  611), 

66,  378 
Grundy  v.  Edwards  [7  J.  J.  Marsh. 

(30  Ky.)  368],  106 
Guerand  v.  Bandelet  (32  Md.  561), 

106,  109 
Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Miami 

S.  S.  Co.  (86  Fed.  407),  161 
Gulf,  Colorado  &  Santa  Fe  Ry.  Co. 

V.  State  (72  Tex.  404),  395 
Guthrie  Daily  Leader  v.  Cameron, 

Auditor  (3  Okla.  677),  6,  8 


Hackett  v.  J.  J.  Reynolds  Co.  (62 

N.  Y.  Supp.  1076),  86,  100 
Hackett  v.  Wilson  (12  Greg.  25),  6 
Hadden  v.   Collector  [5  Wall.    (72 

U.  S.)  107]  ("Appendix  A") 
Hadley   Dean   Plate  Glass  Co.   v. 

Highland    Glass    Co.    (143    Fed. 

242),  1.55 
Hagan  v.  Blindell  (58  Fed.  096,  6 

C.  C.  A.  86),  .505 
Hale  V.  Henkel  (201  U.  S.  43),  186, 

187 
Hale  V.  O'Connor  Coal  &  Supply 

Co.  (181  Fed.  267),  173 


Hamilton-Brown  Shoe  Co.  v.  Saxey 

(131  Mo.  212),  505 
Hamilton    Gaslight    &    C.    Co.  v. 

Hamilton    (146   U.   S.   258),   71, 

211,  275 
Hamilton    Mfg.    Co.  v.  Massachu- 
setts [6  Wall.  (73  U.  S.)  632],  18 
Hammon    Lumber  Co.   v.    Sailors' 

Union  of  the  Pacific   (167   Fed. 

809),  533 
Hammond  Packing  Co.  v.  Arkansas 

(212U.S.  322),  2.30,  494 
Hampton  v.  Caldwell  &  Hall  [(Ark., 

1910),  129  S.  W.  816],  106 
Haney  v.  Caldwell  (43  Ark.  184),  21 
Hanford  v.  Davies  (163  U.  S.  273), 

209,  212 
Hannibal  &  St.  Joseph  Rd.  Co.  v. 

Missouri  River  Packet  Co.  (125 

U.  S.  260),  71 
Harbison-Walker  Refractories  Co. 

V.  Stanton  (227  Pa.  St.  55),  82, 

86,  101,  102,  109 
Hardee  v.  Brown  (56  Fla.  377),  277 
Harders  Fire  Proof  Storage  &  Van 

Co.  V.  Chicago  (235  111.  58),  269 
Harding  v.  American  Glucose  Co. 

(182  111.  216),  65,  87,  108,  251, 

344,  388,  440,  456,  482 
Hardwick    Farmers'    Elevator   Co. 

V.  Chicago,  Rock  Island  &  Pac. 

Ry.  Co.  (110  Minn.  25),  16 
Hardy    v.     Atchison,     Topeka    & 

Santa  Fe  R.  Co.  (.32  Kan.  698), 

16 
Harmon  v.  City  of  Chicago   (110 

111.  400),  271 
Harriman    v.    Northern    Securities 

Co.  (197  U.  S.  244),  193 
Harris  v.  Theus  (149  Ala.  133),  109 
Harrison  v.  Glucose  Sugar  Re6ning 

Co.  (116  Fed.  304),  108,  155,  460 
Hartford  Fire  Ins.  Co.  v.  Chicago, 

Milwaukee  &  St.  Paul  Ry.  Co. 

(70  Fed.  201),  86 
Hartford  Fire  Ins.  Co.  v.  City  of 

Houston  [(Tex.  Civ.  App.,  1908), 

110  S.  W.  973],  330 
Hartford  Fire  Ins.  Co.  v.  City  of 

Houston  (102  Tex.  317),  331 


TABLE   OF   CASES   CITED 


Xli 


[Referen  ces  are  to  Sections] 


Hartz   V.   Eddy   (140  Mich.     79), 

4():} 
Haskell  V.  Barker  Car  Co    v.  Alle- 
ghany T'orging  C*^.  ((Ind.  App., 

1910),  91  X.  E.  975],  21 
Hastings  Industrial  v.  Baxter  (125 

Mo.  App.  494),  4G2 
Hathaway's    Will,    In    re  (4    Ohio 

St.  385),  95 
Hauser  v.  Harding  (126  N.  C.  295), 
V    100 
Havemeycr    v.     Iowa    County    [3 

Wall.  (70  U.  S.)  294],  212 
Hawthorn  v.  People  (109  111.  302), 

269 
Haynes  v.  Doman  [L.  J.  (1899),  2 

Ch.  13],  102,  103,  106,  108 
Hazelhurst,    City    of,     v.     Mayes 

[(Miss.,  1910),  51  So.  890],  277 
Head  Money  Cases  (112  U.  S.  580), 

270 
Heim  Brewing  Co.  v.  BeUnder  (97 

Mo.  App.  64),  2,  68,  413,  459,  461 
Heimbuecher  v.  Goff,  Homes  &  Co. 

(119  111.  App.  373),  403 
Helena,  City  of,  v.  Helena  Water- 
works Co.  (122  Fed.  1),  71,  275 
Henderson  v.  Mayor  of  New  York 

(92  U.  S.  259),  16,  270,  277 
Henry     Bill      Puhlisliing     Co.     v. 

Smythe  (27  Fed.  914),  286 
Henry  L.  Doherty  &  Co.  v.  Rice 

(186  Fed.  204),  392 
Hepburn  v.  Griswold  [8  W^all.  (75 

U.  S.),  603],  203,  204 
Herreshoff  v.  Boutineau  (17  R.  I. 

3),  96,  106,  108,  109 
Herriman  v.  Menzies  (115  Cal.  16), 

8,  65,  90 
Hill  V.  Gudgell  (9  Ky.  L.  Rep.  436), 

106 
Hill  &  Co.    V.    Gray    &   Worcester 

(163  Mich.  12),  107 
Hilton  V.    Echersley  (6  El.    &  Bl. 

47,  97 
Hinde  v.  Gray  (1  Man.  <t  G.  195), 

94 
Hitchcock    V.    Anthony    (S3    Fetl. 

779\  406 
Hitchman    Coal    &    Coke    Co.    v. 


Mitchell  (172  Fed.  963),  468,  522, 

534 
IToagland   v.   Segur    (38   N.   J.    L. 

230),  109 
Hodge  V.  Sloan  (107  N.  Y.  244),  102 
Hoeker  v.    Western   Union   Teleg. 

Co.  (45  Fla.  363),  87 
Hoff  V.  Lenerrman   (143  111.  App. 

170),  106 
Hohorst,  In  re  (150  U.  S.  653),  170 
Holden  v.  City  of  Alton   (179  III. 

318),  .323 
Holden  v.  Hardy  (169  U.  S.   366), 

228 
Holland   v.   Sheehan     (108    Minn. 

362),  86 
Holly  V.  Slate  (14  Tex.  App.  505), 

269 
Holmes  v.  Hurst  (174  U.  S.  82),  287 
Holmes   v.   Martin   (10  Ga.   503), 

106,  109 
Homer  v.  Graves  (7  Bing.  735),  87, 

109 
Home   Telephone    Co.    v.    Granby 

Neosho  Telephone  Co.  (147  Mo. 

App.  216),  350,  359 
Home    Telephone    Co.    v.    North 

Manchester    Teleph.    Co.  [(Ind., 

App.,  1910),  92  X.  E.  558],  93, 

109 
Home  Telephone  Co.   v.   Sarcoxie 

Light  <fe  Teleph.  Co.  [(Mo.,  1911), 

139  S.  W.  108],  434 
Hood   &   Moore's   Stores,    Ltd.,  v. 

Jones  [81  L.  T.  (N.  S.)  169],  106 
Hooker    v.    Vandewater    [4    Denio 

(X.  Y.),  349],  58,  92,  197 
Hooper   v.    CaUfornia    (155    LT.    S. 

648),  16 
Hoops  Tea  Co.  v.  Dorsey  Co.  (99 

111.  App.  181),  lOS 
Hopkins  v.  Jones  (22  Ind.  310),  203 
Hopkins   v.   Oxley   Stave   Co.    (S3 

Fed.  912),  498,  502,  503 
Hopkins  v.  United  States  (171  U. 

S.  578)  (see  "Appendix  A"),  SO, 

82,  149 
Hornby  v.  Close  (Law  Rep.  2  Q.  B. 

153),  97 
Horner  v.  Graves  (7  Bing.  735),  94 


xlii 


TABLE    OF   CASES   CITED 


[References  are  to  Sections] 


Horst,    Mayor,  etc.,  v.  Moses    (48 

Ala.  146),  72.  273 
Hostler  v.  Marlowe  (44  W.  Va.  707), 

300 
Hot  Springs  Electric  Light  Co.  v. 

City   of    Hot    Springs    (70   Ark. 

300),  223 
Houch  V.  Anheuser-Busch  Brewing 

Assoc.  (S8  Tex.  184),  103,  344 
Houck  &  Co.  V.  Wright  (77  Miss. 

476),  403,  462,  463 
House  V.  Mayes  (219  U.  S.  270), 

203,  269,  271,  340 
House   V.    McMullen    [(Cal.   App., 

1909),  100  Pac.  344],  21 
Houston  &  Texas  Central  Rd.  Co. 

V.  Mayes  (201  U.  S.  321),  271 
Hovey  v.  State  (119  Ind.  395),  269 
Howell  V.  State  (83  Neb.  448),  479 
Hubbard  v.  Miller  (27  Mich,   15), 

86,  97,  102,  104,  106,  109,  406 
Hubor  V.  Merkel   (117  Wis.   355), 

271 
Hudspeth  v.  Hall  (111  Ga.  510),  74 
Hughes  V.  Murdock  (45  La.  Ann. 

935),  269 
Hughes  V.  States  (6  Ark.  131),  350 
Hulen  V.  Earel  (13  Okla.  246),  428 
Hull  Electric  Light  Co.  v.  Ottawa 

Elec.  Light  Co.  (Rap.  Jud.  Queb. 

14  C.  S.  124),  16 
Hunt    V.    Riverside    Co-operati\^e 

Club  (140  Mich.  538),  384,  429 
Hunter  v.   Charleston  &   Western 

Carolina  Ry.  Co.  (81  S.  C.  169), 

28 
Huntington   v.    Attrill    (146   U.   S. 

657),  189 
Harsen  v.  Gavin  (162  111.  377),  86, 

88,  103,  104,  109 
Hydes     Ferry     Turnpike     Co.    v. 

Davidson  County  (91  Tenn.  291), 

300 


Illinois   Trust   &    Savings    Bk.    v. 

Arkansas    City    Water   Co.    (67 

Fed.  196),  280,  330 
IlHnois  Trust  &  Savings  Bank  v. 


City  of  Arkansas  City  (76  Fed. 

271),  277 
Imperial    Curtain    Co.    v.    Jacob 

[(Mich.,  1910),  127  N.  W.  772],  16 
Independent    Baking    Powder    Co. 

V.  Boorman  (130  Fed.  726),  159 
Independent  Refiners'  Assoc,  etc., 

V.  Western  New  York  &   Penn- 
sylvania Rd.  Co.  (5  I.  C.  C.  R. 

415),  194 
Indiana    Mfg.    Co.  v.    J.  T.  Case 

Threshing  Mach.  Co.  (154  Fed. 

365),  135 
Indianapolis,    City   of,    v.    Indian- 
apolis Gaslight  &  Coke  Co.  (66 

Ind.  396),  277 
Indianapolis,  City  of,  v.  Navin  (151 

Ind.  139),  266 
Ingraham  v.  National  Salt  Co.  (130 

Fed.  676),  155 
In  re.    See  particular  name. 
Interborough     Metropolitan     Co., 

Matter  of  [125  App.  Div.  (N.  Y.) 

804],  397 
International     Harvester     Co.     v. 

Circuit  Judge  (163  Mich.  55),  460 
International     Harvester     Co.     v. 

Commonwealth     [(Ky.     C.     A., 

1911),  138  S.  W.  248],  484,  486, 

491 
International     Harvester     Co.     v. 

Commonwealth    (137   Ky.    668), 

382,  440,  455,  482,  486,  490 
International     Harvester     Co.     v. 

Commonwealth    (124   Ky.    543), 

491 
International     Harvester     Co.     v. 

Commonwealth     (30     Ky.    Law 

Rep.  716),  455,  469 
International    Text    Book    Co.    v. 

Lynch  (81  Vt.  101),  16 
International    Text    Book    Co.    v. 

Pigg  (217  U.  S.  91),  16 
International  Tooth  Crown  Co.  v. 

Hanks  Dental  Assoc.   (Ill  Fed. 

916),  282 
Inter-Ocean   Publishing  Co.  v.  As- 
sociated Press  (184  111.  438),  431 
Interstate     Commerce     Com.      v. 

Baird  (194  U.  S.  25),  186 


TABLE    OF   CASES   CITED 


xliii 


[References  arc 

Interstate   Commerce    Commission 

V.  Illinois  Cent.  Rd.  Co.  (215  U. 

S.  452),   16 
Interstate   Commerce   Commission 

V.  Southern  Pac.  Co.   (132  Fed. 

829),  195,  198 
Iron    Moulders'    Union    v.     Allis- 

Chalmcrs  Co.  (IIG  Fed.  45),  501, 

503,  515 
Irving    V.    Joint    District    Council 

(180  Fed.  896),  37,  498 


Jack  V.  Kansas  (199  U.  S.  372),  495 
Jackson  v.  Byrnes  (103  Tenn.  698), 

86 
Jackson    v.    Town    of    Union    (82 

Conn.  266),  25 
Jackson,   Matter  of  [57   Misc.   R. 

(N.  Y.)  1],  377,  4.35 
Jackson    Co.    Horse    Railroad    v. 

Rapid  Transit  Railway  Co.   (24 

Fed.  306),  29S,  330 
Jacobs  V.  Beecham  (221  U.  S.  263), 

289 
Jacobs  V.  Cohen  (183  N.  Y.  207), 

106,  497,  523 
Jacobs  V.  Cohen  (90  N.  Y.  Supp. 

854),  523 
Jacobsen  v.  Massachusetts  (197  U. 

S.  11),  231,  271,  340 
Jacoway  v.  Denton  (25  Ark.  625), 

86 
Jayne  v.  Loder  (149  Fed.  21),  184 
Jefferson  Bank  v.  Skelly  [1  Black 

(66  U.  S.),  436],  275 
Jenkins  v.  Temples  (39  Ga.  655), 

106 
Jersey  City  v.  North  Jersey  St.  Ry. 

Co.  (74  N.  J.  L.  774),  264 
Jersey  City  v.   North  Jersey  Ry. 

Co.  (72  N.  J.  L.  383),  275 
Jersey  City  Printing  Co.  v.  Cassidy 

(63   N.   J.    Eq.    759),    501,    505, 

512 
Jervey,  Ex  parte  (66  Fed.  957),  16, 

27 
Jetton-Deckle      Lumber      Co.      v. 

Mather  (53  Fhi.  969),  60 


to  Sections] 

Job  Printers'  Union  v.  Kinsley  (107 
111.  654),  289 

John  D.  Park  &  Sons  Co.  v.  Hart- 
man  (153  Fed.  24),  135,  138 

John  D.  Park  &  Sons  Co.  v.  Na- 
tional Wholesale  Druggists' 
Assoc.  (175  N.  Y.  1),  29,  31,  63, 
401,  470 

John  J.  Scsson  Co.  v.  United  States 
(182  Fed.  573),  175 

Johnson  Publishing  Co.  v.  Mills  (79 
Miss.  543),  314 

Johns-Pratt  Co.  v.  Sachs  (176  Fed. 
738),  158 

Jolly  V.  Brady  (127  N.  C.  142),  106 

Jonas  Glass  Co.  v.  Glass  Bottle 
Blowers'  Assoc.  (72  N.  J.  Eq. 
653),  33,  504 

Jones  V.  CUfford's  Exec.  (5  Fla. 
510),  87 

Jones  V.  Great  South  Fireproof 
Hotel  Co.  (86  Fed.  387),  214 

Jones  V.  Maher  (116  N.  Y.  Supp. 
180),  505,  506 

Jones  V.  Van  Winkle  Gin  &  Machine 
Works  (131  Ga.  336),  505,  514 

Jones  Cold  Store  Door  Co.  v.  Jones 
(108  Md.  439),  106 

Joplin,  City  of,  v.  Southwest  Mis- 
souri Light  Co.  (191  U.  S.  150), 
217,  223 

Justice  V.  Lang  (42  N.  Y.  493),  21 

Justices,  Opinion  of  [(Mass.,  1908), 
85  N.  E.  545],  16,  18 

K 

Kansas  v.  Colorado  (206  U.  S.  46), 
226,  269 

Kansas  Natural  Gas  Co.  v.  Haskel 
(172  Fed.  545),  206 

Karasek  v.  Peier  (22  Wash.  419), 
271 

Karges  Furniture  Co.  v.  Amalga- 
mated Woodworkers'  Local 
Union  (165  Ind.  421),  3,  4,  501, 
503,  506,  514,  516 

Keck  V.  United  States  (172  U.  S. 
446)  (see  "Appendix  A") 

Keene  Syndicate   v.   Wichita   Gas 


xliv 


TABLE   OF   CASES   CITED 


[References  are  to  Sections] 


Electric  Light  &  Power  Co.  (69 

Kan.  284),  87 
Keith   V.    Horschbcrg   Optical   Co. 

(48  Ark.  146),  106 
Keller  v.  United  States  (213  U.  S. 

138),  271 
Kellogg  V.  Sowcrly  (190  N.  Y.  370), 

63,  452,  459,  492 
Kentucky  &  Indiana  Bridge  Co.  v. 

Louisville  &   Nashville   Rd.   Co. 

(37  Fed.  567),  200,  207 
Kepner  v.  United  States  (195  U.  S. 

100)  (see  "Appendix  A") 
Ketchikan  Co.  v.  Citizens'  Co.   (2 

Alaska,   120),  277 
KevU  V.  Standard  Oil  Co.  (8  Ohio 

N.  P.  311),  108 
Kidd  V.  Pearson  (128  U.  S.  1),  16 
Kimball    v.    Atchison,    Topeka    & 

Santa  Fe  R.  Co.  (46  Fed.  888),  19 
Kimball    v.    Grantsville    City    (19 

Utah,  368),  269 
King  V.  EUing  (24  Mont.  470),  263, 

264 
King  V.  Fountain  (126  N.  C.  196), 

106 
King  V.  PhcEnix  Ins.  Co.  of  Brook- 
lyn (195  Mo.  290),  212 
King  V.  Pony  Gold  Mining  Co.  (24 

Mont.  470),  263,  264 
Kingsbury  v.  Nye  (9  Cal.  App.  574), 

269 
Kingsley,   City   of,   v.    Dyerly    (79 

Kan.  1),  16 
Kirch  V.  City  of  Louisville  (30  Ky. 

L.  Rep.  1356),  266 
Kirkham  v.  Russell  (76  Va.  956), 

277 
Kitchen  v.   Greenabaum   (61    Mo. 

110),  86 
Knight  &  Jillson  Co.  v.  Miller  (172 

Ind.  27),  62,  86,   100,   103,   108, 

230,  237,  3.36,  337,  351,  353,  379, 

483 
Knoxville  Water  Co.  v.  Knoxville 

(200  U.  S.  22),  71,  275 
Knoxville  Water  Co.  v.  Knoxville 

(189  U.  S.  434),  230 
Knudsen  v.  Berm  (123  Fed.   636), 

516 


Kosciusko  Oil  Mill  &  Fertihzer  Co. 

V.    Wilson    Cotton    Oil    Co.    (90 

Miss.  551),  416 
Kramer  v.  Old  (119  N.  C.  1),  106 
Kring  v.  Missouri  (107  U.  S.  221), 

214 
Kroschel  v.  Monkers  (179  Fed.  961), 

271 
Krouschnabel-Smith  Co.  v.  Krou- 

schnabcl   (87  Minn.  230),   109 


Lafayette   Bridge   Co.   v.   City  of 

Streator  (105  Fed.  729),  465 
Lake  Shore  &   M.  S.   Ry.   Co.   v. 

Ohio  (173  U.  S.  285),  271,  340 
LaMoine   Lumber  &  Trading  Co. 

V.  Kesterson  (171  Fed.  980),  16 
Lamont,  Corliss  &  Co.  v.  Hershey 

(140  Fed.  763),  289 
Lampson's  Will,   In  re   (53  N.  Y. 

Supp.  531),  86 
Lange  v.  Werk  (2  Ohio  St.  519), 

109 
Lanser  v.  Kearney  (147  Iowa,  335), 

88 
Lanzet  v.  J.  W.  Lafton  Mfg.  Co. 

(184  111.  326),  86,  88,  102,  103, 

106,  108 
Larabee  v.  Dolley  (175  Fed.  365),  21 
Laredo,    City   of,    v.    International 

Bridge  &  Tramway  Co.  (66  Fed. 

246),  49,  257,  274,  297 
Laurel  Hill  Cemetery  v.  San  Fran- 
cisco (216  U.  S.  358),  271 
Lawson  v.  Cobban  (38  Mont.  138), 

86 
Leach  v.  Cargill  (60  Mo.  316),  277 
Leather  Cloth  Co.  v.  Lonsont  (Law 

Rep.  9  Eq.  Cas.  345),  86,  94 
Leavenworth   County   Commrs.  v. 

Miller  (7  Kan.  479),  269 
Leeper  v.  State  (103  Tenn.  500), 

8,314 
Leetham  v.  Johnston- White  (76  N. 

J.  Eq.  304),  109 
Lehigh  &  Wilkes-Barre  Coal  Co.  v. 

Borough  of  Junction  (75  N.  J.  L. 

922),  16 


TABLE    OF   CASES   CITED 


xlv 


[References 

Lehigh  Water  Co.  v.  Easton  (121 

U.  S.  388),  212,  213 
Lehigh  Water  Co. 'a  Appeal  (102  Pa. 

St.  515),  6 
Leibengood  v.  Missouri,  Kansas  & 

Topeka  Ry.  Co.  (83  Kan.  25),  16 
Leioup  V.  Port  of  Mobile  (127  U.  S. 

640),  16 
Leman  v.  Chipman  (82  Neb.  392), 

21 
Leng  &  Co.,  Ltd.,  v.  Andrews  [Law 

Rep.  (1909),  1  Ch.  D.  763],  109 
Leon  Levy,  Ex  parte  (43  Ark.  42), 

242 
Leslie  v.  Lorillard   (110  N.  Y.  519), 

88,  102,  108 
Levine  v.  Klein  (120  N.  Y.  Supp. 

196),  4 
Lewis  V.  Weatherford  Mineral  Wells 

&    Northwestern    Ry.    Co.     (36 

Tex.  Civ.  App.  48),  398 
Lewis,  Appeal  of  (67  Pa.  St.  153), 

269 
License  Cases  [5  How.  (46  U.  S.) 

504],  16,  270 
License   Tax   Cases    [5    Wall.    (72 

U.  S.)  462],  270 
Likins  Petition  (223  Pa.  St.  456),  269 
Lincoln   St.  R.  Co.  v.  City  of   Lin- 
coln (61  Neb.  109),  71,  275 
Linden    Land    Co.    v.    Milwaukee 

Electric   Ry.   &   Light  Co.    (107 

Wis.  493),  316 
Lindsay  &   Co.,  Ltd.,  v.  Montana 

Federation  of  Labor  (37  Mont. 

264),  3,  32,  60,  521 
Lindsay  &   Phelps  Co.   v.   Mullen 

(176  U.  S.  126),  16 
Lindsley  v.  Natural  Carbonic  Gas 

Co.  (220  U.  S.  61),  237,  271 
Linn  v.  Ligsbee  (67  111.  75),  86,  103, 

104 
List  v.  Commonwealth  (118  Pa.  St. 

322),  16 
Little  Rock  &  Ft.  S.  Railway  Co.  v. 

Oppenheimer  (64  Ark.  271),  350 
Liverpool  &  London  &  Globe  Ins. 

Co.  v.  Clunie  (88  Fed.  160),  449 
Lloyd  V.  DolUson  (194  U.  S.  445), 

227 


are  to  Sections] 

Lochner  v.  New  York  (198  U.  S. 

45),  231 
Locker  v.   American   Tobacco  Co. 

[121  App.  Div.  (N.  Y.)  443],  478 
Loder  v.  Jayne  (142  Fed.  1010),  138, 

184 
Loeb  v.  Eastman  Kodak  Co.  (183 

Fed.  704),  162 
Loeffler  v.  City  of  Chicago  (246  111. 

43),  277 
Loewe  v.  California  State  Confeder- 
ation (139  Fed.  71),  502,  518 
Loewe  v.  Lawlor  (142  Fed.  216),  173 
Loewe  v.  Lawlor  (208  U.  S.  274),  76, 

113,    122,    129,    139    (See    "Ap- 
pendix A") 
Logan  v.  North  Carolina  Rd.  Co. 

(116  N.  C.  940),  92 
Logan  &  Sons  v.  Pyne  (43  Iowa, 

524),  280,  298,  312,  330 
Lohse  Patent   Door  Co.  v.   Fuelle 

(215  Mo.  421),  4,  31,  32,  69,  497, 

498,  501,  518 
Long  V.  City  of  Duluth  (49  Minn. 

280),  330 
Long  V.  Towl  (42  Mo.  545),  106, 

109 
Long  Island  R.  Co.  v.  City  of  New 

York  (199  N.  Y.  288),  264 
Long  Island  Water  Supply  Co.  v. 

Brooklyn  (166  U.  S.  685),  71,  275 
Longshore  Printing  Co.  v.  Howell 

(26  Oreg.  527),  41 
Los  Angeles  v.   Los  Angeles  City 

Water  Co.  (177  U.  S.  558),  329 
Los  Angeles  City  Water  Co.  v.  City 

of  Los  Angeles  (88  Fed.  720),  329 
Lottery  Case  (188  U.  S.  321),    16, 

197 
Lottowanna,    The    [21    Wall.     (88 

U.  S.)  558],  270 
Lough  v.  Outenbridge  (143  N.  Y. 

271),  05 
Louisiana  v.  Jumel  (107  U.  S.  711), 

209,  214 
Louisiana,  State  of,  v.  Morgan  (28 

La.  Ann.  482),  275 
Louisville  &  Nashville  Rd.  Co.  v. 

Kentucky   (161   U.  S.  677),    19, 

271 


xlvi 


TABLE    OF   CASES   CITED 


[References  arc  to  Sections] 


Louisville  &  Nashville  Rd.  Co.  v. 

Milton  (21S  U.  S.  36),  237,  238 
Louisville  &  Nashville  Rd.  Co.  v. 

Mottloy  (219  U.  S.  467),  205,  207, 

233 
Louisville  &  Nashville  Rd.  Co.  v. 

Railroad    Commission    of   Tenn. 

(19  Fed.  679),  16 
Louisville  Bagging  Manuf.  Co.  v. 

Central   Passenger   Ry.   Co.    (95 
•     Ky.  50),  278 
Louisville  Gas  Co.  v.  Citizens'  Gas 

Co.  (115  U.  S.  683),  218,  224,  263, 

271,  303 
Louisville  Underwriters,  In  re  (134 

U.  S.  488),  170 
Love  V.  Cavatt  (26  Okla.  179),  21 
Loverin  &  Browne  Co.  v.  Travis 

(135  Wis.  322),  16 
Low  V.  Blackford  (87  Fed.  406),  214 
Lowenstein  v.  Evans  (69  Fed.  908), 

165 
'Lowry    v.    Tile,    Mantel    &    Grate 

Assoc.  (98  Fed.  817),  80 
Luddington  Water  Supply  Co.  v. 

City  of  Luddington   (119  Mich. 

480),  329 
Lukin  Rule  Co.  v.  Fringeli  (57  Ohio 

St.  596),  88,  108,  109 
Lynch  v.  City  of  Springfield  (174 

Mass.  430),  277 
Lynch,  Ex  parte  (16  S.  C.  32),  269 

M 

Mac.    See  Mc. 

Macauley  Bros.  v.  Tiemey  (19  R.  L 

255),  60 
MacGinnis  v.  Boston  &  Montana 

Con.sol.  Copper  &  Silver  Min.  Co. 

(29  Mont.  428),  2.50,  251,  465, 

483 
Mackall  v.  Ratchford  (82  Fed.  41), 

505 
Macon  &  W.  R.  Co.  v.  Davis  (13 

Ga.  68),  275 
Macon,  Town  of,  v.  Patty  (57  Miss. 

378),  271 
Madison,  City  of,  v.  Madison  Gas 

&  Electric  Co.  (129  Wis.  249),  271 


Maestri  v.  Board  of  Assessors  (110 

La.  517),  72,  272 
Mallon  V.    May    (11    Mees.   &   W. 

652),  103 
Mallinokrodt    Chemical    Works    v. 

Nemnich   (83  x\Io.  App.  6),  69, 

106,  108 
Manchester  v.  Massachusetts  (139 

U.  S.  240),  270 
Manchester  &  L.  R.  Co.  v.  Concord 

R.  Co.  (66  N.  H.  100),  93 
Mandeville  v.   Harmon   (42  N.   J. 

Eq.  185),  106 
Mannington  v.  Hocking  Valley  Ry. 

Co.  (183  Fed.  133),  19,  95 
Mapes  V.  Metcalf  (10  N.  Dak.  601), 

376,  423 
Marchant  v.  Pennsylvania  R.  Co. 

(153  U.  S.  380),  230 
Marion  Trust  Co.  v.  Bennett  (169 

Ind.  346),  265 
Marshall  &  Bruce  Co.  v.  City  of 

Nashville  (109  Tenn.  495),  8,  89, 

322 
Marshall  Engine  Co.  v.  New  Mar- 
shall Engine  Co.  (203  Mass.  410), 

109 
Marshalltown    Stone    Co.    v.    Des 

Moines  Brick  Mfg.  Co.  (114  Iowa, 

574),  86,  88 
Martell  v.  White  (185  Mass.  255), 

509 
Martin  v.  McFall  (65  N.  J.  Eq.  91), 

497,  518 
Martin  v.  O'Brien  (34  Miss.  21), 

263,  321 
Marx  &  Haas  Jeans  Clothing  Co.  v. 

Watson  (168  Mo.  133),  502 
Massigault  v.   Springs   (199  U.   S. 

473),  271 
Master  Granite  &  Blue  Stone  Cut- 
ters' Assoc.  (23  Pa.  Co.  R.  517), 

16 
Master      Horseshoers'     Protective 

Ass'n   V.   Quinlivan    (82   N.    Y. 

Supp.  288),  516 
Master     of     Gunmakers     v.     Fell 

(Willes,  388),  94 
Masters  v.  Lee  (39  Neb.  574),  30 
Matter  of.    See  particular  name. 


TABLE    OF    CASES   CITED 


xlvii 


[References  arc  to  Sections] 


Matthews  v.  People  (202  111.  389 j, 

39,  231 
Matthews  v.  Shankland  (56  N.  Y. 

Supp.  123),  3,  31 
Mattison  v.  Lake  Shore  &  M.  S.  Ry. 

Co.  (2  Ohio  N.  P.  276),  30 
Maxwell  v.  Dow  (176  U.  S.  581), 

227 
May  V.  Sloan  (101  U.  S.  231),  25 
Mayo  V.  Dover  &  Foxcroft  Village 

¥iTc  Co.  (96  Me.  539),  277 
McCall  V.  Wright  (198  N.  Y.  143), 

101 
McCarthy,  Ex  parte  (29  Cal.  393), 

269 
MeClanahan  v.  Breeding  (172  Ind. 

457),  86 
McCord  V.  Thompson  Starrett  Co. 

(113  N.  Y.  Supp.  385),  522 
McCorniick  In  re  v.  Bonfils  (9  Okla. 

605),  21 
McCormick    Typothetae  v.   Typo- 
graphical Union  (117  N.  Y.  Supp. 

70),  533 
McCrackcn  v.   Hayward   [2    How. 

(43  U.  S.)],  608 
McCulloch  V.  State  of  Maryland  [4 

Wheat.  (17  U.  S.)  316],  203 
McCurry  v.  Gibson  (108  Ala.  451), 

109 
McGrew  v.  Missouri  Pac.  Ry.  Co. 

(230  Mo.  416),  231,  268 
McGuire  v.  Cliicago,  Burhngton  & 

Quincy  R.  Co.  (131  Iowa,  340), 

269,  270 
McLean  v.   Arkansas   (211    U.   S. 

539),  534 
McLean  v.  Denver  &  Rio  Grande 

Ry.  Co.  (203  U.  S.  38),  270 
McLeod  V.  Burroughs  (9  Ga.  213),  71 
McMeekin     v.     Central     Carohna 

Power  Co.  (80  S.  C.  512),  266 
McN'amara  v.  Gargett   (68   Mich. 

454),  86 
McNaughton   Co.    v.    McGirl    (20 

Mont.  124),  16 
McRee  v.   Wilmington  &  Raleigh 

Rd.  Co.  (47  X.  C.  186),  319 
Meeker  v.   Lehigh   Valley   R.   Co. 

(183  Fed.  548),  173,  184 


Meeker  v.   Lehigh   Valley  11.   Cf). 

(162  Fed.  354),  188,  189 
Meffert   v.   State   Board   of   Med. 

Reg.  &    Exam.   (66  Kan.   710), 

271 
Meier   v.    Spear   [(Ark.,  1910),  132 

S.  W.  988),  31,  498 
Memphis  &  S.  L.  R.  Co.  v.  Union 

Ry.  Co.  (116  Tenn.  500),  000 
Memphis,  City  of,  v.  Memphis  Wa- 
ter Co.  [5  Heisk.  (52  Tenn.)  495], 

8,  256,  274,  325,  327 
Memphis,  City  of,  v.  Postal  Teleg. 

Cable  Co.  (139  Fed.  707),  278 
Merchants'  Ad-Sign  Co.  v.  Sterhng 

(124  Cal.  429),  410 
Merchants'  Ice  &  Cold  Storage  Co. 

V.  Rohrraan  (138  Ky.  .530),  390 
Meredith  v.  Zinc  &  Iron  Co.   (55 

N.  J.  Eq.  211),  7,  101 
Merriman    v.    Cover,    Drayton    & 

Leonard   (104  Va.  428),  86,  87, 

104,  106,  109 
Merritt    &    Co.    v.    Layton    [(Del. 

Super.,  1910),  75  Atl.  795],  21 
Merz  Capsule  Co.  v.  United  States 

Capsule  Co.  (67  Fed.  875),  130 
Metcalf  v.  American  School  Furn. 

Co.  (122  Fed.  115),  130,  161 
Metcalf  v.  American  School  Fum. 

Co.  (108  Fed.  909),  161,  162 
Milhau  v.  Sharp  (27  N.  Y.  611),  70 
Miller  v.  Commonwealth   (88  Va. 

018),  2GS 
Miller  v.  Palmer  (58  Md.  451),  21 
Mills  v.  County  of  St.  Clair  (7  111. 

197),  72,  275,  300 
Mills  V.  United  States  Printing  Co. 

(91  N.  Y.  Supp.  185),  32,  36,  505, 

511,  513 
Millville  Gaslight  Co.  v.  Vineland 

Light  &  Power  Co.  (72  N.  J.  Eq. 

,305),  71,  72,  73,  275 
Millville  Improvement  Co.  v.  Pit- 
man, Glassboro  &   Clayton   Gas 

Co.  (75  N.  J.  L.  410),  264 
Mines  v.  Scribner  (147  P'ed.  927), 

133 
Minneapolis  &  St.  Louis  Ry.  Co.  v. 

Beckwith  (129  U.  S.  26),  271 


xlviii 


TABLE    OF   CASES   CITED 


[References  are  to  Sections] 


Minneapolis,  St.  Paul  &  Sault  St 

Marie  Ry.  Co.  v.  Railroad  Com- 
mission (136  Wis.  146),  269 
Minnesota   v.    Barber    (136    U.    S. 

313).    (See  "Appendix  A") 
Minnesota  v.    Northern   Securities 

Co.  (194  U.  S.  48),  161,  165 
Minnesota  Iron  Co.  v.  Kline  (199 

U.  S.  593),  232 
Minturn   v.   Larne    [23    How.    (64 

U.  S.)  435],  298,  330 
Mires  v.  St.  Louis  &  San  Francisco 

R.  Co.  (134  Mo.  App.  379),  16 
Missouri  Pacific  Ry.  Co.  v.  Larabee 

Flour  Mills  Co.  (211  U.  S.  612), 

270 
Missouri    Pacific    Railway    Co.    v. 

Nebraska  (217  U.  S.  196),  271 
Missouri    Pacific   Railway    Co.   v. 

Texas  &  Pac.  Ry.  Co.   (30  Fed. 

2),  197 
Missouri  River  Power  Co.  v.  Steele 

(32  Mont.  433),  269 
Mitchel  V.   Reynolds   (1   P.   Wms. 

181),  86.     (Sec  "Appendix  A"), 

86,  88,  94 
Mobile  V.  Watson  (116  U.  S.  289), 

214 
Mobile,  County  of,  v.  Kimball  (102 

U.  S.  691),  16,  270 
Mogul  Steamship  Co.  v.  McGregor 

(21   Queen's  B.  Div.   Law  Rep. 

553),  59,  68 
Mogul  Steamship  Co.  v.  McGregor, 

Gow  &  Co.  [(1892)  App.  Cas.  25]. 

(See  "Appendix  A"),  97 
Monarch  Tobacco  Works  v.  Amer- 
ican Tobacco  Co.  (165  Fed.  774), 

114,  122,  123,  160,  167,  174,  177, 

191 
Monongahela   River   Consol.   Coal 

&  Coke  Co.  V.  Jutte  (210  Pa.  St. 

288),  106,  109 
Montague   &   Co.   v.   Lowry    (193 

U.  S.  38).    (See  "Appendix  A"), 

146 
Montgomery   v.    Multnomah    Ry. 

Co.  (11  Oreg.  344),  6 
Moorman  &  Givens  v.   Parkerson 

I(La.,  1911),  54So.  47],  88 


Moran  v.  Miami  County  [2  Black 

(67  U.  S.),  722],  275 
More  V.  Bonnet  (40  Cal.  251),  106 
Morgan's   Steamship  Co.  v.  Louis- 
iana Board  of  Health  (118  U.  S. 

455),  270 
Moroney  Hardman  Co.  v.  Goodwin 

Pottery    Co.     [Tex.     Civ.    App. 

(1909),  120  S.  W.  1088],  385 
Morrill  V.  Boston  &  Maine  Railroad 

(55  N.  H.  331),  395 
Morris    v.    City    of    Indianapolis 

[(Ind.),  94  N.  E.  705],  271 
Morris  Run  Coal  Co.  v.   Barclay 

Coal  Co.  (68  Pa.    St.  173),    80, 

109,  197 
Morrow  County  Illuminating  Co.  v. 

Village  of  Gilead  (10  Ohio  S.  & 

C.  P.  Dec.  235),  298 
Motion    Pictures    Patent    Co.    v. 

Laemmle  (178  Fed.  104),  158 
Moultrie    County  v.   Rockingham 

Ten-Cent  Savings  Bank  (92  U.  S. 

631),  209 
Mulcahy  v.  Reg.   (L.  R.  3  H.  L. 

317),  61 
Murdock,  Kerr  &  Co.  v.   Walker 

(152  Pa.  St.  595),  503,  506 
Murray  v.  Menefee  (20  Ark.  561), 

300 
My  Laundry  Co.  v.  Schmeling  (129 

Wis.  597),  109 
My  Maryland  Lodge  v.  Adt  (100 

Md.  238),  502 

N 

Napa  State  Hospital  v.  Dasso  (153 
Cal.  698),  266 

Nashua  &  Lowell  Rd.  Corp.  v.  Bos- 
ton &  Lowell  Rd.  Corp.  (19  Fed. 
804),  197 

National  Benefit  Co.  v.  Union  Hos- 
pital Co.  (45  Minn.  272),  108,  109 

National  Biscuit  Co.  v.  Ohio  Baking 
Co.  (127  Fed.  160),  288 

National  Cotton  Oil  Co.  v.  Texas 
(197  U.  S.  115).  (See  "Appendix 
A"),  8,  46,  65,  232,  236,  276,  337, 
444 


I 


TABLE    OF   CASES   CITED 


xlix 


[References 

National  Enamel  &  Stamping  Co.  v. 

Haberman   (120  Fed.  415),   106, 

108,  109 
National  Fircproofing  Co.  v.  Mason 

Builders'  Assoc.   (169  Fed.  259), 

3,  4,  78,  161,  414,  497,  523 
National  Folding  Bo.\  &  Paper  Co. 

V.  Robertson  (99  Fed.  985),  158 
National  Harrow  Co.  v.  Hench  (84 

Fed.  226),  134 
National    Holton-Brake-Beam   Co. 

V.  Inter-Changeable  Brake-Beam 

Co.  (106  Fed.  603),  383 
National   Home   Building  &   Loan 

AR.sn.  V.  Black  (153  Ind.  701),  464 
National  Lead  Co.  v.  Grate  Paint- 
Stove  Co.  (80  Mo.  App.  247),  448 
National       Protective       Assoc,    v. 

Gumming  (170   N.  Y.  315),  60, 

497,  501,  502,  511,  513 
National  State  Bank  v.  Haakell  (219 

U.  S.  104),  271 
Navigation     Co.     v.    Winsor,     [20 

Wall.  (87  U.  S.)  64],  87,  88,  102, 

108,  109,  406 
Nelson  v.  United  States  (201  U.  S. 

92),  182,  186 
Nester  v.  Continental  Brewing  Co. 

(161  Pa.  St.  473),  87 
Newburyport  Water  Co.  v.  New- 

buryport  (193  U.  S.  561),  333 
Newell    V.    Meyendorff    (9    Mont. 

454),  108 
New  Haven  Rd.  Co.  v.  Interstate 

Commerce  Commission  (200  U.  S. 

404).    (See  "Appendix  A") 
New  Orleans  v.  New  Orleans  Water- 
works  Co.  (142  U.  S.  79),  218, 

326 
New  Orleans  Gaslight  Co.  v.  City 

of  New  Orleans  (42  La.  Ann.  188), 

277 
New     Orleans     Gaslight     Co.    v. 

Drainage   Commission    (111    La. 

838),  224 
New  Orleans  Gaslight  Co.  v.  Hart 

(40  La.  Ann.  474),  271 
New  Orleans  Gas  Co.  v.  Louisiana 

Light  Co.   (115  U.  S.  650),  72, 

209,  224,  271,  304,  327 


arc  to  Sections] 

New  Orleans,  Mobile  &  Tex.  R.  Co. 
V.  iSouthem  &  Atlantic  Teleg. 
Co.  (53  Ala.  211),  293 

New  Orleans  Waterworks  Co.  v. 
Louisiana  Sugar  Rof.  Co.  (125 
U.  S.  18),  210,  212,  225,  245 

New  Orleans  Waterworks  v.  New 
Orleans  (164  U.  S.  471),  225,  278 

New  Orleans  Waterwoi-ks  Co.  v. 
Rivers  (115  U.  S.  674),  327 

New  York  v.  Miln  [11  Pet.  (36 
U.  S.)  102],  271 

New  York  v.  Squire  (145  U.  S.  175), 
271 

New  York  Bank  Note  Co.  v.  Hamil- 
ton Bank  Note,  Engraving  & 
Printing  Co.  (180  N.  Y.  280),  102, 
106 

New  York  Bank  Note  Co.  v. 
Kidder  Press  Mfg.  (192  Mass. 
391),  109 

New  York,  New  Haven  &  Hartford 
Rd.  Co.  v.  Interstate  Commerce 
Commission  (200  U.  S.  361),  270 

New  York,  New  Haven  &  Hartford 
Rd.  Co.  V.  Offield  (77  Conn.  417), 
263,  313 

Niagara  Fire  Ins.  Co.  v.  Cornell 
(110  Fed.  816),  231,  346 

Nicomen  Boom  Co.  v.  North  Shore 
Boom  &  Driving  Co.  (40  Wash. 
315),  295 

Noble  State  Bank  v.  Haskell  (219 
U.  S.  104),  228,  271 

Nordenfelt  v.  Maxim-No  rdenfclt 
Guns  &  Ammunition  Co.  [Law 
Rep.  (1894)  App.  Cas.  535,  565], 
86,  94,  103,  109 

Norman  Prince  (185  Fed.  169),  195 

Northern  Pacific  Railway  Co.  v. 
Duluth  (208  U.  S.  583),  271 

Northern  Securities  Co.  v.  United 
States  (193  U.  S.  197)  (see  "Ap- 
pendix A"),  13,  16,  29,  58,  65,  75, 
77,80,  81,  83,  110,  112,  114,  116. 
125,  132,  151,  161,  182,  193,  203, 
205,  226,  233,  23G,  270,  350. 

Northumberland  County  v.  Zim- 
merman (75  Pa.  St.  26),  271 

Northwestern  Consol.  Mill.  Co.  v. 


1 


TABLE   OF   CASES   CITED 


[References  are 

Callam  &  Sons  (177  Fed.  786),  159 
Northwestern    Warehouse    Co.    v. 

Oregon    Kaihvay    &    Navigation 

Co.  (32  Wash.  218),  260,  324 
Norton  v.  Thomas  &  Sons  Co.  (99 

Tex.  578),  403 
Norwich    Gaslight  Co.  v.  Norwich 

City  Gas  Co.  (25  Conn.  19),  8, 

272,  274,  276,  298,  304,  307 
Nutting  V.  Massachusetts  (183  U. 

S.  553),  16 

O 

Oakdale  Mfg.  Co.  v.  Garet  (18  R. 

I.  484),  109,  335 
O'Connell  v.  Reg.  (11  CI.  &  F.  233), 

62 
Ohio  Baking  Co.  v.  National  Bis- 
cuit Co.  (127  Fed.  116),  288 
Ohio    Life    Ins.    &    Trust    Co.    v. 

Debolt  [16  How.  (57  U.  S.)  416], 

212,  219,  275 
O.  H.  Jewell  Filter  Co.  v.  Jackson 

(140  Fed.  340),  383 
Oklahoma  v.  Kansas  Natural  Gas 

Co.  (221  U.  S.  229),  206,  270,  271 
Olcott  V.  Supervisors  [16  Wall.  (83 

U.  S.)  678],  212 
Omaha   Horse   Rd.    Co.    v.    Cable 

Tramway  Co.  (30  Fed.  324),  71, 

275,  330 
Omaha  Water  Co.  v.  City  of  Omaha 

(147  Fed.  1),  263,  265,  277,  294 
O'Neil  V.  Behanna  (182  Pa.  St.  236), 

517 
O'Neil  V.  Vermont  (144  U.  S.  223), 

16 
Opinions   of   Justices,    In   re    (204 

Mass.  607),  16 
Opinions  of  Justices  [(Mass.,  1908), 

85  N.  E.  545],  18 
Oregon  Ry.  &  Nav.  Co.  v.  Camp- 
bell (180  Fed.  253),  17,  71,  272, 

275 
Oregon  Steam  Navigation  Co.   v. 

Hale  (1  Wash.  Ty.  283),  88,  109 
Oregon  Steam   Navigation  Co.   v. 

Winsor   [20  Wall.  (87  U.  S.)  64], 

87,  88,  102,  108,  109,  406 


to  Sections] 

Osborn  v.  Benbow  (38  Mo.  App. 
25),  108 

Oslikosh  Waterworks  Co.  v.  Osh- 
kosh  (187  U.  S.  437),  213 

Otis  Steel  Co.  v.  Local  Union,  No. 
218,  of  Cleveland,  etc.  (110  Fed. 
698),  503 

Ottawa  v.  Carey  (108  U.  S.  110),  277 

Over  V.  Byram  Foundry  Co.  (37 
Ind.  App.  452),  86,  102,  403 

Owen  County  Burley  Tobacco 
Society  v.  Brumback  (32  Ky.  L. 
Rep.  916),  244,  375 

Owensboro  v.  Owensboro  Water- 
works Co.  (191  U.  S.  358),  225 

Oxley  Stave  Co.  v.  Cooper's  Inter- 
national Union  (72  Fed.  695),  31 


Pacific  Factor  Tea  Co.  v.  Adler  (90 

Cal.  110),  86,  90 
Pacific  Postal  Teleg.  Cable  Co.  v. 

Western   Union   Teleg.   Co.    (50 

Fed.  493),  293 
Paddleford,  Fay  &  Co.  v.  Mayor, 

etc.,  of  Savannah  (14  Ga.  438), 

16,  17 
Palmer  v.  City  of  Helena  (40  Mont. 

498),  277 
Paragon  Oil  Co.  v.  Hall  (7  Ohio  C. 

Ct.  240),  108 
Parfitt  v.  Ferguson  (38  N.  Y.  Supp. 

466),  306 
Paris,  City  of,  v.  Sturgeon  (50  Tex. 

Civ.  App.  519),  277 
Park  V.  Modern  Woodmen  of  Amer- 
ica (181  111.  214),  266 
Park  &  Sons  Co.  v.  Hartman  (153 

Fed.  24),  135,  138 
Park  &  Sons  Co.  v.  National  Whole- 
sale Druggists'  Assoc.  (175  N.  Y. 

1),  29,  31,  63,  401,  470 
Parkinson  Co.  v.  Building  Trades 

Council  of  Santa  Clara  County 

(154  Cal.  581),  497,  501,  519 
Passenger  Cases  [7  How.  (48  U.  S.) 
283],  16,  270 

Pasteur  Vaccine  Co.   v.   Burkey 
^22  Tex.  Civ.  App.  232),  462 


TABLE    OF   CASES   CITED 


[References  are  to  Sections] 


Patch  Mfg.  Co.  V.  Protection  Lodge 

(77  Vt.  294),  520 
Paterson  Chronicle  Co.  v.  Mayor, 

etc.,  of  Paterson  (6G  N.  J.  L.  129), 

323 
Patnode  v.  Westenhaven  (114  Wis. 

460),  60,  61,  440 
Patterson  v.  Glassmire  (166  Pa.  St. 

230),  108 
Patterson  v.  Kentucky   (97  U.  S. 

501),  384 
Patterson  v.  Missouri  Pac.  Ry.  Co. 

(77  Kan.  236),  16 
Patterson  v.  Wollmann  (5  N.  Dak. 

608),  8,  72,  276,  300 
Paul  V.  Virginia  [8  Wall.  (75  U.  S.) 

168],   16 
Pearsall  v.  Great  Northern  Ry.  Co. 

(161  U.  S.  646),  71,  225,  275 
Peltz  V.  Eichele  (62  Mo.  171),  106 
Pennsylvania  v.    Wheeling  &  Bel- 
mont Bridge  Co.  [18  How.  (59 

U.  S.)  421],  270 
Pennsylvania  R.  Co.  v.  Canal  Com- 
missioners (21  Pa.  St.  9),  71,  275 
Pennsylvania  R.  Co.  v.  Common- 
wealth [(Pa.,  1886),  7  Atl.  368], 

19 
Pennsylvania  Sugar  R.  Co.  v.  Amer- 
ican Co.  (166  Fed.  254),  120,  173, 

175 
Pensacola   Teleg.   Co.   v.    Western 

Union  Teleg.  Co.   (96  U.  S.   1), 

16,  203,  292,  318 
People  V.  Aachen  &  Munich  Fire 

Ins.  Co.  (126  111.  App.  636),  337 
People  V.   American  Ice  Co.    (120 

N.  Y.  Supp.  443),  8,  68,  357 
People   V.   American   Ice  Co.    [135 

App.  Div.  (N.  Y.)  180],  445,  448, 

474 
People  V.  Board  of  Election  Com- 

mi.ssioners  of  Chicago  (221  III.  9), 

265 
People  V.  Bo  wen  [30  Barb.  (N.  Y.) 

24],  303 
People   V.    Butler  Street   Foundry 

(201  111.  236),  442,  455,  495 
People  (ex  rel.  Peabody)  v.  Chicago 

Gas  Trust  Co.  (130  lU.  268),  86 


People    (ex   rel.    Healy)    v.    Clean 

Street  Co.  (225  111.  470),  263,  279 
People  V.  Collins  (9  Cal.  App.  622), 

80 
People  V.  Commercial  Life  Ins.  Co. 

[(111.,  1910),  93  N.  E.  90],  264 
People  (ex  rel.  Woodhaven  Gas  Co.) 

V.  Deehan  (153  N.  Y.  528),  71, 

275 
People  V.  Detroit  United  Ry.  (162 

Mich.  460),  275 
People  V.  Dickerson  (17  Det.  Leg. 

N.  1044),  230,  231 
People   (ex  rel.   Single  Paper  Co., 

Ltd.)    V.    Edgcomb    (98   N.    Y. 

Supp.  965),  322 
People  V.  Fisher  [50  Hun  (N.  Y.), 

552],  45 
People  V.  Flagg  (46  N.  Y.  401),  269 
People  (ex  rel.  Rhodes)  v.  Fleming 

(10  Colo.  553),  269 
People  (ex  rel.)  v.  Fox  (247  111.  402), 

264 
People  V.  Gilson  (109  N.  Y.  389),  82 
People  V.  Hawkins  (157  N.  Y.  1),  86 
People  V.  King  (110  N.  Y.  418),  27 
People  V.  Klaw  (106  N.  Y.  Supp. 

341),  16 
People  V.  Klaw  [55  Misc.  R.  (N.  Y.) 

72],  436 
People  V.  Marcus  (185  N.  Y.  257), 

536 
People  V.  Marcus  (97  N.  Y.  Supp. 

322),  522,  536 
People  V.  McFarlin  (43  Misc.  591, 

89  N.  Y.  Supp.  527),  510,  518,  523 
People  V.  Milk  Exchange  (145  N. 

Y.  267),  335 
People    V.    Montena    (123    N.    Y. 

Supp.  1074),  27 
People  V.  Murphy  (195  N.  Y.  176), 

271 
People  V.  North  River  Sugar  Re- 
fining Co.  (54  Hun,  377),  65 
People  V.  People's  Gaa  Light  &  Coke 

Co.  (205  111.  482) 
People  V.  Perley  (123  N.  Y.  Supp. 

436),  277 
People  V.  Public  Service  Commis- 
sion (125  N.  Y.  Supp.  1000\  2()6 


lii 


TABLE   OF   CASES   CITED 


[References  are 

People  V.  Radt  (71   N.  Y.  Supp. 

846),  519 
People  V.  Raymond  (34  Cal.  492), 

16 
People  V.  Richard   (1   Mich.  216), 

475 
People  (ex  rel.  Koerner)  v.  Ridgley 

(21  111.  65),  272 
People    V.    Sacramento    Butchers' 

Assn.    (12  Cal.   App.   471),   459, 

469,  471,  472,  475,  487 
People    (ex   rel.    Healy)    v.    Shedd 

(241  111.  155),  86 
People  V.  Sheldon  (139  N.  Y.  251) 

(see  "Appendix  A"),  63 
People  (ex  rel.  Gill)  v.  Smith  (5  N. 

Y.  Cr.  R.  513),  511 
People  V.  Woodhaven  Gas  Co.  (153 

N.  Y.  528),  275 
People  V.  Young  (45  N.  Y.  Supp. 

772),  269 
People's  Bank  v.  Dalton  (2  Okla. 

476),  86 
People's  Rd.  v.  Memphis  Rd.   [10 

Wall.  (77  U.  S.)  38],  272 
People's  Tobacco  Co.  v.  American 

Tobacco  Co.  (170  Fed.  396),  173 
Peoria  Gas  &  Electric  Co.  v.  Peoria 

(200  U.  S.  48),  451 
Perdue  v.  State  (134  Ga.  300),  227 
Perls  V.  Saalfield  Co.  [C.  A.  (1892) 

2  Ch.  149],  109 
Peterson  v.  Schmidt  (13  Ohio  C.  C. 

205),  108 
Pettibone  v.  United  States  (148  U. 

S.  197),  3,  20,  84 
Philadelphia  &  Southern  Steamship 

Co.  V.  Pennsylvania  (122  U.  S. 

326),  270 
PhilHps  V.  lola    Portland    Cement 

Co.  (125  Fed.  593),  120,  140 
Phillips   Village   Corp.    v.    Phillips 

Water  Co.  (104  Me.  103),  277 
Pickard  v.  Pullman  Southern  Car 

Co.  (117  U.  S.  34),  270 
Pickett  V.  Walsh  (192  Mass.  572), 

497,  501,  502,  509 
Pidcock    V    Harrington    (64    Fed. 

821),  161 
Pierce  v.  Stablemen's  Union   (156 


to  Sections] 

Cal.  70),  31,  34,  501,  504,  518, 

530,  537 
Pike  V.  State  Board  of  Land  Com- 
missioners    [(Idaho,     1911),    113 

Pac.  447],  86 
Pike  V.  Thomas  [4  Bibb.   (7  Ky.) 

486],  88 
Pikes  Peak  Power  Co.  v.  City  of 

Colorado  Springs   (105  Fed.   1), 

277 
Pinkney,  In  re  (47  Kan.  89),  25, 

365 
Pittsburg,  C,  C.  &  St.  L.  Ry.  Co.  v. 

Hartford    City    (170    Ind.    674), 

266 
Pittsburg,    Cincinnati,    Chicago    & 

St.   Louis  Ry.   Co.   v.  Town  of 

Crown    Point    (146    Ind.     421), 

277 
Plant  V.  Woods  (176  Mass.  492), 

32,  509 
Planters'   Bank  v.  Sharp  [6  How. 

(47  U.  S.)  301],  214 
Piatt  V.   City  &   County  of  San 

Francisco  (158  Cal.  74),  277 
Piatt  V.   LeCocq   (150  Fed.   391), 

269 
Plumb  V.  Christie   (103  Ga.  686), 

308 
Pocahontas  Coke  Co.  v.  Powhatan 

Coal,  etc.,  Co.  (60  W.  Va.  508), 

8,  12,  65,  66,  75,  87,  89,  96,  102, 

106,  109 
Poindexter  v.  Greenhow.     See  Vir- 
ginia Coujjon  Cases. 
Pooling  of  Freights,  In  re  (115  Fed. 

588),  197 
Pope   Motor   Car   Co.   v.   Keegan 

(150  Fed.  148),  503 
Pope  Turnbo  v.  Bedford  (147  Mo. 

App.  692),  439 
Porter  v.  Vinzant  (49  Fla.  213),  277 
Post  V.  Railroad  (103  Tenn.  184), 

474 
Postal  Teleg.  Cable  Co.  v.  Alabama 

(155  U.  S.  482),  165 
Postal  Teleg.  Cable  Co.  v.  City  of 

Mobib  (179  Fed.  955),  16 
Postal   Teleg.   Cable  Co.   v.   State 

(HO  Md.  608),  16 


TABLE   OF   CASES   CITED 
[References  are  to  Sections] 


liii 


Potter  County  Water  Co.  v.  Austin 

Borough  (206  Pa.  St.  297),  22o 
Prescott  V.  Bidwell   (18  So.   Dak. 

64),  410 
Price  V.  People  (193  111.  114),  271 
Pritchard  v.  Norton  (106  U.  S.  124), 

214 
Prame  v.   Ferrell    (166  Fed.  702), 

102,  106 
Pueblo  &  Arkansas  Valley  Rd.  Co. 

V.  Taylor  (6  Colo.  1),  86 
Pueblo,    City   of,    v.    Stanton    (4.5 

Colo.  523),  277 
Purczell  V.  Smidt  (21  Iowa,  55),  269 
Purington  v.  HinclifT  (219  III.  159), 

502 
Pumell  V.  McLane  (98  Md.  589), 

272 
Purvis   V.    Local   No.   500,   United 

Brotherhood  of  Carpenters  (214 

Pa.  St.  348),  502,  518 

Q 

Queen  Ins.  Co.  v.  The  State  (86 
Tex.  250),  12,  16,  18,  54,  86,  90, 
106 

Quinn  v.  Leathern  (70  Law  J.  P. 
C.  76),  60,  518 

Quinn  v.  Shields  (62  Iowa,  129),  21 

R 

Rafferty  v.  Buffalo  City  Gas  Co. 

[37  App.  Div.  (N.  Y.)  618],  392 
Ragsdale  v.  Naglc  (106  Cal.  332), 

108 
Rahrer,  In  re  (140  U.  S.  545),  16 
Railroad   Co.   v.   Fuller   [17   Wall. 

(84  U.  S.)  560],  10 
Railroad  Co.  v.  Husen   (95  U.  S. 

465),  16 
Railroad  Co.  v.  McClure  [10  Wall. 

(77  U.  S.)  511],  209 
Railroad  Co.  v.  Richmond  [19  Wall. 

(86  U.  S.)  584],  206,  207 
Railway  Co.  v.  Schaffer  (65  Ohio 

St.  414),  536 
Rakestraw  v.  Lanier  (104  Ga.  188), 

106 


Rand,  McNally  &  Co,  v.  Hart- 
rauft  (20  Wa«h.  591),  313 

KatcJiff  V.  Wichita  Union  Stock- 
yards Co.  (74  Kan.  1),  271 

Rayburn  Water  Co.  v.  Armstrong 
Water  Co.  (9  Pa.  Dist.  R.  24),  72 

Re.     See  particular  name. 

Read  v.  Atlantic  City  (49  N.  J.  L. 
558),  277 

Reading  Rd.  Co.  v.  Pennsylvania. 
See  State  Freight  Tax. 

Reagan  v.  Mercantile  Trust  Co. 
(154  U.  S.  413),  270 

Reclamation  Dist.  No.  70  v.  Sher- 
man (11  Cal.  App.  399),  266 

Redland  Fruit  Co.  v.  Sargent  (51 
Tex.  Civ.  App.  619),  348,  405, 
462 

Reelfoot  Lake  Levee  Dist.  v.  Daw- 
son (97Tenn.  151),  269 

Reese,  In  re  (107  Fed.  942,  47  C.  C. 
A.  87),  503 

Reese,  In  re  (98  Fed.  984),  503 

Reform  Club  of  Masons  &  Plas- 
terers L.  A.  706,  V.  Laborers' 
Union  Protective  Society  (60  N. 
Y.  Supp.  388),  511,  516 

Reid  V.  Southern  Ry.  Co.  (153  N.  C. 
490),  16 

Reid  V.  Trowbridge  (78  Miss.  542), 
298 

Renz  V.  Kremer  (142  Wis.  1),  271 

Retail  Lumber  Dealers'  Assoc,  v. 
State  (95  Miss.  337),  98,  105,  271, 
432 

Revere  Water  Co.  v.  Inhabitants 
of  ^^■inthrop  (192  Mass.  455),  61 

Rex  V.  Eccles  (I  Leach,  274),  475 

Rex  V.  Gill  &  Henry  (2  B.  &  Aid. 
204),  475 

Rex  V.  Kcnrick  (5  Q.  B.  61),  62 

Reynolds  v.  Davis  (198  Mass.  294), 
502,  515 

Rice  v.  Standard  Oil  Co.  (134  Fed. 
464),  120,  173,  176 

Richards  v.  American  Desk  &  Seat- 
ing Co.  (87  Wis.  503),  109 

Richardson  v.  Buhl  (77  Mich.  658), 
65,  89.  335 

Richmond    County    Gaslight     Co. 


Uv 


TABLE    OF   CASES   CITED 


V.  Middletown  (59  N.  Y.  228), 

304,  330 
Richmond,  Fredericksburg    &  Po- 
tomac  Rd.    Co.  V.    Louisa   Rd. 

Co.  [13  How.  (54  U.  S.)  71],  221 
Riverside   Mills  v.   Atlantic  Coast 

Line  R.  Co.  (168  Fed.  987),  16 
Robbins  v.  Shelby  Co.  Tax  Dist. 

(120  U.  S.  480),  270 
Robbins  v.  Shelby  Taxing  District 

(120  U.  S.  489)  (see  "Appendix 

A") 
Roberts,  Ex  parte  (166  Mo.  207), 

269 
Roberts  v.  Lemeret  (73  Neb.  365), 

106,  109 
Robinson,    In    re,  v.    City    of    St. 

Thomas  (23  Ont.  Rep.  489),  317 
Robinson  v.  Lamb  (126  N.  C.  492), 

252,  300 
Robinson  v.    Suburban   Brick   Co. 

(127  Fed.  804),  141 
Robson  V.  Hamilton  (41  Oreg.  239), 

86 
Rockland  Water  Co.  v.  Camden  & 

Rockland    Water    Co.    (80    Me. 

544),  74,  275 
Rogers  v.  Evarts  (17  N.  Y.  Supp. 

264),  517 
Rohlf  V.  Kasemeier  (140  Iowa,  182), 

18,  351,  359,  427,  500 
Rosenbaum  v.  United  States  Credit 

System  Co.  (65  N.  J.  L.  255),  97, 

103,  109 
Rourke  v.  Elk  Drug  Co.  [75  App. 

Div.  (N.  Y.)  145],  452 
Roush  V.  Gcsman  (126  Iowa,  498), 

106 
Rousillon  V.  Roussillon  (14  Ch.  D. 

351),  94 
Rubber   Tiro    Wheel    Co.    v.    Mil- 
waukee Rubber  Works  Co.  (142 

Fed.  531),  135,  136 
Ruddy    V.    United    Association    of 

Journeymen  Plumbers  [(N.  J.  L., 

1910),  75  Atl.  742],  512 
Run  V.  Barclay  (68  Pa.  St.  187),  61 
Russell  V.  Courier  Printing  &  Pub. 

Co.  (43  Colo.  321),  86 
Russell  &  Sons  v.  Stampers  &  Gold 


[References  are  to  Sections] 

Leaf  Local  Union  No.  22   (107 
N.  Y.  Supp.  303),  499,  516,  525, 
526,  527,  529,  531,  532 
Russia  Cement  Co.   v.  Frauenhar 
(126  Fed.  228),  289 


S 

Sackett  &  Wilhems  Lithographing 

&  Print  Co.  v.  National  Assoc,  of 

Employing     Lithographers      (61 

Misc.  (N.  Y.)  150],  37,  40 
Safety  Insulated  Wire  &  Cable  Co. 

V.  Mayor,  etc.,  of  Baltimore  (66 

Fed.  140),  277 
Saginaw   Gaslight    Co.  v.  City   of 

Saginaw  (28  Fed.  529),  298,  304, 

330 
Saint.    See  St. 
Salinger  v.  Western  Union  Teleg. 

Co.  [(Iowa),  126  N.  W.  362],  27 
Salt   Lake  City  v.  Christensen  (34 

Utah,  38),  269 
San  Antonio  Gas  Co.  v.  State  (22 

Tex.  Civ.  App.   118),  335,  344, 

382,  482 
San  Diego  Water  Co.  v.  San  Diego 

Flume  Co.  (108  Cal.  549),  8 
San  Francisco  Gas  Co.  v.  City  of 

San  Francisco  (9  Cal.  453),  277 
San  Louis  Water  Co.  v.  Estrada 

(117  Cal.  168),  266 
Santa  Clara   Mill  Lumber  Co.   v. 

Hayes  (76  Cal.  387),  89 
Saxlehner  v.   Wagner    (216  U.   S. 

275),  290 
Schlang  v.  Ladies   Waist   Makers' 

Union  (124  N.  Y.  Supp.  289),  497, 

518 
Schmalz  v.   Wooley  (57  N.  J.  Eq. 

303),  264 
Schneider  v.  City  of  Menasha  (118 

Wis.  298),  277 
Schultz  V.    State   (112    Md.   211), 

277 
Schwalm  v.  Holmes  (49  Cal.  665), 

82 
Schwarcz    v.    International    Ladies 

G.  W.  Union  (124  N.  Y.  Supp. 

918),  511,  516 


Table  of  cases  cited 


Iv 


(Rofttrencrs 

Scott  V.  Farmers'  &  Merchants'  Na- 
tional Bank  (1)7  Tex.  31),  309 

Scranton  KlvcA .  Light  &  Heat  Co.  v. 
Scranton  llhiininating,  Heat  & 
Power  Co.  (122  Pa.  St.  154),  71 

Searle  Manufacturing  Co.  v.  Terry 
(5G  Misc.  205,  106  N.  Y.  Supp. 
438),  501,  503,  532 

Seattle  &  Lake  Washington  Water- 
way Co.  V.  Seattle  Dock  Co.  (35 
Wis.  503),  334 

Seattle  Brewing  &  Malting  Co.  v. 
Hanson  (144  Fed.  1011),  520 

Seattle,  City  of,  v.  Clark  (28  Wash. 
717),  271 

Seattle,  City  of,  v.  Dencker  (58 
Wash.  501),  S,  89 

Seavy  v.  Spratling  (133  Ga.  27),  88 

Security  Savings  &  Loan  Assn.  v. 
Elbert  (153  Ind.  198),  464 

Seibcrt  v.  Lewis  (122  U.  S.  284),  214 

Sentner  v.  Straus  (130  Fed.  389), 
159 

Seymour  v.  O.sborne  [11  Wall.  ((iO 
U.  S.)  516],  283 

Sharpe  v.  Hasey  (134  Wis.  618),  25 

Shawnee  Compress  Co.  v.  Anderson 
(209  U.  S.  423).  (See  "Appen- 
dix A"),  83 

Shawnee  Sewerage  &  Drainage  Co. 
V.  Steams  (220  U.  S.  462),  216 

Shcehan  v.  Scott  (145  Cal.  684),  269 

Shelby  v.  Ziegler  (22  Okla.  799),  21 

Sherlock  v.  Ailing  (93  U.  S.  99),  270 

Sherman  County  v.  Simons  (109 
U.  S.  735),  263 

Sherry  v.  Perkins  (147  Mass.  212), 
32,  505 

Shreveport  v.  Cole  (129  U.  S.  36), 
209 

Shreve  Traction  Co.  v.  Kansas  Citj', 
Shreveport  &  Gulf  Ry.  Co.  (119 
La.  759),  278 

Shute  V.  Heath  (131  N.  C.  281),  106 

Shuttleworth  v.  State  (35  Ala.  415), 
18 

Siebold,  Ex  parte  (100  U.  S.  371), 
203 

Simmons-Burke  Clothing  Co.  v. 
Linton  (90  Ark.  73),  21 


are  to  SectionsJ 

Sims  V.  Steadman  (62  S.  C.  300),  214 
Singer  Manufacturing  Co.  v.  Juno 

Manufacturing   Co.    (163    U.    S. 

169),  291 
Singer  Manufacturing  Co.  v.  Long 

(18  C.  D.  412),  291 
Sinsheimer     v.     United     Garment 

Workers  (28  N.  Y.  Supp.  321), 

519 
Sinton  v.  Ashbury  (41  Cal.  425),  278 
Skaggs  V.  Simpson  (33  Ky.  L.  Rep. 

410),  109 
Skaneatelcs    Water    Co.    v.    Skan- 

eateles  (184  U.  S.  354),  74,  225 
Skelly  V.  Bristol  Sav.  Bk.  (63  Conn. 

83),  21 
Skinner   v.    Garnctt     Gold-Mining 

Co.  (96  Fed.  735),  263 
Slaughter  v.  Thacker  Coal  &  Coke 

Co.  (55  W.  Va.  642),  75,  87,  106 
Slaughter-House    Cases    [16    Wall. 

(83  U.  S.)  36],  8,  227,  276 
Slideil  V.  Grandjean  (111  U.  S.  412), 

275 
Smalley  v.  Greene  (.'i2  Iowa,  241), 

82 
Smiley  v.  Kansas  (196  U.  S.  447), 

234,  236,  271,  336,  337,  444 
Smith  v.  Alabama  (124  U.  S.  465), 

271 
Smith  V.  Berryman  (142  Mo.  App. 

373),  277 
Smith  V.  Du  Bose  (78  Ga.  413),  86 
Smith  V.   San  Francisco  <fe   North 

Pac.  Ry.  Co.  (115  Cal.  584),  86 
Smith's  Appeal  (113  Pa.  St.  579), 

106,  108 
Snead  v.  Central  of  Georgia  Ry.  Co. 

(151  Fed.  608),  16 
Solon    V.    State    (Tex.    Civ.    App. 

1908)  349],  269 
Soon  Hing  v.  Crowley  (113  U.  S. 

703),  370 
South   Carolina   v.    United   States 

(199  U.  S.  437),  226 
Southern     Express     Co.   v.   Keiler 

[(Va.,  1909)  64  S.  E.  38],  27 
Southern  Fire  Brick  &  Clay  Co.  v. 

Garden  City  Land  Co.  (223  111. 

616),  92,  101,  106,  378 


Ivi 


TABLE    OF   OASES   CITED 


[References  are  to  Sections) 


Southern  Gun  Co.   v.   Laylin   (66 

Ohio  St.  578),  269 
Southern    Indiana    Expr.    Co.    v. 

United  States  Expr.  Co.  (88  Fed. 

659),  161 
Southern  Pacific  Co.  v.  Interstate 

Commerce  Commission  (200  U.  S. 

536),  195,  198 
Southern  Pacific  Terminal  Co.   v. 

Interstate    Commerce    Commis- 
sion (219  U.  S.  498),  16 
Southern   Railway   Co.    v.    Greene 

(216  U.  S.  400),  237 
Southern  Railway  Co.  v.  King  (217 

U.  S.  524),  205,  270,  271 
Southern  Railway  Co.  v.  Machin- 
ists' Local  Union   (111   Fed.  49), 

505 
Southern  Wisconsin  Power  Co.,  In 

re  (140  Wis.  245),  266 
South  Pasadena,  City  of,  v.  Pasa- 
dena   Land  &  Water   Co.   (152 

Cal.  579),  277 
Southwestern    Missouri    Light   Co. 

V.  City  of  Jophn  (113  Fed.  817), 

217 
Spaulding  v.    Inhabitants  of  Pea- 
body  (153  Mass.  129),  299 
Spease  Ferry,  In  re  (138  N.  C.  219), 

300 
Spies  V.  People  (122  111.  212),  3 
Sportswood   V.    Morris   (12   Idaho, 

360),  272 
Spring  Valley  Water  Co.  v.  City  & 

County   of   San    Francisco    (165 

P'ed.  667),  231 
St.  Hyacinth  Congregation  v.  Bor- 

noki  (141  Wis.  205),  266 
St.  Joseph  Plank  Road  v.  Khne  (106 

La.  325),  320 
St.  Louis  V.  Kaime  (180  Mo.  309), 

277 
St.  Louis  &  C.  R.  Co.  V.   Postal 

Teleg.  Co.  (173  111.  508),  293 
St.  Louis  &  San  Francisco  R.  Co.  v. 

State  (87  Ark.  562),  16 
St.  Louis  Gashght  Co.  v.  St.  Louis 

Gas  Fuel  &  Power  Co.  (16  Mo. 

App.  52),  306 
St.  Paul,  Minneapolis  &  Manitoba 


Railway  Co.  v.  Minnesota  (214 

U.  S.  497),  271 
Stahr  V.  Hichman  Grain  Co.  (132 

Ky.  496),  473 
Standard    Oil    Co.    v.    State    (117 

Tenn.  618),  336,  351,  363,  385, 

407,  440,  473,  483 
Standard  Oil  Co.  v.  United  States 

(221  U.  S.  1).     (See  "Appendix 

A"),  15,  16,  22,  23,  24,  58,  85a, 

233,  235,  267,  276 
Standard  Oil  Co.  of  Ky.  v.  Tennes- 
see (217  U.  S.  413),  237 
Standard    Paint    Co.    v.    Trinidad 

Asphalt    Mfg.    Co.    (220    U.    S. 

446),  288,  289 
Staroske  v.  PuUtzer  Pub.  Co.  [(Mo., 

1911),  138  S.  W.  36],  423 
Starr    Burying    Ground    Assoc,    v. 

North  Lane  Cemetery  Assoc.  (77 

Conn.  83),  263 
State  V.   Adams  Lumber  Co.    (81 

Neb.  392),  3.50,  422 
State  V.  Mtna.  Fire  Ins.  Co.  (66  Ark. 

480),  480 
State   (ex  rel.  Crow)  v.  iEtna  Ins. 

Co.  (150  Mo.  113),  264 
State  V.  Aiken  (42  S.  C.  222),  308 
State   (ex  rel.)  v.  Allen   (178  Mo. 

555),  223 
State  V.  Ameker  (73  S.  C.  330),  3 
State  V.  Arkadelphia  Lumber  Co. 

(70  Ark.  1011),  350 
State    (ex    rel.    Crow)    v.    Armour 

Packing  Co.   (173  Mo.  356),  2, 

425 
State  Star  Pub.  Co.  v.  Assoc.  Press 

(159  Mo.  410),  271,  431 
State  V.  Bienstock  [(N.  J.,  1909),  73 

Atl.  530],  3,  60 
State  V.  Boland  (144  Mo.  534),  482 
State  (ex  rel.  Monnett)  v.  Buckeye 

Pipe  Line  Co.  (61  Ohio  St.  520), 

344 
State  V.  Central  Lumber  Co.  (24  S. 

Dak.  136),  8,  48,  231,  237,  271, 

288,  346,  374 
State  V.  Central  of  Georgia  Railway 

Co.  (109  Ga.  716),  395 
State  (ex  rel.  Means)  v.  Chicago, 


TABLE    OF-  CASES   CITED 


Ivii 


[ltef(-reii(-('.s 

R.  T.  &  P.  Ry.  Co.  [(Ark.,  1910), 

128  S.  W.  555],  356 
State  V.  Cliicago,  St.  Paul,  Minne- 
apolis  &   Omaha   Ry.    Co.    (40 

Minn.  267),  16 
State    V.     Cincinnati    Gaslight    & 

Coke  Co.  (18  Ohio  St.  262),  298, 

304,  330 
State  V.  Citizens'  Bank  of  Louisiana 

(52  La.  Ann.  1086),  263 
State  V.  City  of  Bangor  (98  Me. 

114),  265 
State    (ex  rel.   Spokane  &    British 

Columbia  Tcleph.  &  Telcg.  Co.) 

V.   City   of   Spokane    (24   Wash. 

53),  317 
State  V.  Clark  (30  Wash.  439),  269 
State  (ex  inf.  Crow)  v.  Continental 

Tobacco  Co.   (177  Mo.   1),  365, 

389,  393,  448 
State  V.   Creamery   Package  Mfg. 

Co.   [(Minn.,   1911),   132  N.  W. 

268],  447,  448 
State  V.   Creamery   Package   Mfg. 

Co.  (110  Minn.  415),  390,  453 
State  V.  Crowley  (41  Wis.  271),  475 
State  V.  Cudahy  Packing  Co.   (33 

Mont.  179),  203,  249 
State  (ex  rel.  Postal  Teleg.  Cable 

Co.)    V.    Delaware    &    Atlantic 

Teleg.  &  Teleph.  Co.    (47  Fed. 

633),  92 
State  V.  Delaware,  Lackawanna  & 

Western  R.  Co.  (30  N.  J.  L.  473), 

16 
State  V.  Denny  (118  Ind.  449),  269 
State  V.   Donaldson   (32  N.   J.    L. 

151),  512,  517 
State  V.    Drayton    (82   Neb.   254), 

338,  346 
State  V.  Duckworth  (5  Idaho,  642), 

16 
State  V.    Duluth   Board   of  Trade 

(107  Minn.  506),  5,  8,  23,  46,  53, 

65,  68,  80,  82,  89,  90,  96,  97,  100, 

106,  109,  247,  378,  379,  497,  500 
State  V.  Duncan  (78  Vt.  364),  32 
State  V.  Dyer  (67  Vt.  690),  505 
State  V.  Eastern  Coal  Co.  (29  R.  L 

254),  3,  5,  8,  13,  60,  61,  63,  89 


are  to  Sections] 

State  V.   Eckenrode  [(Iowa,  1910j, 

127  N.  W.  56],  16 
State  V.  Effler  [(Del.,  1910),  78  Atl. 

411],  3 
State  V.  Erickson  (54  Wash.  472), 

475,  485 
State  (ex  inf.)  v.  Firemen's  Fund 

Ins.  Co.  (152  Mo.  1),  18,  264,  370, 

379,  482,  493 
State  V.  Fitzpatrick  (16  R.  I.  1),  271 
State   V.    Fountain    [6    Pen.  (Del.) 

520],  269 
State  V.  Freeholders  of  Hudson  (23 

N.  J.  L.  206),  72 
State  V.  Gage  (72  Ohio  St.  210), 

344,  374 
State   V.    Glenn    Lumber   Co.    (83 

Kan.  399),  354,  469 
State  V.  Gliddcn  (.55  Conn.  46),  31, 

33,  502,  503 
State  V.  Goldhart  (172  Ind.  210), 

269 
State  V.  Goodwill  (33  W.  Va.  179), 

82,  536 
State   V.    Grays   Harbor   &    Puget 

Sound  Ry.  Co.  (,54  Wash.  530),  16 
State  V.  Griffin  (69  N.  H.  1),  271 
State   (ex  rel.   Clark)   v.   Haworth 

School    Trustee,    etc.    (122    Ind. 

462),  8,  314 
State  V.  Henke  (19  Mo.  225),  18 
State  (Myers)  v.  Hudson  Co.  Elec. 

Co.  (60  N.  J.  L.  350),  299 
State  V.  Illinois  Cent.  R.  Co.  (246 

111.  188),  16 
State  V.    Indiana  &    111.   Southern 

Rd.  Co.  (133  Ind.  69),  16 
State    V.    International    Harvester 

Co.  (81  Kan.  610),  446 
State    V.    International    Harvester 

Co.  (79  Kan.  371),  471,  485 
State    V.    International    Harvester 
.  Co.  (79  Ark.  517),  3-50,  442 
State  V.  Jack  (69  Kan.  387),  495 
State   V.   Jackson   Cotton   Oil   Co. 

(95  Miss.  6),  343,  378 
State  V.  Julow  (129  Mo.  163\  536 
State  (ex  rel.  Hardley)  v.  Kansas 

City  Live  Stock  Exchange  (211 

Mo.  181),  440,  450 


Iviii 


TABLE    OF   CASES   CITED 


[References  are  to  Sections] 


State  V.  Kreutzberg  (114  Wis.  530), 

271,  535,  536 
State  V.  Lancashire  Fire  Ins.  Co. 

(66  Ark.  466),  370 
State  V.  Laredo  Ice  Co.   (96  Tex. 

461),  344 
State  (ex  rel.  Worley)  v.  Lewis  (55 

Fla.  570),   277 
State  V.  Lewis  (26  Utah,  125),  269 
State  V.  McCaw  (77  S.  C.  351),  266 
State  V.  Mcssner  (43  Wash.  206),  3 
State  V.  Milwaukee   Gashght   Co. 

(29  Wis.  454),  274,  303 
State       (Clapp)       v.       Minnesota 

Thresher    Mfg.    Co.    (40    Minn. 

213),  272 
State  V.  Missouri,  K.  &  T.  R.  Co.  of 

Texas   (99   Tex.  516),  213,  387, 

398,  483 
State  V.  Missouri  Pac.  Ry.  Co.  (81 

Neb.  15),  16 
State  V.  Monarch  Portland  Cement 

Co.  [(Kan.,  1910),  111  Pac.  487], 

469 
State  V.  Moore  (104  N.  C.  714),  271 
State  V.  Moore  (40  Neb.  854),  269 
State  V.  Moore  &  Ligon  (19  Ala. 

520),  272 
State  V.  Morgan  (2  S.  Dak.  32),  16 
State    (ex    rel.    Laclede    Gaslight 

Co.)  V.  Murphy  (130  Mo.   10), 

278 
State  V.  Norton  (23  N.  J.  L.  33),  3 
State  V.  Omaha  Elevator  Co.   (75 

Neb.  637),  354,  355,  488 
State  V.  Penny  (42  Mont.  118),  271 
State  V.  Perry  (151  N.  C.  661),  252, 

310 
State  V.  Phipps  (50  Kan.  609),  16, 

25,  421 
Stat£  V.  Portland  General  Electric 

Co.  (52  Oreg.  502),  266 
State  V.  Post  (55  N.  J.  L.  264),  6 
State  V.  Racine  Sattlcy  Co.  [(Tex. 

Civ.  App.,  1911),  134  S.  W.  400], 

3,  98 
State  V.  Real  Estate  Bank  [5  Pike 

(5  Ark.),  595],  72 
State  V.   Redmoor   (134  Wis.  89), 

269 


State  V.  Richcreek  (167  Ind.  217), 

271 
State  V.  Schlatterbeck  (39  Ohio  St. 

268),  95 
State  V.  Schlitz  Brewing  Co.  (104 

Tenn.  715),  16,  25,  332,  344,  346, 

360 
State  V.  Scougal  (3  S.  Dak.  56),  272 
State  (ex  rel.  Henson)  v.  Sheppard 

(192  Mo.  497),  269 
Stats  v.  Shippers'  Warehouse  Co. 

(95  Tex.  603),  376,  392 
State  (ex  rel.  W^oodward)  v.  Skeggs, 

(154  Ala.  249),  269 
State  V.  Small  (82  S.  C.  93),  26 
State  V.  Smiley  (65  Kan.  240),  234, 

337,  344,  419 
State  V.  Standard  Oil  Co.  (61  Neb. 

28),  448 
State  V.  Standard  Oil  Co.  (49  Ohio 

St.  137),  92 
State  (ex  rel.  Young)  v.  Standard 

Oil  Co.  (HI  Minn.  85),  372 
State  (ex  rel.  Hadley)  v.  Standard 

Oil  Co.  (218  Mo.  1),  230,  237,  271, 

336,  339,  341,  344,  345,  347,  374, 

445,  455,  471,  477,  494,  495,  496 
State  V.  Standard  Oil  Co.  of  Ken- 
tucky (120  Tenn.  86),  237 
State  V.  Stewart  (59  Vt.  273),  505 
State  V.  Stockford  (77  Conn.  227), 

497,  501,  503,  517 
State  (ex  rel.  Berryhill)  v.  St.  Paul 

Gaslight  Co.  (92  Minn.  467),  404 
State  V.  St.   Paul,   Minneapolis  & 

Manitoba    Ry.    Co.    (98    Minn. 

380),  71,  271,  275 
State  (ex  rel.  Cascade  R.  R.  Co.) 

V.  Superior  Court  (5  Wash.  346), 

395 
State  (ex  inf.  Crow)  v.  Swarzschild 

&  Sulzberger  Co.  (173  Mo.  394), 

425 
State  ex  rel.  v.  Talbot  (123  Mo.  69), 

482 
State  V.   Tampa  Waterworks  Co. 

(56  Fla.  858),  277 
State  (ex  inf.  Attorney  General)  v. 

Terminal     Railroad     Association 

(182  Mo.  284),  369 


TABLE    OF   CASES   CITED 


lix 


[Rcferoncos  are  to  .Sections] 


State  (Southern  N.  E.  Teleph.  Co.) 

V.  Towers  (71  Conn.  G.57),  317 
State  V.  United  States  Express  Co. 

(63  W.  Va.  299),  16 
State  V.   Vanderbilt   (37  Ohio  St. 

643),  95 
State  V.  Virginia-Carolina  Chemical 

Co.  (71  S.  C.  544),  340,  344,  352 
State  (e.x  rel.  Coleman)  v.  Western 

Union  Teleg.  Co.  (75  Kan.  609), 

205 
State  (ex  rel.  Case)  v.  Wilson  (151 

Mo.  App.  723),  277 
State  V.  Wilson  (73  Kan.  334),  415, 

461 
State  V.   Witherspoon    (115  Tenn. 

138),  344,  468,  469,  474,  475 
State  Board  of  Health  v.  Diamond 

Mills   Paper  Co.    (03   X.  J.   Eq. 

Ill),  264 
State  freight  Tax  [15  Wall.  (82  U. 

S.)  232],  16,  270 
Staten  Island   Midland  R.  Co.   v. 

Staten    Island    Electric    R.    Co. 

(54  N.  Y.  Supp.  598),  72 
State  Tonnage  Tax  Cases  [12  Wall. 

(79  U.  S.)  204],  16 
Stein  V.  Bienville  Water  Supply  Co. 

(141  U.  S.  67),  71,  225,  275 
Sterling   Remedy   Co.   v.  Wyckofif, 

Seamans  &   Benedict   (154  Ind. 

437),  464 
Sternberg  v.  O'Brien  (14  N.  J.  L. 

237),  109 
Stewart  &  Bro.  v.  Stems  &  Culvert 

Lumber  Co.  (56  Fla.  570),  86,  89, 

97,  101,  102,  109,  380 
Stines  v.  Borman  (25  Ohio  St.  580), 

406 
Stone    V.    Textile    Examiners'    & 

Shrinkers'  Employers'  Assn.  (122 

N.  Y.  Supp.  137),  38 
Stout  V.  State  (43  Ark.  414),  350 
Stovall    V.    McCutchen    (107    Ky. 

577),  88 
Stratton    v.    Morris    (5    Pick.  (89 

Tenn.)  497],  269 
Strauss    v.     Amorican    Publishers' 

Association  (177  N.  Y.  473),  430 
Strauss    v.     American    Pubhshers' 


Assn.  [92  App.  Div.  (X.  Y.)  350], 

454 
SuUivan  v.  Texas  (207  U.  S.  416;, 

218 
Sunset  Teleph.  &  Teleg.  Co.  v.  City 

of  Eureka  (172  Fed.  755),  16 
Superior  Coal  Co.  v.  E.  R.  Darling- 
ton Lumber  Co.  (236  111.  83),  109 
Sutton  v.  Head  (86  Ky.  156),  88, 

106 
Swann  v.  Swann  (21  Fed.  299),  86 
Swanson  v.  City  of  Ottumwa  (131 

Iowa,  540),  212 
Swearington  v.  United  States  (161 

U.  S.  446)  (see  "Appendix  A") 
Swift  &  Co.  v.  United  States  (196 

U.  S.  375)  (see  "Appendix  A"), 

65,  77,  80,  82,  83,  89,  122,  129, 

141,  148,  173,  183,  236 
Swigert  &  Howard  v.  Tilden  (121 

Iowa,  650),  86,  88,  96,  106,  109 
Syracuse    Water    Co.    v.    City    of 

Syracuse  (116  X.  Y.  167),  71,  328 


Tacoma  Hotel  Co.  v.  Tacoma  Light 

&  Water  Co.  (3  Wash.  316),  277 
Talcott  V.  Brackctt  (5  111.  App.  60), 

109 
Tallman  v.  Gaillard  (57  X.  Y.  Supp. 

419),  511 
Tammany    Waterworks    v.     Xew 

Orieans  Waterworks  (120  U.  S. 

64),  225 
Tarbell  v.  Rutland  Rd.  Co.  (73  Vt. 

347),  86 
Taylor  v.  Saurman  (110  Pa.  St.  3), 

88 
Teachout    v.    Des    Moines    Broad 

Gauge  St.  Ry.  Co.  (75  Iowa,  722), 

316 
Teal  V.  Felton  [12  How.  (53  U.  S.) 

284],  168 
Tecktonius  v.  Scott  (110  Wis.  441), 

86 
Temperton  v.  Russell  [(1893),  1  Q. 

B.  715],  502 
Territory   v.     DeWolfo    (13    Okla. 

454),  304 


Ix 


TABLE   OF   CASES   CITED 


[References 

Territory  v.  Farnsworth  (5  Mont. 

303),  16 
Territory  v.  Leslie  [(N.  M.,  1910), 

106  Pac.  378],  3 
Territory  v.  Long  Bell  Lumber  Co. 

(22  Okla.  890),  368 
Territory  v.  Rcyburn  (1  Kan.  55), 

208 
Texarkana  Gas  &  Electric  Co.  v. 

City   of   Texarkana    [(Tex.    Civ. 

App.,  1909),  123  S.  W.  213],  271 
Texas  &  Pacific  Coal  Co.  v.  Lawson 

(89  Tex.  394),  389,  405,  4G0 
Texas  &  Pacific  Ry.  Co.  v.  Henson 

[(Tex.),  132  S.  W.  118],  27 
Texas  &  Pacific  Ry.  Co.  v.  Southern 

Pac.  Ry.  Co.  (41  La.  Ann.  970), 

197 
Texas   Brewing  Co.  v.  Templemau 

(90  Tex.  277),  402 
Thomas  v.  Cincinnati,  N.  O.  &  T. 

P.  Ry.  Co.  (62  Fed.  803),  43,  76, 

498 
Thomas  v.   Lee   County   [3   Wall. 

(70  U.  S.)  327],  212 
Thomas  v.  Miles  (3  Ohio  St.  274), 

106 
Thomas    v.    Williamson    (51    P'la. 

332),  269 
Thompson  v.  Cobb  (95  Tex.  140), 

214 
Thomp.son  v.  Hubbard  (131  U.  S. 

123),  285 
Thomson  v.  Union  Castle  Mail  S. 

S.  Co.   (166  Fed.  251),  83,  118, 

129,  152,  167,  173 
Thorington    v.    Montgomery    (147 

U.  S.  490),  227 
Thorpe  v.  Rutland  &  B.  R.  Co.  (27 

Vt.  140),  269 
Thousand    Island    Park   Assoc,    v. 

Tucker  (173  N.  Y.  203),  264 
Thousand    Islands   Steamboat   Co. 

V.  Visgar  (83  N.  Y.  Supp.  325), 

321 
Tlirift  V.  Elizabeth  City  (122  N.  C. 

31  j,  8,  252,  278,  280,  328 
Thurlow     V.     Massachusetts.     See 

License  Cases. 
Tibby  Brothers  Glass  Co.  v.  Penn- 


are  to  Sections] 

sylvania  Railroad  Co.   (219  Pa. 

St.  430),  395 
Timmerman    v.    Dever    (52    Mich. 

34),  46 
Tinsley    v.    Treat, .  United    States 

Marshal  (205  U.  S.  20),  181 
Tivoli,  Manchester,  Ltd.,  v.  CoUey 

(52  W.  R.  032),  106 
Tobler  v.  Austin  (22  Tex.  Civ.  App. 

99),  86,  106 
Tode  V.  Gross  (127  N.  Y.  480),  101, 

102 
Toledo,  Ann  Arbor  &  North  Mich- 
igan Ry.  Co.  V.  Pennsylvania  Co. 

(54  Fed.  730),  3,  31,  42,  502,  505 
Toledo  Bank  v.  Bond.   See  Bank  of 

Toledo  v.  City  of  Toledo. 
Toledo  W.  &  W.  Ry.  Co.  v.  City  of 

Jacksonville  (67  111.  37),  271 
Town  of.     See  name  of. 
Tracy  v.  Banlcer  (170  Mass.  266), 

539,  540 
Trade-Mark  Cases  (100  U.  S.  82), 

16,  288 
Transportation  of  Immigrants,   In 

re  (10  I.  C.  C.  R.  13),  194 
Trenton  v.    Wahrenburg    (30  Ind. 

App.  304),  106,  109 
Trenton  Pass.  R.  Co.  v.  Guarantors' 

Liability  Indemnity  Co.   (60  N. 

J.  L.  246),  86 
Trenton  Potteries  Co.  v.  Ohphant 

(58  N.  J.  Eq.  507),  109,  335 
Trenton  Potteries  Co.  v.  Oliphant 

(56  N.  J.  Eq.  680),  88,  89,  91,  96, 

102,  106,  108,  109 
Tribolet  v.  United  States  (11  Ariz. 

436),  56 
Trust  Company  of  Georgia  v.  State 

(109  Ga.  736),  458 
Trustees     of     Exempt     Firemen's 

Benev.  Fund  v.  Roome  (93  N.  Y. 

313),  6 
Trustees  of  Southampton  v.  Jessup 

(162  N.  Y.  122),  71,  275 
Tuckahoe  Canal  Co.  v.  Tuckahoe 

&  James  River  Ry.  Co.  [11  Leigh 

(Va.),42],  70,275,311 
Tugman  v.  City  of  Chicago  (78  111. 

105),  280 


TABLE   OF   CASES   CITED 


Ixi 


[References 

Turner    v.    City    of    Hattiesburg 

[(Misa.,  1910),  53  So.  081],  20(3 
Turner   v.    Johnson    [7    Dana    (37 

Ky.),  435],  lOG 
Turner  v.  Wilkes  County  Commrs. 

(173  U.  S.  461),  209 
Turner  v.  Williams  (194  U.  S.  279), 

226 
Turnpike  Co.  v.  State  [3  WaU.  (70 

U.  S.)  210],  74,  275 
Tuscaloosa  Ice  Mfg.  Co.  v.  Williams 

(127  Ala.  110),  87,  90,  100 
Twelfth  St.  Market  Co.  v.  Phila- 
delphia &  Reading  Term.  R.  Co. 

(142  Pa.  St.  580),  74 
Twin  Village  Water  Co.  v.  Damaris- 

cotta  Gaslight  Co.  (98  Me.  325), 

299 
Typothetae        v.        Typographical 

Union  (117  N.  Y.  Supp.  144),  533 
Typothetffi         v.        Typographical 

Union,  No.  6  (129  N.  Y.  Supp. 

967),  533 

U 

Underwood  v.  Barker,  L.  R.  (1  Ch. 

D.  300),  86,  94,  102,  106,  109 
Union    Central    Life    Ins.    Co.    v. 

ChampHn  (11  Okla.  184),  86 
Union  Ferry  Co.,  Matter  of  (98  N. 

Y.  139),  6,  264 
Union  Pacific  Coal  Co.  v.  United 

States   (173   Fed.   737),   80,   82, 

120,  124,  128,  155,  185 
Union   Pac.   R.   Co.   v.   Ruef   (120 

Fed.  102),  503 
Union  Strawboard  Co.  v.  Bonfield 

(193  111.  420),  86,  88,  108 
Uniontown,  City  of,  v.  State  ex  rel. 

Glass  (145  Ala.  471),  272 
Union  Trust  Co.  of  N.  Y.  v.  Atchi- 
son, Topeka  &  Santa  Fe  R.  Co. 

(8  N.  Mex.  327),  293 
United    Shoe    Machinery    Co.    v. 

Kimball  (193  Mass.  351),  109 
United    Shoe    Machinery    Co.    of 

Canada    v.    Brunet    [Law    Rep. 

(1909)  App.  Cas.  330],  103 
United  States  v.  Addyston  Pipe  & 


are  to  Sections] 

Steel    Co.    (85    Fed.    271)    (see 

"Appendix  A"),  20,  77,  80,  86,  87, 

95,  97,  109 
United    States   v.    Aglor    (62    P'cd. 

824),  505 
United    States    v.    American    Bell 

Teleph.  Co.  (128  U.  S.  315),  282 
United  States  v.  American  Naval 

Stores  Co.  (172  Fed.  455),  3,  8, 

20,  78,  79,  123,  126,  185 
United  States  v.  American  Tobacco 

Co.  (221  U.  S.  106),  15,  16,  22,  23, 

24,  58,  233 
United  States  v.  Amer   an  Tobacco 

Co.  (164  Fed.  700),  16,  46,  55,  65, 

67,  79,  83,  101,  114,  118,  126,  131, 

141 
United  States  v.  American  Tobacco 

Co.  (163  Fed.  701),  144,  160 
United  States  v.  .\rredondo  [6  Pet. 

(31  U.  S.)  691],  275 
United  States  v.  Baltimore  &  Ohio 

R.  Co.  (165  Fed.  113),  27 
United  States  v.  Benett  (65  Fed. 

62),  440 
United  States  v.  Black  (160  Fed. 

431),  64 
United  States  v.  Britton  (108  U.  S. 

199),  64 
United  States  v.  Cassidy  (67  Fed. 

698),  16,  25,  58,  76 
United  States  v.  Chesapeake  &  O. 

Fuel  Co.  (105  U.  S.  104),  65 
United  States  v.  Chicago  &  N.  W. 

Ry.  Co.  (157  Fed.  616),  16 
United    States    v.    Coal    Dealers' 

Assoc.  (85  Fed.  252),  25,  58,  80, 

83,  118,  168 
United   States   v.    Cole    (153   Fed. 

801),  60,  64 
United  States  v.  Colorado  &  N.  W. 

R.  Co.  (157  Fed.  321),  16 
United  States  v.  Debs  (64  Fed.  724), 

16,  20,  2.5,  111,  114,  115,  116 
United  States  v.  E.  C.  Knight  Co. 

(156  U.  S.  1).     (See  "Appendix 

A"),  8,  16,  65,  77,  82,  87,   141, 

147 
United  States  v.  Elliott   (64  Fed. 

27),  505 


Ixii 


TABLE   OF   CASES   CITED 


[References  are  to  Sections] 


Uaited  States  v.  Elliott   (G2  Fed. 

801),  76 
United  States  v.  Erie  R.  Co.  (166 

Fed.  352),  16 
United  States  v.  Freight  Assoc.  (166 

U.  S.  290).    (See  "Appendix  A") 
United  States  v.  Goldberg  (12  Mey- 
er Fed.  Dec.  41),  60 
United  States  v.  Greenhut,  50  Fed. 

469),  178 
United  States  v.  Haggerty  (116  Fed. 

510),  505 
United  States  v.  Hamburg-Ameri- 
can Line  (159  Fed.  104),  27 
United  States  v.  Heike  (175  Fed. 

852),  186 
United  States  v.  Heinze  (218  U.  S. 

532),  238 
United  States  v.  Heth    [3  Cranch 

(7  U.  S.),  399],  275 
United  States  v.  Holliday  [3  Wall. 

(70  U.  S.)  407],  16 
United  States  v.  Jellico  Mountain 

Coal  &  Coke  Co.  (46  Fed.  432), 

80 
United  States  v.  Joint  Traffic  Assoc. 

(171   U.   S.   505)    (See   "Appen- 
dix A"),  16,  80,  81,  82,  83,  111, 

151,  201,  231,  233,  267 
United   States   v.   Kane    (23   Fed. 

748),  505 
United  States  v.  Kertel  (157    Fed. 

396),  3,  60 
United  States  v.  Kis.sel  (173  Fed. 

823),  3,  20,  57,  62,  64,  84,  85,  119, 

180 
United  States  v.    MacAndrews  & 

Forbes  Co.  (149  Fed.  823),  1,  20, 

58,  84,  120,  145,  178,  179 
United  States  v.   MacFarland   (28 

App.  D.  C.  552),  277 
United  States  v.  Mooney  (116  U.  S. 

106),  170 
United  States  v.  Moore  (173  Fed. 

122),  3,  61 
United   States   v.    Musgrave    (160 

Fed.  700),  86 
United  States  v.  Nelson   (.52  Fed. 

646),  178 
United  States  v.  New  York,  New 


Haven  &  Hfd.  R.  Co.  (165  Fed. 

742),  230 
United    States  v.   Northern    Secu- 
rities Co.  (120  Fed.  721),  80 
United  States  v.   Northern  Secur- 
ities Co.  (193  U.  S.  197).     (See 

Northern  Securities  Co.  v.  United 

States)  (See  "Appendix  A") 
United  States  v.  Patterson  (59  Fed. 

280),  178 
United  States  v.  Patterson  (55  Fed. 

605),  15,  20,  24,  58,  80 
United  States  v.   Pratt   (98  U.  S. 

4.50),  57 
United  States  v.  Reading  Co.  (183 

Fed.  427),  15,  22,  24,  80,  81,  124, 

126,  151,  182 
United  States  v.  Standard  Oil  Co. 

(173  Fed.  177),  79,  80,  82,  110, 

112,    113,    115,    120,    132,    182, 

185 
United  States  v.  Standard  Oil  Co. 

of  lud.  (1.55  Fed.  305),  16 
United  States  v.  Standard  Oil  Co. 

(152  Fed.  290),  169,  170,  171 
United    States   v.    Stevenson    (215 

U.  S.  200),  64 
United  States  v.  Sweeney  (95  Fed. 

434),  505 
United  States  v.  Swift  &  Co.  (122 

Fed.  529),  16,  27,  80,  83,  89 
United    States    v.    Trans-Missouri 

Freight  Assoc.  (58  Fed.  58),  10, 

196,  231,  515 
United    States    v.    Trans-Missouri 

Freight  Assoc.  (53  Fed.  440),  8 
United    States    v.    Trans-Missouri 

Freight  Assoc.   (166  U.  S.  290). 

(See  "Appendix  A"),  23,  58,  75, 

76,  78,  80,  83,  86,  97,  106,  114, 

118,  123,  127,  151,  201,  233,  350, 

387 
United  States  v.  Union  Pacific  Ry. 

Co.  (98  U.  S.  569),  169 
United  States  v.  Union  Pac.  Ry. 

Co.  (45  Fed.  221),  293 
United  States  v.  Union  Pac.  Ry.  Co. 

&  Western  Union  Teleg.  Co.  (160 

U.  S.  1),  293 
United  States  v.  Virginia-Carolina 


TABLE   OF   CASES   CITED 


Ixiii 


[References  are  to  Sections 
Chemical  Co.  (163  Fed.  66),  169, 


178 
United  States  v.  Weber  (114  Fed. 

950),  497,  505,  516 
United  States  v.  Wells-Fargo  Ex- 
press Co.  (161  Fed.  606),  534 
United  States  v.  Wong  Kim  Ark 

(169  U.  S.  649).     (See  "Appen- 
dix A") 
United    States    v.     Workingmen's 

Amalgamated  Council  of  N.  O. 

(54  Fed.  994),  76,  1.39,  505 
United    States    Chemical    Co.    v. 

Provident  Chemical  Co.  (64  Fed. 

946),  8,  12,  66,  68,  82,  99,  109 
United  States  Consol.  Seeded  Raisin 

Co.  V.  Griffin  &  Shelley  Co.  (126 

Fed.  364),  134,  135 
United  States  Fidelity  &  Guaranty 

Co.  V.  Commonwealth  (139  Ky. 

27),  16 
United  States  Gypsum  Co.  v.  Glea- 

son  (135  Wis.  539),  16 
United  States  Heater  Co.  v.  Iron 

Moulders'  Union  (129  Mich.  354), 

538 
United  States  Saving  &  Loan  Co. 

V.    First    Methodist    Protestant 

Church,  (153  Fed.  702),  464 
Up  River  Ice  Co.  v.  Denier  (114 

Mich.  296),  86,  88,  104,  106 
Urmston  v.   Whitelake  [(2   B.   D.) 

8  R.  R.  &  Corp.  L.  J.  153]  89 


Vance  v.   W.   A.   Vandercook   Co. 

(170  U.  S.  438),  16 
V.an  Hook  v.  City  of  Selina,  70  Ala. 

361),  271 
Van  Patten  v.  Chicago,  Milwaukee 

&  St.  Paul  R.  Co.  (74  Fed.  981), 

170 
Vegelahn   v.    Guntner    (167   Mass. 

92),  60,  505,  506,  509 
Venning  v.  .Atlantic  Coast  Line  R. 

Co.  (78  S.  C.  42),  16 
Vermilye  v.  Western  Union  Teleg. 

Co.  [(Mass.,  1911),  93  N.  E.  635], 

000 


Vickaburg  v.  Vicksburg  Waterworks 

Co.    (206  U.  S.   496),   294,   328, 
332 
Vidal  V.  Girard's  Executors  [2  How. 

(43  U.  S.)  127],  86 
Vigilancia,  The  (73  Fed.  457;,  214 
Village  of.     See  name  of. 
Vinconncs,    City    of,    v.    Citizens' 

Gaslight  Co.  (132  Ind.  114),  277, 

304 
Virginia  Coupon  Cases  (114  U.  S. 

270),  214 
Virtue  v.  Creamery  Package  Mfg. 

Co.  (179  Fed.  115),  123,  140,  158 
Von  Bremen  v.  MacMonnies  (122 

N.  Y.  Supp.  1087),  88 

W 

Wabash  R.  Co.  v.  Hannahan  (121 

Fed.  563),  497,  501 
Wabash,   St.   Louis  &   Pacific  Rj'. 

Co.  V.  Illinois  (118  U.  S.  557),  16, 

17,  270 
Waco  Water  &  Light  Co.  v.  City  of 

Waco  [(Tex.  Civ.  App.,  1894),  27 

S.  W.  675],  326,  329 
Wagner  v.  City  of  Rock  Island  (146 

111.  139),  277 
Wagner  v.  Minnie    Harvester   Co. 

(25  Okla.  558),  461 
Wagoner  Undertaking  Co.  v.  Jones 

(134  Mo.  App.  101),  462 
Wakefield  v.  Van  Tassell  (202    111. 

41),  86 
Walker  v.  Cronin  (107  Mass.  555), 

509 
Walker  v.  Lawrence  (177  Fed.  363), 

86,  109 
Walker  v.  Whitehead  [16  Wall.  (83 

U.  S.)  314],  214 
Wallace  v.  City  of  Reno  (27  Nev. 

71),  269 
Walla  Walla  v.  Walla  W^alla  Water 

Co.  (172  U.  S.  1),  225,  298 
Waller  v.  Osborn  [(60  Fla.),  52  So. 

970],  277 
Walsh    V.    Association    of    Master 

Plumbers  (97  Mo.  App.  280),  31, 

429 


Ixiv 


TABLE    OF   CASES   CITED 


[References  are 

Walsh  V.  Dwight.  (58  N.  Y.  Supp. 

91),  82,  403 
Walsh,  Ex  parte  [(Tex.  Civ.  App., 

1910),  129  S.  W.  118],  237 
Ward  V.  Byrne  (5  M.  &  W.  548),  94 
Ware  &  Leland  v.  Mobile  County 

(209  U.  S.  405),  16 
Ware-Kramer     Tobacco      Co.     v. 

American  Tobacco  Co.  (180  Fed. 

160),  8,  118,  120,  IGO,  161,  173, 

252 
Warfield  v.  Booth  (33  Md.  63),  106 
Warren  v.  Bouvier  (124  N.  Y.  Supji. 

641),  86 
Warren  v.  Jones  (51  Me.  146),  109 
\Vashburn  v.  Dosch  (68  Wis.  436), 

108 
'.'Nashington    Toll    Bridge    Co.    v. 

Commissioners   of   Beaufort    (81 

X.  C.  491),  252,  300,  319 
V/ater,  Light  &  Gas  Co.  of  Hutch- 
inson V.  Hutchinson  (207  U.  S. 

385),  71,  74,  223,  225,  294 
Waters-Pierce  Oil  Co.  v.  State  (19 

Tex.  Civ.  App.  1),  344 
Waters-Pierce  Oil  Co.  v.  Texas  (212 

U.  S.  86),  230,  337,  343,  345,  386, 

442,  443 
Waterworks  Co.  v.  City  of  Wash- 
burn (129  Wis.  73),  325 
Waterworks    Co.    v.    Rivers    (115 

U.  S.  674),  225 
W^atkins  v.  Griffith  (59  Ark.  344), 

350 
Watkins  v.   Morley   (2  Tex.  App. 

Div.  Caa.,  §  723),  109 
Watson   V.   Harlem   &   New   York 

Nav.  Co.  [52  How.  Pr.  (N.  Y.) 

348],  1,  400 
Watson   v.    Maryland    (218   U.   S. 

173),  271 
Watson  V.  St.  Louis,  I.  M.  &  S.  Ry. 

Co.  (169  Fed.  942),  534 
Watson,  In  re  (17  S.  Dak.  486),  269 
Wayne  Monroe  Teleph.  Co.  v.  On- 
tario Teleph.  Co.  (112  N.  Y.  Supp. 

424),  109 
Webb  V.  Dunn  (18  Fla.  721),  16 
Webb  Press  Co.  v.  Bierce  (116  La. 

Ann.  905),  87,  412 


to  Sections] 

W^eber  v.  Rogan  (188  U.  S.  10),  210, 
212 

Webster  v.  Williams  (62  Ark.  101), 
106 

Weinsberg  v.  St.  Louis  Cordage 
Co.  (135  Mo.  App.  553),  21 

Weisert  Bros.  Tobacco  Co.  v.  Amer- 
ican Tobacco  Co.  (163  Fed.  712), 
145 

Welch  v.  Phelps  &  Bigelow  Wind- 
mill Co.  (89  Tex.  653),  82,  408 

W^elton  v.  Missouri  (91  U.  S.  275), 
16 

Western  Union  Teleg.  Co.  v.  Amer- 
ican Union  Teleg.  Co.  (65  Ga. 
160),  293 

Western  Union  Teleg.  Co.  v.  Amer- 
ican Union  Teleg.  Co.  (9  Biss.  72, 
Fed.  Case  No.  17,444),  293 

Western  Union  Teleg.  Co.  v.  At- 
lantic &  Pacific  States  Teleg.  Co. 
(5  Nev.  102),  16,  293 

Western  Union  Teleg.  Co.  v.  At- 
lantic R.  Co.  (91  U.  S.  283),  318 

Western  Union  Teleg.  Co.  v.  Balti- 
more &  Ohio  Teleg.  Co.  (23  Fed. 
12),  293 

Western  Union  Teleg.  Co.  v.  Bur- 
lington &  Southwestern  R.  Co. 
(11  Fed.  1),  293 

Western  Union  Teleg.  Co.  v.  Call 
Pub.  Co.  (181  U.  S.  92),  318 

Western  Union  Teleg.  Co.  v.  Chi- 
cago &  Paducah  Rd.  Co.  (86  III. 
246),  92 

Western  Union  Teleg.  Co.  v.  Com- 
mercial Milling  Co.  (218  U.  S. 
406),  16,  271 

Western  Union  Teleg.  Co.  v.  Crovo 
(220  U.  S.  364),  270 

Western  Union  Teleg.  Co.  v.  James 
(162  U.  S.  650),  271 

Western  Union  Teleg.  Co.  v.  Kan- 
sas (216  U.  S.  1),  205 

Western  Union  Teleg.  Co.  v.  Nor- 
man, (77  Fed.  13),  272 

Western  Union  Teleg.  Co.  v. 
Pendleton  (122  U.  S.  347),  16, 
271 

Western  Union  Teleg.  Co.  v.  Penn- 


TABLE    OF   CASES   CITED 


Ixv 


[References 

sylvania  Rd.  Co.  (195  U.  S.  540), 

292 
Western  Union  Teleg.  Co.  v.  Texa.s 

(105  U.  S.  460),  16 
Western   Wooden   Ware   Assoc,    v. 

Starkey  (84  Mich.  76),  80,  87,  88. 

102,  106,  108,  406 
West   Manayunk   Gaslight  Co.   v. 

New  Gaslight  Co.  (21  Pa.  Co.  Ct. 

Rep.  379),  71 
Westminster  Water  Co.  v.  City  of 

W\-stminster  (98  Md.  551),  216 
West  River  Bridge  Co.  v.   Dix  [6 

How.  (47  U.  S.)  507J,  214,  215 
West  Virginia  Transp.  Co.  v.  Ohio 

River  Pipe  Line  Co.  (22  W.  Va. 

600),  86 
West  Virginia  Transp.  Co.  v.  Stand- 
ard Oil  Co.  (50  W.  Va.  611),  60, 

61 
Wheaton  v.  Peters  [8  Pet.  (33  U.  S. 

591],  285,  287 
Wheeler  v.  City  of  Sault  Ste.  Marie 

(17  Det.  Leg.  N.  1117),  277 
Wheeler-Stenzcl    Co.    v.    National 

Window    Glass    Jobbers'    Assn. 

(154  Fed.  864),  173 
Wheeler-Stenzel    Co.    v.    National 

Window    Glass    Jobbers'     Assn. 

(152  Fed.  864),  118 
Wheeling  &  Belmont  Bridge  Co.  v. 

Wheeling  Bridge  Co.  (138  U.  S. 

287),  220 
W.  H.  Hill  &  Co.  v.  Gray  &  Wor- 
cester (163  Mich.  12),  107 
Whitaker   v.    Keilby    (106    N.    Y. 

Supp.  511),  92,  109 
White  V.  City  of  Meadvillc  (177  Pa. 

St.  643),  325 
WTiite  V.  Hard  [13  Wall.  (SO  U.  S.) 

646],  214 
White  V.  White  (132  Wis.  121),  4 
White-Smith    Music    Pub.    Co.    v. 

Apollo  Co.  (209  U.  S.  1),  287 
White,  Tompkins  &  Courage  v.  Wil- 
son (23  T.  L.  R.  469),  106 
Whitlock  v.  Hawkins  (105  Va.  242), 

269 
Whittaker  v.  Howe  (3  Beav.  383), 

94 


are  to  Sections] 

Whitwell   V.   Continental   Tobacco 

Co.   (125  Fed.  454),  75,  80,  82, 

114,  122,  125,  140 
Wichita  Electric   Co.    v.    Hinckley 

[(Tex.  Civ.  App.,  1910),  131  S.  W. 

1192],  203 
Wilcox  V.  Cherry  (123  N.  C.  79),  21 
Wiley  V.  Baumgardner  (97  Ind.  66), 

106 
Wiley  &   Drake  v.   National   Wall 

Paper  Co.  (70  111.  App.  513),  462 
Wilkesbarre  Elec.  L.  Co.  v.  Wilkea- 

barre  L.   H.  &   M.  Co.  [(Penn., 

1886),  4  Kulp,  47],  71 
Williams  v.  Fears  (110  Ga.  584),  16, 

26 
Williams  v.  Rogan  (59  Tex.  438),  21 
Williams  v.  Wingo  (177  U.  S.  601), 

220 
Williams,  In  re  (158  Cal.  550),  508 
Willicut  &  Sons  Co.  v.  Driscoll  (200 

Mass.  110),  516 
Willis  V.  Kalmback  (109  Va.  475), 

269 
Willson  V.  Morse  (117  Iowa,  581), 

462,  489 
Wilmington   Water   Power   Co.    v. 

Evans  (166  111.  548),  272 
Wilson  V.  Hey  (232  111.  389),  497, 

516,  520 
Wiltse  V.   City  of  Red  Wing   (99 

Minn.  255),  277 
Winch  V.  Tobin  (107  111.  212),  269 
Winchester  v.  Corinna  (55  Me.  9), 

269 
Winona,   City    of,   v.   Botzet    (169 

Fed.  321),  277 
Wire  Company  v.  Murray  (80  F'ed. 

811),  505 
Wisconsin  Cent.  R.  Co.  v.  United 

States  (164  U.  S.  190),  275 
Wittenberg  v.  Mollyneaux  (60  Neb. 

583),  91 
Wolff    v.    Hirschfeld    [(Tex.    Civ. 

App.),  57  S.  W.  572],  86,  409 
Wood  V.  City  of  Seattle  (23  Wash. 

1),  259,  262,  316 
Wood  V.  Common  Council  of  City 

of  Birmingham  (56  N.  Y.  Supp. 

105),  73 


Ixvi 


TABLE    OF   CASES   CITED 


Wood  V.  Whitehead  Bros.  Co.  (165 

N.   Y.    545),    88,   96,    101,   102, 

232 
Wood  Mowing  &  Reaping  Co.  v. 

Greenwood    Hardware    Co.    (75 

S.  C.  378),  65,  109,  3S2 
Woodruff  V.  Hughes  (2  Ga.  App. 

361),  3 
Woodruff  V.  New  York  &  New  Eng. 

R.  Co.  (50  Conn.  63),  271 
Woods  V.  Colfax  County  (10  Neb. 

552),  263 
Woodward    v.    Alson    [12    Heisk. 

(Tenn.)  581],  189 
Wooten  V.  Harris  (153  N.  C.  43), 

106,  107,  409 
Worcester,   City  of,   v.   Worcester 

Consolidated   St.   Ry.   Co.    (196 

U.  S.  539),  278 
Wright  V.  Cunningham  (115  Tenn. 

445),  268,  278 


[References  are  to  Sections] 

Wright  V.  Nagle  (101  U.  S.  791),  71, 

298,  330 
Wright  V.  Rydor  (36  Cal.  342),  88, 

106,  109 
Wright  V.  State  (88  Md.  436),  8 
Wunch   V.    Shankland    (69   N.    Y. 

Supp.  349),  511 


Yarmouth   v.   Yarmouth    (34   Me. 

411),  272 
Yazoo  &  Mississippi  Valley  Rd.  Co. 

V.  Searles   (85   Miss.   520),   248, 

251,  340,  381,  399 
Yick   Wo  V.   Hopkins   (118  U.  S. 

356),  370 


Zikos  V.  Oregon  R.  &  Nav.  Co.  (179 
Fed.  893),  16 


JOYCE 

ON 

MONOPOLIES  AND  UNLAWFUL 
COMBINATIONS 

OR 

RESTRAINTS 

CHAPTER  I 

GENERAL   TERMS   AND   DEFINITIONS 

§    1.  Combination  Defined.  §    7.  Forestalling  Defined. 

2.  Competition  Defined.  8.  Monopoly  Defined. 

3.  Conspiracy  Defined.  9.  Monopolist  Defined. 

4.  Civil  Conspiracy  Defined.  10.  "Pooling"  Defined. 

5.  Engrossing  Defined.  11.  Regrating  Defined. 

6.  Exclusive  Right  or  Privilege  12.  "Trust"  Defined 

Defined. 

Section  1.    Combination  Defined. 

A  combination  is  the  union  or  association  of  two  or  more 
persons  or  parties  for  the  attainment  of  some  common 
end.^ 

The  union  or  association  of  two  or  more  persons  or 
things,  by  set  purpose  or  agreement,  in  order  to  effect 
some  object  by  joint  operation;  as  a  combination  of  cap- 
ital or  of  labor.^  It  is  declared,  however,  that  '''combin- 
ation' is  a  word  not  yet  possessed  of  an  accurate  legal 

1  Brownsville  Glass  Co.  v.  Appert  Glass  Co.  (U.  S.  C.  C),  136  Fed.  240, 
245,  per  BuflBngton,  Dist.  J.,  quoting  Cent.  Diet,  (case  of  contract  or  license 
to  use  certain  patents;  trusts;  when  organization  a  "combination"). 

2  Webster's  Universal  Diet.  (Ed.  1910-1911).  See  also  Watson  v.  Har- 
lem &  New  York  Navigation  Co.,  52  How.  Pr.  (N.  Y.)  348,  353,  per  Law- 
rence, J.  Examine  Central  Shade  Roller  Co.  v.  Cushman,  143  Mass.  353, 
364,  9  N.  E.  629. 

(1)  1 


§§  2,  3  GENERAL   TERMS   AND   DEFINITIONS 

meaning;  its  place  in  criminal  law  is,  I  believe,  no  older 
than  this  statute,^  of  itself  it  means  no  more  than  'co- 
operation'— a  union  of  effort."^ 

§  2.  Competition  Defined. 

Competition  is  defined  to  be  the  struggle  between  rivals 
for  the  same  trade  at  the  same  time.  That  there  cannot 
be  competition  in  the  absence  of  trade  is  self-evident,  and 
although  it  is  a  popular  saying  that  "competition  is  the 
life  of  trade,"  yet  it  is  quite  certain  that  trade  is  the  mother 
of  competition,  since  the  latter  springs  from  the  former. 
Therefore,  it  would  seem  to  follow  that  whatever  restrains 
trade  restrains  competition  in  exact  degree.^ 

§  3.  Conspiracy  Defined.^ 

The  most  generally  accepted  definition  of  a  conspiracy 
is  that  it  consists  of  a  combination  between  two  or  more 
persons  to  do  a  criminal  or  an  unlawful  act,  or  a  lawful 
act  by  criminal  or  unlawful  means.^  A  conspiracy  is  also 
similarly  defined  as  a  combination  of  two  or  more  persons, 

3  Anti-Trust  Act  of  July  2,  1890,  c.  647,  26  Stat.  209;  U.  S.  Comp.  Stat., 
1901,  p.  3200.     See  §  13  herein. 

4  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed.  823, 
831,  per  Hough,  Dist.  J. 

6  Heim  Brewing  Co.  v.  BeUndcr,  97  Mo.  App.  64,  76,  71  S.  W.  691,  sub- 
Btantially  the  language  of  Ellison,  J. 

" Competition  is  the  life  of  trade''  as  to  the  evil  effects  of  "Pools,  trusts  and 
conspiracies  to  fix  or  maintain  the  prices  of  the  necessaries  of  hfe."  See, 
under  the  above  headUne,  State  ex.  inf.  Crow  v.  Armour  Packing  Co.,  173 
Mo.  356,  387,  73  S.  W.  645,  per  Marshall,  J. 

«  See  §§  4,  20,  herein. 

7  United  States  v.  Moore  (U.  S.  C.  C),  173  Fed.  122  (a  case  of  conspiracy 
to  defraud  the  United  States  under  Rev.  Stat.,  §  5440;  U.  S.  Comp.  Stat., 
1901,  p.  3676.  See  also  Toledo,  Ann  Arbor  &  North  Michigan  Ry.  Co.  v. 
Pennsylvania  Co.  (U.  S.  C.  C),  54  Fed.  730,  739,  per  Taft,  Cir.  J.;  State  v. 
Effler  (Del.  Gen.  Sess.,  1910),  78  Atl.  411;  Matthews  v.  Shankland,  56  N.  Y. 
Supp.  123,  129;  State  v.  Bienstock  (N.  J.,  1909),  73  Atl.  530,  535  (quoting 
from  State  v.  Norton,  23  N.  J.  L.  33);  State  v.  Ameker,  73  S.  C.  330,  338, 
339,  53  S.  E.  484;  State  v.  Racine  Sattlcy  Co.  (Tex.  Civ.  App.,  1911),  134 
S.  W.  400  (case  under  State  Anti-Trust  Statute). 

Conspiracy  is  a  combination  or  agreement  between  two  or  more  persons 
to  do  an  unlawful  thing,  or  to  do  a  lawful  thing  in  an  unlawful  manner. 
Ballantine  v.  Cummings,  220  Pa.  St.  621,  70  Atl.  546  (trespass  for  dam- 
ages for  conspiracy). 

2 


GENERAL   TERMS   AND   DEFINITIONS  §  4 

by  concerted  action,  to  accomplish  a  criminal  or  unlawful 
purpose,  or  some  purpose  not  in  itself  criminal  or  unlawful 
by  criminal  or  unlawful  means,*"  Under  another  defini- 
tion a  conspiracy  is  the  combining  of  two  or  more  persons 
for  the  purpose  of  doing  something  unlawful,  oppressive 
or  immoral,  as  a  means  or  an  end.^ 

§  4.  Civil  Conspiracy  Defined.^" 

Substantially  the  same  definitions  have  been  given  of 

Criminal  conspiracy  is  a  confederating  of  two  or  mure  persons  to  accom- 
plish some  unlawful  purpose,  or  a  lawful  purpose  by  some  unlawful  means. 
Territory  v.  Leslie,  (N.  M.  1910),  106  Pac.  378  (quoting  Bishop's  New 
Crim.  Law). 

"A  conspiracy  at  common  law  may  be  defined  in  short,  as  an  agreement 
or  combination  formed  between  two  or  more  persons  to  do  an  unlawful 
act  or  to  do  a  lawful  act  by  unlawful  means."  Franklin  Union  v.  The 
People,  220  111.  355,  77  N.  E.  176  (case  of  labor  union;  injunction;  con- 
tempt). 

»  United  States:  Pettibone  v.  United  States,  148  U.  S.  197,  37  L.  ed.  419,  13 
Sup.  Ct.  542;  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172 
Fed.  455,  460,  per  Sheppard,  Dist.  J.  (a  case  of  conspiracy  in  restraint  of 
interstate  commerce;  criminal  prosecution;  Act  of  July  2,  1890);  United 
States  V.  Keitel  (U.  S.  D.  C),  157  Fed.  396  (indictment;  conspiracy  to  de- 
fraud United  States). 

Indiana:  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local 
Union,  165  Ind.  421,  424,  75  N.  E.  877. 

Montana:  Lindsay  &  Co.,  Ltd.,  v.  Montana  Federation  of  Labor,  37 
Mont.  264,  274,  96  Pac.  127  (quoting  Anderson's  Diet,  of  Law,  234,  as  ap- 
proved in  Spies  v.  People,  122  111.  212,  3  Am.  St.  Rep.  320,  12  N.  E.  865). 

Texas:  Green  v.  Bennett  (Tex.  Civ.  App.,  1908),  110  S.  W.  108. 

Washington:  State  v.  Messner,  43  Wash.  206,  86  Pac.  836. 

A  conspiracy  is  a  combination  of  two  or  more  persons  by  concerted  action 
to  accomplish  some  cruninal  or  unlawful  purpose.  Bauer  v.  State,  3 
Okla.  Cr.  529,  530,  107  Pac.  525. 

A  conspiracy  "has  been  defined  as  an  agreement  by  two  or  more  persons 
to  do  an  illegal  act,  or  to  do  a  legal  act  by  illegal  methods."  United  States 
V.  Kissel  (U.  S.  C.  C),  173  Fed.  823,  825. 

'  Woodruff  V.  Hughes,  2  Ga.  App.  361,  58  S.  E.  551  (action  for  damages 
for  alleged  conspiracy  to  oust  plaintiff  from  possession  of  certain  prem- 
ises). 

"A  'conspiracy'  may  be  broadly  defined  as  a  combination  to  effect  an 
illegal  object  as  an  end  or  means."  National  Fireproofing  Co.  v.  Mason 
Builders'  Assoc.  (U.  S.  C.  C.  A.),  169  Fed.  259,  94  C.  C.  A.  535. 

A  criminal  conspiracy  is  a  confederation  to  do  something  unlawful  either 
as  a  means  or  an  end.    State  v.  Ea.stern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1. 

'»  See  §§  3,  20,  herein. 

A  civil  conspiracy  consists  in  a  combination  of  two  or  more  persons  to  do 

3 


§  5  GENEllAL   TEKMS   AND   DEFINITIONS 

civil  as  of  criminal  conspiracy.  It  would  seem,  however, 
that  such  qualifications  relating  to  the  cause  of  action, 
to  the  gravamen  or  essentials  of  the  offense  as  are  em- 
bodied in  the  following  statements,  are  material.  ^^  Thus 
every  agreement  between  two  or  more  persons  to  accom- 
plish a  criminal  or  unlawful  object,  or  a  lawful  object  by 
criminal  or  unlawful  means,  is  an  unlawful  conspiracy, 
and  any  person  whose  rights  are  injured  by  acts  done  in 
furtherance  of  such  conspiracy  has  his  action  at  law  for 
redress  in  damages.  ^^  So  any  combination  of  two  or  more 
persons  to  do  a  criminal  or  unlawful  act  by  any  means  or 
to  do  a  lawful  act  by  criminal  or  unlawful  means  is  an 
actionable  conspiracy  at  common  law,  and  upon  the  pur- 
pose thereof  being  consummated  is  actionable  by  the 
person  injured  to  recover  compensation  therefor." 

§  5.  Engrossing  Defined. 

"Engrossing"  is  defined  or  ''described  to  be  the  getting 
into  one's  possession,  or  buying  up,  large  quantities  of 
corn,  or  other  dead  victuals  with  intent  to  sell  them  again. 
This  must  of  course  be  injurious  to  the  public,  by  putting 
it  in  the  power  of  one  or  two  rich  men  to  raise  the  price 
of  provisions  at  their  own  discretion.     And  so  the  total 

an  unlawful  act  by  lawful  or  unlawful  means,  or  to  do  a  lawful  act  by  un- 
lawful means.  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local 
Union,  165  Ind.  421,  75  N.  E.  877;  Goldfield  Consol.  Mines  Co.  v.  Goldfield 
Miners'  Union  (U.  S.  C.  C),  159  Fed.  500  (injunction;  miners'  union). 

A  "civil  conspiracy"  may  be  defined  as  a  combination  of  two  or  more 
persons  to  accomplish  by  concerted  action  an  unlawful  or  oppressive  ob- 
ject; or  a  lawful  object  by  unlawful  or  oppressive  means.  Natural  Fire- 
proofing  Co.  V.  Mason  Builders'  Assoc.  (U.  S.  C.  C.  A.),  169  Fed.  259,  94 
C.  C.  A.  535.  See  also  Green  v.  Bennett  (Tex.  Civ.  App.,  1908),  110  S.  W. 
108  (case  of  action  by  stockholders,  complaining  of  certain  acts  of  defend- 
ants in  placing  a  bank  in  voluntary  liquidation). 

"  Conspiracy  is  synonymous  with  collusion  or  connivance.  Levine  v.  Klein, 
120  X.  Y.  Supp.  196,  65  Misc.  458  (alleged  agreement  or  conspiracy  for 
divorce). 

'2  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  114  S.  W.  997  (injunc- 
tion; trades  unions;  strikes;  "boycott"). 

"  White  V.  White,  132  Wis.  121,  111  N.  W.  1116  (action  for  damages  for 
alleged  consummated  conspiracy  to  injure;  essentials  of  conspiracy  at 
common  law  held  sufficient  and  that  it  was  unnecessary  to  satisfy  every 
essential  of  statute.    Section  4466a,  St.  1898). 

4 


GENERAL   TERMS   AND    DEFINITIONS  §  6 

engrossing  of  any  other  commodity,  with  an  intent  to  sell 
it  at  an  um-easonable  price,  is  an  offence  indictable  and 
finable  at  the  common  law."^''  Coal  is  declared  to  be  an 
article  of  prime  necessity  and  therefore  legally  capable  of 
being  engrossed. ^^ 

§  6.  Exclusive  Right  or  Privilege  Defined. 

A  right  or  privilege  is  exclusive  where  the  grant  thereof 
carries  with  it  the  right  to  all  the  work  of  the  character 
therein  named,  and  which  precludes  every  other  person 
or  corporation  from  sharing  the  privilege  or  enjoying  an 
equal  privilege,  and  which  also  precludes  the  legislature 
from  conferring  equal  or  like  rights  upon  other  persons 
or  corporations  for  the  reason  that  the  entire  privilege 
has  been  granted  and  there  is  no  residue  for  distribution.'*^ 
The  word  ''exclusive"  is  derived  from  "ex,"  out,  and 
^^  claudere,'"  to  shut.  An  act  does  not  grant  an  exclusive 
privilege  or  franchise  unless  it  shuts  out  or  excludes  others 
from  enjo^ang  a  similar  privilege  or  franchise.  The  most 
familiar  instances  of  grants  of  exclusive  privileges  or  fran- 
chises are  to  be  found  in  acts  authorizing  the  establish- 
ment of  ferries,  toll  bridges,  turnpikes,  telegraph  companies 
and  the  like.  The  delegation  to  a  corporation  of  the  power 
to  acquire  title  to  land  for  public  purposes  is  not  a  grant 
of  an  ''exclusive"  privilege,  for  the  same  delegated  power 
may  be  conferred  upon  any  corporation  to  whom  the  leg- 
islature may  see  fit  to  intrust  it." 

"  4  Blackstone's  Comm.  160. 

"T/ie  old  offeiuses  of  regrating,  engrossing  and  forestalling  are  no  longer 
known  to  the  law;  but  modern  legislatures  are  still  seeking  a  solution  of  the 
same  problem — how  to  maintain  the  right  to  freely  buy  and  sell  the  nec- 
essaries of  life  in  a  market  which  is  free  from  artificial  and  conventional 
restrictions."  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  527,  121 
N.  W.  395,  per  Elliott,  J. 

It  is  declared  that:  "Doubtless  engrossing  is  an  offense  at  common  law 
in  this  State."    State  v.  Eastern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1,  4. 

»'•  State  V.  Eastern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1,  4. 

'8  Guthrie  Daily  Leader  v.  Cameron,  Auditor,  3  Okla.  677,  688,  41  Pac. 
635,  per  Burford,  J.  (a  case  of  a  special  statute  granting  a  special  and  ex- 
chisive  privilege  to  a  printing  company;  held  void). 

"  Union  Ferry  Co.,  Matter  of  Application  of,  9S  N.  Y.  139,  151,  per 

5 


§  7  GENERAL   TERMS   AND   DEFINITIONS 

§  7.  Forestalling  Defined. 

"Forestalling  is  derived  horn,  fare,  via  and  stall,  imped- 
imentum  and  by  the  common  law  regrating  and  engrossing 
were  comprehended  within  forestallment."  ^^  The  offense 
of  forestalling  the  market  was  also  an  offence  against  pub- 
lic trade.  ''This  which  *  *  *  is  also  an  offense  at  common 
law,  was  described  by  statute  ^^  to  be  the  buying  or  con- 
tracting for  any  merchandise  or  victual  coming  in  the  way 
to  market;  or  dissuading  persons  from  bringing  their 
goods  or  provisions  there;  or  persuading  them  to  enhance 
the  price  when  there;  any  of  which  practices  make  the 
market  dearer  to  the  fair  trader."  ^^  Where  rival  cor- 
porations are  not  exercising  any  public  franchise  of  carry- 
ing passengers  or  goods,  but  only  the  franchise  of  being  a 
corporation,  and  their  business  is  one  that  may  be  con- 
ducted by  private  individuals,  in  that  they  are  simply 
the  owners  of  a  certain  species  of  property,  such  as  a  cer- 
tain mineral  deposit,  which,  in  its  natural  state,  is  of  no 
use  to  mankind,  and  which  after  it  has  been  manufactured 
and  made  fit  for  use,  can  hardly  be  classed  as  a  necessity, 
the  law  forbidding  forestalling  the  market  does  not  apply 

Rapallo,  J.;  Davenport  v.  Kleinschmidt,  6  Mont.  502,  531,  13  Pac.  249,  per 
McLeary,  J.,  gives  same  definition. 

Exclusive  franchise,  privilege  or  immunity;  meaning  of,  see  the  following 
cases: 

Montana:  Davenport  v.  Kleinschmidt,  6  Mont.  502,  529-531,  13  Pac. 
249  (holding  that  a  right  to  furnish  all  the  water  to  a  municipal  corporation 
for  twenty  years,  which  right  cannot  be  abridged,  is  an  exclusive  privilege). 

New  Jersey:  State  v.  Post,  55  N.  J.  L.  264,  26  Atl.  683. 

New  York:  Trustees  of  Exempt  Firemen's  Benev.  Fund  v.  Roome,  93 
N.  Y.  313,  328,  45  Am.  Rep.  217  (a  grant  of  a  right  to  receive  a  certain  pro- 
portion of  public  funds  is  not  an  exclusive  privilege,  franchise  or  immunity, 
under  a  constitutional  provision  prohibiting  such  grants  by  private  or  local 
bill). 

Oregon:  Hackett  v.  Wilson,  12  Oreg.  25,  31,  32,  6  Pac.  652  (exclusive 
privilege  confined  to  ferry  landings  and  such  privilege  can  be  imphed  be- 
yond that);  Montgomery  v.  Multnomah  Ry.  Co.,  11  Oreg.  344,  3  Pac.  435 
(ferry  franchise  gives  exclusive  privilege  of  transportation  between  certain 
points  on  ferry  landings). 

Pennsylvania:  Lohigh  Water  Co.'s  Appeal,  102  Pa.  St,  515,  527. 

1*  Dane's  Abridg.,  chap.  205,  art.  2.    See  note  to  §  5,  herein. 

"5and6E(iw.  VI,  c.  14. 

^  4  Blackstone's  Comm.  160;  Dane's  Abridg.,  chap.  205,  art.  2. 

6 


GENERAL   TERMS   AND    DEFINITIONS  §  8 

to  the  purchase  of  such  property.  So  where  such  rival 
interests  consolidate  under  a  condition  precedent  which 
involves  the  purchase  of  other  mines  and  plants,  no  mo- 
nopoly is  created.-^ 

§  8.  Monopoly  Defined.^^ 

Various  definitions  have  been  given  of  the  word  "monop- 
oly," but  the  main  governing  idea  is  that  of  exclusive  con- 
trol, a  stifling  of  competition.  An  early  definition  which 
has  been  extensively  quoted  is  as  follows:  "A  monopoly 
is  an  institution  or  allowance  by  the  king  by  his  grant, 
commission,  or  otherwise  to  any  person  or  persons,  bodies 
politique,  or  corporate,  of  or  for  the  sole  buying,  selling, 
making,  working,  or  using  of  any  thing,  whereby  any  per- 
son or  persons,  bodies  politique  or  corporate,  are  sought 
to  be  restrained  of  any  freedome,  or  liberty  that  they  had 
before,  or  hindered  in  their  lawfull  trade."  ^^    In  a  New 

"  Meredith  v.  Zinc  &  Iron  Co.,  55  N.  J.  Eq.  211,  221,  37  Atl.  539. 

"  See  §  22,  herein. 

"  Coke's  Inst.  181,  Part  3,  Cap.  85;  4  Blackstone's  Comm.  159;  Bacon's 
Abridg.,  title  "Monopoly." 

This  definition  is  quoted  or  given  substantially  in  the  following  cases: 

United  Stales:  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  1,  9,  15  Sup, 
Ct.  249,  39  L.  ed.  525,  per  Mr.  Justice  Fuller  (a  case  of  control  of  manu- 
factories of  refined  sugar,  and  construction  and  application  of  Sherman  Anti- 
Trust  Act  of  July  2,  1890,  26  Stat.  209;  U.  S.  Comp.  Stat.,  1901,  p.  3200); 
Butchers'  Union  Slaughter-House  &  Live-Stock  Landing  Co.  v.  Crescent 
City  Live-Stock  Landing  &  Slaughtcr-House  Co.,  Ill  U.  S.  74G,  755,  4  Sup. 
Ct.  652,  28  L.  ed.  585,  per  Mr.  Justice  T^ield  (a  case  of  grant  of  exclusive 
privileges  for  stock-landing  and  slaughter-houses;  bill  for  injunction;  con- 
stitutional law);  Slaughter-House  Cases,  16  Wall.  (83  U.  S.)  36,  102,  21  L. 
ed.  394,  per  Mr.  Justice  Held  in  dissenting  opinion;  Charles  River  Bridge  v. 
Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  607,  9  L.  ed.  773,  per  Mr.  Justice 
Story  in  dissenting  opinion;  Ware-Kramer  Tobacco  Co.  v.  American  To- 
bacco Co.  (U.  S.  C.  C),  180  Fed.  160,  170;  Bartholomew  v.  City  of  Austin, 
85  Fed.  359,  364,  29  C.  C.  A.  568,  573;  United  States  v.  Trans-Missouri 
Freight  Assoc,  53  Fed.  440,  452,  per  Reiner,  Dist.  J.  (case  of  agreement 
or  combination  between  carriers  to  maintain  rates;  injunction;  Sherman 
Anti-Trust  Act,  July  2,  1890,  s.  c,  58  Fed.  58,  92,  7  C.  C.  A.  15,  24  L.  R.  A. 
73,  per  Sanborn,  Cir.  J.,  s.  c,  166  U.  S.  290,  41  L.  ed.  100,  17  Sup.  Ct.  540; 
Greene,  In  re,  52  Fed.  104,  116,  per  Jackson,  Cir.  J.  (case  of  monopoly;  re- 
straint of  trade;  Sherman  Anti-'l'rust  Act,  July  2,  1890;  indictment). 

Connecticut :  Norwich  Gas  Light  Co.  v.  Norwich  City  Gas  Co.,  25  Conn. 
19,  38,  per  Ilinman,  J.,  quoting  liouvier. 


§  8  GENERAL   TERMS   AND   DEFINITIONS 

York  case  it  is  declared  that  a  monopoly  in  the  modern 
sense  is  created  where  as  the  result  of  an  effort  to  that  end, 
previously  competing  businesses  are  so  concentrated  in  the 
hands  of  a  single  person  or  corporation  or  in  a  few  persons 
or  corporations  acting  together,  that  they  have  power  to 
practically  control  prices  of  a  commodity  and  thus  sup- 
press competition.  A  monopoly  exists  where  all  or  nearly 
all  of  an  article  of  trade  or  commerce  within  a  community 
or  district  is  brought  within  the  hands  of  one  man  or  set  of 
men,  or  of  a  corporation  or  set  of  corporations  acting  to- 
gether so  as  to  practically  bring  the  handling  or  production 
of  a  commodity  within  such  single  control  to  the  ex- 
clusion of  competition  or  free  traffic  therein.  ^^  Monopoly 
has  also  been  defined  as  a  special  privilege  conferred  on 

Indiana:  State  ex  rel.  Clark  v.  Haworth  School  Trustee,  etc.,  122  Ind. 
462,  498,  23  N.  E.  946,  7  L.  R.  A.  240,  per  Berkshire,  J. 

Louiidana:  Darcantel  v.  Slaughter-House,  etc.,  Co.,  44  La.  Ann.  632,  642, 
11  So.  239. 

Maryland:  Wright  v.  State,  88  Md.  436,  443,  41  Atl.  795,  per  Pearce,  J., 
who  adds:  "To  constitute  u  monopoly  within  the  meaning  of  this  definition 
there  must  be  an  allowance  or  grant  by  the  State  to  one  or  several  of  a 
sole  right — that  is  a  right  to  the  exclusion  of  all  others  than  the  grantee  or 
grantees."  This  case  was  not  a  grant  but  statute  prohibiting  the  sale  of 
any  article  in  imitation  of  butter;  demurrer  to  indictment  overruled. 

Minnesota:  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  527,  121  N. 
W.  395,  per  Elliott,  J. 

Montana:  Davenport  v.  Kleinschmidt,  6  Mont.  502,  529,  13  Pac.  249,  per 
McLeary,  J.  (case  of  grant  by  city  ordinance  being  a  monopoly;  gives  an 
exclusive  right  or  sole  power). 

Tennessee:  Marshall  &  Bruce  Co.  v.  City  of  Nashville,  109  Tenn.  495, 
508,  71  S.  W.  815,  per  Wilkes,  J.  (case  of  invalidity  of  ordinance  requiring 
union  label  on  city  printing). 

Webster's  definition  of  monopoly  given  in  Herriman  v.  Menzies,  115  Cal. 
16,  21,  46  Pac.  730,  35  L.  R.  A.  318,  56  Am.  St.  Rep.  81;  State  v.  Central 
Lumber  Co.,  24  S.  Dak.  136,  123  N.  W.  504,  509,  per  Whiting,  J. 

"  People  V.  American  Ice  Co.,  120  N.  Y.  Supp.  443,  456,  457,  per 
Wheeler,  J.,  s.  c.  (upon  points  as  pleading,  etc.),  120  N.  Y.  Supp.  41,  135 
App.  Div.  180. 

"A  monopoly  exists  where  all,  or  so  nearly  all,  of  an  article  of  trade  or 
commerce  within  a  community  or  district  is  brought  within  the  hands  of 
one  man  or  set  of  men,  as  to  practically  bring  the  handling  or  production 
of  the  commodity  or  thing  within  such  single  control  to  the  exclusion  of 
competition  or  free  traffic  therein.  Anything  loss  than  this  is  not  a  monop- 
oly." Herriman  v.  Menzies,  115  Cal.  16,  46  Pac.  730,  35  L.  R.  A.  318,  56 
Am.  St.  Rep.  81  (a  case  of  association  of  stevedores;  held  not  void  as  a 
contract  in  restraint  of  trade,  nor  as  creating  a  monopoly). 

8 


GENERAL   TERMS   AN'D    DEFINITIONS  §  8 

one  or  more  persons  to  llie  exclusion  of  all  others;  ^^  as 
the  sole  power  of  dealmg  in  a  particular  thing  or  doing  a 
particular  thing,  either  generally  or  in  a  particular  place;  '^ 
as  an  exclusive  privilege  not  enjoyed  by  others;  ^^  as  an 

"  Barbee  v.  Plank  Road  Co.,  6  Fla.  262,  268,  so  declared  in  discussion  of 
I)oint  raised  that  an  act  of  incorporation  created  a  monop)oly  in  that  it 
granted  exclusive  privileges. 

A  monopoly  exists  when  the  manufacture  and  sale  of  any  commodity  is 
restrained  to  one  or  a  certain  number.  City  of  Seattle  v.  Dencker,  58 
Wash.  501,  108  Pac.  1080. 

"A  monopoly  is  when  the  sale  of  any  merchandise  or  commodity  is  re- 
strained to  one,  or  a  certain  number;  and  has,  says  Coke  (11  Coke,  84-89, 
8  Coke,  125),  three  inseparable  consequences:  the  increase  of  the  price,  the 
badness  of  the  wares,  the  impoverishment  of  others."  7  Dane's  Abridg. 
38,  chap.  205,  art.  5. 

"  '  It  is  said  to  be  a  monopoly  when  one  person  alone  buys  up  the  whole 
of  one  kind  of  a  commodity  fixing  a  price  at  his  own  pleasure.'  "  State  v. 
Eastern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1,  4,  per  Dubois,  J.,  quoting  from 
Black's  L.  Diet. 

26  San  Diego  Water  Co.  v.  San  Diego  Flume  Co.,  108  Cal.  549,  559,  41 
Pac.  495,  25  L.  R.  A.  839  (case  of  exclusive  agency  of  a  water  company  for 
a  flume  company;  contract  held  not  to  create  a  monopoly). 

Monopoly  is  "  '  the  abuse  of  free  commerce,  by  which  one  or  more  individ- 
uals have  procured  the  advantage  of  seHing  all  of  a  particular  kind  of  mer- 
chandise.' "  Herriman  v.  Menzies,  115  Cal.  16,  21,  46  Pac.  730,  35  L.  R.  A. 
318,  56  A.  S.  R.  81,  quoting  Bouvier's  L.  Diet. 

"Various  definitions  of  'monopoly'  have  been  given:  'The  abuse  of 
free  commerce,  by  which  one  or  more  individuals  have  procured  the  ad- 
vantage of  selling  alone  all  of  one  particular  kind  of  merchandise,  to  the 
detriment  of  the  public;  any  combination  among  merchants  to  raise  the 
price  of  any  particular  merchandise  to  the  detriment  of  the  public'  The 
popular  meaning  of  'monopoly'  at  the  present  day  seems  to  be  the  sole 
power  (or  power  largely  in  excess  of  that  possessed  by  others)  of  dealing  in 
some  particular  commodit3',  or  at  some  particular  market  or  place,  or  of 
carrying  on  some  particular  business.  Anything  less  than  this  is  not  a 
monopoly."  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C), 
172  Fed.  455,  458,  per  Sheppard,  Dist.  J. 

The  popular  meaning  of  "  monopoly  "  at  the  present  day  seems  to  be 
the  sole  power  (or  a  power  largely  in  excess  of  that  possessed  by  others) 
of  dealing  in  some  particular  commodity,  or  at  some  particular  place  or 
market,  or  of  carrying  on  some  i)articular  business.'  "  Davenport  v.  Klein- 
schmidt,  6  Mont.  502,  529,  13  Pac.  249,  citing  2  Rap.  &  L.  Law  Diet.  834, 
835. 

"  Guthrie  Daily  Leader  v.  Cameron,  Auditor,  3  Okla.  677,  689,  41  Pac 
635,  per  Burford,  J.  (applied  to  a  statute  construed  as  a  special  act  granting 
a  special  and  exclusive  privilege  to  a  printing  company;  held  void). 

Monopoly  is  "an  exclusive  privilege  to  carry  on  a  traffic."  "The  posses- 
sion or  the  assumption  of  anj-thing  to  the  exclusion  of  other  possessors; 
thus  a  man  is  popularly  said  to  have  a  monopoly  of  any  business  of  which 

9 


§  8  GENERAL   TERMS   AND   DEFINITIONS 

exclusive  right  granted  to  a  few  of  something  which  was 
before  of  common  right. ^^  ''So  that  it  is  not  the  case  of  a 
monopoly  if  the  subjects  had  not  the  common  right  or 

he  has  acquirod  complete  control."  Century  Diet,  as  quoted  in  Conti- 
nental Securities  Co.  v.  Interborough  Rap.  Transit  Co.  (U.  S.  C.  C),  165 
Fed.  945,  956  (consolidation  of  street  railroads). 

28  Leeper  v.  State,  103  Tenn.  500,  514,  53  S.  W.  962,  48  L.  R.  A.  167  (case 
where  "Uniform  Text-Book  Act"  held  not  obnoxious  to  the  constitutional 
provisions  against  monopoly  and  special  class  legislation). 

This  definition  is  quoted  in  the  following  cases:  Charles  River  Bridge  v. 
Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  607,  9  L.  ed.  773,  per  Mr.  Justice 
Story  in  dissenting  opinion;  Bartholomew  v.  City  of  Austin,  85  Fed.  359, 
364,  29  C.  C.  A.  568,  573;  United  States  v.  Trans-Missoiu-i  Freight  Assoc, 
53  Fed.  440,  452,  per  Riner,  Dist.  J.  (agreement  or  combination  between 
carriers  to  maintain  rates;  injunction;  Sherman  Anti-Trust  Act,  July  2, 
1890);  Thrift  v.  EHzabeth  City,  122  N.  C.  31,  37,  20  S.  E.  349,  44  L.  R.  A. 
427,  per  Douglass,  J.  (case  of  ordinance  attempting  to  grant  exclusive 
privilege  for  construction  of  waterworks,  etc.,  and  exclusive  use  of  streets; 
unconstitutional);  City  of  Memphis  v.  Memphis  Water  Co.,  5  Heisk.  (52 
Tenn.)  495,  528;  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60 
W.  Va.  508,  520,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep. 
901,  per  Cox,  J. 

"Monopoly  impHes  an  exclusive  right,  from  which  all  others  are  de- 
barred, and  to  which  they  are  subservient. "  United  States  Chemical  Co.  v. 
Provident  Chemical  Co.,  64  Fed.  946,  950,  citing  Green's  Case,  52  Fed.  104. 

"  But  what  is  a  monopoly,  as  understood  in  law?  It  is  an  exclusive  right 
granted  to  a  few,  of  something  which  was  before  of  common  right.  Thus  a 
privilege  granted  by  the  king  for  the  sole  buying,  selling,  making,  working 
or  using  a  thing,  whereby  the  subject,  in  general,  is  restrained  from  that 
liberty  of  manufacturing  or  trading,  which  before  he  had  is  a  monopoly;  4 
Black.  Comm.  159;  Bac.  Abridg.  Prerogative,  J:  4.  My  Lord  Coke,  in  his 
Pleas  of  the  Crown,  3  Inst.  181,  has  given  this  very  definition  of  a  monop- 
oly; and  that  definition  was  approved  by  Holt  &  Treby  (afterwards  chief 
justices  of  the  king's  bench),  arguendo,  as  counsel,  in  the  great  case  of  the 
East  India  Company  v.  Sandy's,  10  Howell  State  Trials,  386.  His  words 
are,  that  a  monopoly  is  'an  institution  by  the  king,  by  his  grant,  commis- 
sion, or  otherwise,  to  any  persons  or  corporations,  of  or  for  the  sole  buying, 
selling,  making,  working  or  using  of  everything,  whereby  any  persons  or 
corporations  an;  sought  to  be  restrained  of  any  freedom  or  Hberty  they  had 
before,  or  hindered  in  their  lawful  trade.'  So,  that  it  is  not  the  case  of  a 
monopoly,  if  the  subjects  had  not  the  common  right  or  hberty  before  to  do 
the  act,  or  possess  and  enjoy  the  privilege  or  franchise  granted,  as  a  com- 
mon right.  10  Howell's  State  Trials,  425.  And  it  deserves  an  especial  re- 
mark, that  this  doctrine  was  an  admitted  concession,  pervading  the  entire 
arguments  of  the  counsel  who  opposed,  as  well  as  of  those  who  maintained 
the  grant  of  the  exclusive  trade  in  the  case  of  the  East  India  Company  v. 
Sandy's,  10  How.  St.  Tr.  386,  a  case  which  constitutes,  in  a  great  measure, 
the  basis  of  this  branch  of  the  law."  Charles  River  Bridge  v.  Warren 
Bridge,  11  Pet.  (36  U.  S.)  420,  607,  9  L.  ed.  773,  per  Mr.  Justice  Story, 

10 


GENERAL   TERMS   AND   DEFINITIONS  §§  9,  10 

liberty  before  to  do  the  act,  or  possess  and  enjoy  the 
privilege  or  franchise  granted,  as  a  common  right."  -^ 
In  a  comparatively  recent  case  in  the  Federal  Supreme 
Court  monopoly  has  been  defined  to  be  unified  tactics  with 
regard  to  prices.  It  is  the  power  to  control  prices  which 
makes  the  inducement  of  combinations  and  their  profit.^'' 

§  9.  Monopolist  Defined. 

A  monopolist  is  one  who  by  the  exercise  of  the  sovereign 
power,  takes  from  the  public  that  which  belongs  to  it, 
and  gives  to  the  grantee  and  his  assigns  an  exclusive  use.^^ 

§  10.  "  Pooling  "  Defined. 

"Pooling"  has  been  defined  to  be  an  aggregation  of 
property  or  capital  belonging  to  different  persons,  with 
a  view  to  common  liabilities  and  profits.  ^- 

Contracts  between  competing  corporations,  commonly 
termed  "pooling  contracts,"  to  divide  their  earnings  from 
the  transportation  of  freight  in  fixed  proportions,  have 
long  been  held  void  by  courts  as  against  public  policy. 
Such  contracts  do  not  simply  restrict  competition,  they 
tend  to  destroy  it,  and  if  they  do  not  effect  that  result, 
it  is  only  because  they  do  not  completely  accomplish  then- 
main  purpose. ^^ 

quoted  in  Patterson  v.  Wollmann,  5  N.  Dak.  608,  615,  616,  67  N.  W.  1040, 
33  L.  R.  A.  536,  per  Corliss,  J. 

29  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  607, 
9  L.  ed.  773,  per  Mr.  Justice  Stor}';  Bartholomew  v.  City  of  Austin,  85  Fed. 
359,  364,  29  C.  C.  A.  568,  573;  City  of  Memphis  v.  Memphis  Water  Co.,  5 
Heisk.  (52  Tenn.)  495,  528. 

3"  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  129,  25  Sup.  Ct.  382, 
49  L.  ed.  689  (case  under  Anti-Trust  Acts  of  Texas  to  forfeit  license  of  cor- 
poration for  violating  those  statutes). 

3»  Allen  V.  Hunter,  6  McLean  (U.  S.  C.  C),  303,  305,  306,  Fed.  Cas.  Xo. 
225,  p.  477. 

"  American  Biscuit  &  Mfg.  Co.  v.  Klotz  (U.  S.  C.  C),  44  Fed.  721,  724. 
construing  Act  of  La.,  July  5,  1890,  in  connection  with  Sherman  Anti-Trust 
Act  of  July  2,  1890  (case  of  pooling  of  bakeries). 

Poohng  is  "a  combination  among  persons  or  companies  normally  com- 
petitive, as  among  transportation  or  shipping  interests,  whereby  a  uniform 
rate  is  set  and  maintained,  the  profits  being  shared  on  a  percentage  basis." 
Webster's  Universal  Diet.  (Ed.  1910-1911). 

"United  States  v.  Trans-Mis.souri  Freight  Assoc.  (U.  S.  C.  C.  A.),  58 
Fed.  58,  65,  per  Sanborn,  Cir.  J. 

11 


§§11,  12        GENERAL   TERMS   AND   DEFINITIONS 

§  11.  Regrating  Defined. 

Regrating  was  an  offense  at  common  law  and  was 
described  by  statute  =^'  ''to  be  the  buying  of  corn,  or  other 
dead  \dctual,  in  any  market,  and  seUing  it  again  in  the 
same  market,  or  within  four  miles  of  the  place.  For  this 
also  enhances  the  price  of  the  provisions,  as  every  suc- 
cessive seller  must  have  a  successive  profit."  ^^ 

§  12.  "  Trust  "  Defined.36 

A  trust  has  been  defined  as  a  contract,  combination, 
confederation  or  understanding,  express  or  implied,  be- 
tween two  or  more  persons,  to  control  the  price  of  a  com- 
modity or  services  for  the  benefit  of  the  parties  thereto, 
and  to  the  injury  of  the  public,  and  which  tends  to  create 
a  monopoly. ''^'  By  very  recent  commercial  usage  the 
technical  meaning  of  the  word  "trusts"  has  been  extended 
so  as  to  comprehend  combinations  of  corporations  or 
capitahsts  for  the  purpose  of  controlling  the  price  of  ar- 
ticles of  prime  necessity,  or  the  charges  of  transportation 
for  the  public.  ^^  In  a  Federal  case  the  court  declares  that 
''Combinations  in  the  nature  of  modern  trusts  *  *  *  are 
those  which  aim  at  a  union  of  energy,  capital  and  interest 
to  stifle  competition,  and  enhance  the  price  of  articles  of 
prime  necessity  and  staples  of  commerce.  In  such  cases 
there  is  absent  the  element  of  exchange  of  one  valuable 
right  for  another."  ^^ 

^*  5  and  6  Edw.  VI,  c.  14. 

35  4  Blackstone's  Comm.  160;  Dane's  Abridg.,  chap.  205,  art.  4.  See 
note  to  §  5,  herein. 

3^  See  §  29,  herein. 

"  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508, 
520,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901,  per  Cox,  J. 

58  Queen  Ins.  Co.  v.  The  State,  86  Tex.  250,  266,  24  S.  W.  397,  22  L.  R.  A. 
483,  per  Gaines,  Assoc.  J.,  a  case  of  alleged  combination  of  insurance  com- 
panies to  fix  rates,  and  construction  of  a  State  statute  defining  trusts,  etc.; 
restrictions  in  trade;  combinations  in  restraint  of  trade. 

33  United  States  Chemical  Co.  v.  Provident  Chemical  Co.  (U.  S.  C.  C), 
64  Fed.  946,  950,  per  Priest,  Dist.  J.,  a  case  of  a  lease  with  a  stipulation 
claimed  to  be  in  restraint  of  trade  and  void;  held  not  to  confer  any  special 
or  exclusive  privilege  and  that  no  monopoly  was  created  and  lease  not  void. 


12 


TERMS   AND    DEFINITIONS 


§13 


CHAPTER  II 


TERMS  AND  DEFINITIONS  UNDER  SHERMAN  ANTI-TRUST  ACT 


13.  Sherman  Anti-Trust  Act. 

14.  Anti-Trust    Amendments    to 

Wilson  Tariff  Act — Trusts, 
etc.,  in  Restraint  of  Import 
Trade  Declared  Void — Pen- 
alty. 

15.  Terms    and    Definitions    In- 

volved in  Meaning  and  Ap- 
plication of  Sherman  Anti- 
Trust  Act. 

16.  Commerce — Interstate   Com- 

merce— Commerce  with 
Foreign    Nations    Defined. 

17.  Intrastate     Commerce     De- 

fined. 

18.  Com  modity ,  Commodities  De- 

fined. 

19.  Competing  Line  Defined. 

20.  Conspiracy    Defined  —  Con- 


spiracy in  Restraint  of  Trade 
Defined. 
§  21.  Contract  Defined. 

22.  Monopoly,  "  Monopohze"  De- 

fined. 

23.  Contract  in  Restraint  of  Trade 

Defined. 

24.  "Restraint  of  Trade"— "Re- 

straint " — In  Restraint  of 
Trade  or  Commerce  "  De- 
fined. 

25.  Trade  Defined. 

26.  Traffic  Defined. 

27.  Transportation  Defined. 

28.  "Transportation   Within  the 

State" — Meaning  of. 

29.  "Trust"— "Holding"   Cor- 

poration or  Company. 


§  13.  Sherman  Anti-Tnist  Act. 

The  Sherman  Anti-Trust  Act^  is  entitled  "An  act  to 
Protect  Trade  and  Commerce  Against  Unlawful  Re- 
straints and  Monopolies  "  and  provides  as  follows: 

Trusts,  etc.,  in  the  States  in  restraint  of  trade,  etc.,  illegal — 
Persons  combining  guilty  of  misdemeanor — Penalty. 

"Sec.  1.  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade  or 
commerce  among  the  several  States,  or  with  foreign  na- 
tions, is  hereby  declared  to  be  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  com- 
bination or  conspiracy,  shall  be  deemed  guilty  of  a  misde- 
meanor, and,  on  conviction  thereof,  shall  be  punished  by 
fine  not  exceeding  five  thousand  dollars,  or  by  imprison- 

'  Act  of  July  2,  1890,  chap.  647,  26  Stat.  209,  U.  S.  Comp.  Stat.,  p.  3200. 

13 


§  13  TERMS   AND   DEFINITIONS 

ment  not  exceeding  one  year,  or  by  both  said  punish- 
ments, in  the  discretion  of  the  court. 

Persons  attempting  to  monopolize,  etc.,  guilty  of  misde- 
meanor— Penalty. 

''Sec.  2.  Every  person  who  shall  monopolize,  or  at- 
tempt to  monopolize,  or  combine  or  conspire  with  any 
other  person  or  persons,  to  monopolize  any  part  of  the 
trade  or  commerce  among  the  several  States,  or  with 
foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punishments,  in  the 
discretion  of  the  court. 

Trusts,  etc.,  in  Territories  or  District  of  Columbia  illegal — 
Persons  engaged  therein  guilty  of  misdemeanor — Penalty. 

''Sec.  3.  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade 
or  commerce  in  any  Territory  of  the  United  States  or  of 
the  District  of  Columbia,  or  in  restraint  of  trade  or  com- 
merce between  any  such  Territory  and  another,  or  be- 
tween any  such  Territory  or  Territories  and  any  State  or 
States  or  the  District  of  Columbia,  or  with  foreign  nations, 
or  between  the  District  of  Columbia  and  any  State  or 
States  or  foreign  nations,  is  hereby  declared  illegal.  Every 
person  who  shall  make  any  such  contract  or  engage  in  any 
such  combination  or  conspiracy,  shall  be  deemed  guilty 
of  a  misdemeanor,  and,  on  conviction  thereof,  shall  be 
punished  by  fine  not  exceeding  five  thousand  dollars,  or  by 
imprisonment  not  exceeding  one  year,  or  by  both  said 
punishments,  in  the  discretion  of  the  court. 

Jurisdiction  of  United  States  Circuit  Courts — Prosecuting 
officers — Procedure — Hearing,  etc. — Temporary  restraining 
order,  etc. 

"Sec.  4.  The  several  circuit  courts  of  the  United  States 
are  hereby  invested  with  jurisdiction  to  prevent  and  re- 
strain violations  of  this  act;  and  it  shall  be  the  duty  of  the 
several  district  attorneys  of  the  United  States,  in  their 
respective  districts,  under  the  direction  of  the  Attorney 
General,  to  institute  proceedings  in  equity  to  prevent 
14 


TERMS   AND    DEFINITIONS  §  13 

and  restrain  such  violations.  Such  proceedings  may 
be  by  way  of  petition  setting  forth  the  case  and  praying 
that  such  violation  shall  be  enjoined  or  otherwise  pro- 
hibited. When  the  parties  complained  of  shall  have  been 
duly  notified  of  such  petition  the  court  shall  proceed,  as 
soon  as  may  be  to  the  hearing  and  determination  of  the 
case;  and  pending  such  petition  and  before  final  decree,  the 
court  may  at  any  time  make  such  temporary  restraining 
order  or  prohibition  as  shall  be  deemed  just  in  the  premises. 

Process — Summoning  other  parties — Subpoenas. 

"Sec.  5.  Whenever  it  shall  appear  to  the  court  before 
which  any  proceeding  under  section  four  of  the  act  may 
be  pending,  that  the  ends  of  justice  require  that  other 
parties  should  be  brought  before  the  court,  the  court  may 
cause  them  to  be  summoned,  whether  they  reside  in  the 
district  in  which  the  court  is  held  or  not;  and  subpoenas 
to  that  end  may  be  served  in  any  district  by  the  marshal 
thereof. 

Trusts,  etc.,  property  in  transit — Forfeiture,  seizure  and 
condemnation. 

''Sec.  6.  Any  property  owned  under  any  contract  or  by 
any  combination,  or  pursuant  to  any  conspiracy  (and  be- 
ing the  subject  thereof)  mentioned  in  section  one  of  this 
act,  and  being  in  the  course  of  transportation  from  one 
State  to  another,  or  to  a  foreign  country,  shall  be  forfeited 
to  the  United  States,  and  may  be  seized  and  condemned 
by  like  proceedings  as  those  provided  by  law  for  the  for- 
feiture, seizure,  and  condemnation  of  property  imported 
into  the  United  States  contrary  to  law. 

Damages — Litigation — Recovery. 

"  Sec.  7.  Any  person  who  shall  be  injured  in  his  business 
or  property  by  any  other  person  or  corporation  by  reason 
of  anything  forbidden  or  declared  to  be  unlawful  by  this 
act  may  sue  therefor  in  any  circuit  court  of  the  United 
States  in  the  district  in  which  the  defendant  resides  or  is 
found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  threefold  the  damages  by  him  sustained,  and 
the  costs  of  suit,  including  a  reasonable  attornej^'s  fee.- 

-  The  remedies  given  under  this  statute,  are  three  in  number:  First, 

15 


§  14  TERMS   AND    DEFINITIONS 

"Person^^  or  "persons^'  defined. 

"Sec.  8.  That  the  word  'person/  or  'persons/  wherever 
used  in  this  act  shall  be  deemed  to  include  corporations 
and  associations  existing  under  or  authorized  by  the  laws 
of  either  the  United  States,  or  the  laws  of  any  of  the  Ter- 
ritories, the  laws  of  any  State,  or  the  laws  of  any  foreign 
country."  ^ 

§  14.  Anti-Trust  Amendments  to  Wilson  Tariff  Act — 
Trusts,  etc.,  in  Restraint  of  Import  Trade  Declared  Void 
— Penalty.'* 

"  Sec.  73.  That  every  combination,  conspiracy,  trust, 
agreement,  or  contract  is  hereby  declared  to  be  contrary 

a  criminal  prosecution;  Second,  a  forfeiture  of  property;  and,  Third,  an 
action  by  any  person  injured  to  recover  threefold  damages.  Continental 
Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  212  U.  S.  227,  29  Sup.  Ct.  280,  53 
L.  ed.  486,  aff'g  148  Fed.  939. 

^  A  corporation,  while  htj  fiction  of  law  recognized  for  some  purposes  as  a 
person,  is  not  endowed  with  the  inalienable  rights  of  a  natural  person,  but 
it  is  an  artificial  person,  created  and  existing  only  for  the  convenient  trans- 
action of  business.  Northern  Securities  Co.  v.  United  States,  193  U.  S. 
197,  48  L.  ed.  679,  698,  24  Sup.  Ct.  436,  4.54. 

A  corporation  doing  business  within  a  State  other  than  that  of  its  creation, 
having  an  office  and  agents  therein,  and  subject  to  the  process  of  the  courts 
of  such  State,  is  a  "person"  within  the  meaning  of  the  equal  protection 
clause  of  the  Fourteenth  Amendment.  Adams  v.  Standard  Oil  Co.  of  Ky. 
(Miss.  1910),  53  So.  692. 

To  what  extent  corporations  are  persons  see  Joyce  on  Franchises,  §§  64-66. 

Corporations  are  amenable  for  conspiracy  in  the  enforcement  of  contracts 
in  civil  law  and  may  be  guilty  criminally  of  conspiracy.  State  v.  Eastern 
Coal  Co.,  29  R.  I.  4.54,  70  Atl.  1. 

Corporation  defined  see  Joyce  on  Franchises,  §§  50,  51  and  extended  note 
thereto. 

Association  defined.  An  association  is:  (a)  "an  organization  of  persons 
without  a  charter,  for  business,  humanity,  charity,  culture  or  other  pur- 
pose: any  unincorporated  society  or  body : "  (b)  "a  body  of  persons  invested 
with  some,  yet  not  full,  corporate  rights  and  powers;  as  a  joint-stock  as- 
sociation, a  building  and  loan  association."  (c)  "'Association'  ex  vi  termini 
implies  agreement,  compact,  union  of  minds,  purpose,  and  action.  May 
apply  to  those  already  associated  with  persons  named  or  those  who  may 
come  in  afterward:  as  in  acts  of  incorporation."    Anderson's  Diet,  of  Law. 

To  what  extent  definition  of  corporation  includes  an  association  see  Joyce  on 
Franchises,  §§  52-54. 

*  Act  of  Aug.  27,  1894  (§§  7a-77),  chap.  349,  28  Stat.  570;  U.  S.  Comp. 
Stat.,  1901,  p.  3202. 

16 


TERMS   AND   DEFINITIONS  §  14 

to  public  policy,  illegal,  and  void,  when  the  same  is  made 
by  or  between  two  or  more  persons  or  corporations  either  of 
whom  is  engaged  in  importing  any  article  from  any  foreign 
country  into  the  United  States,  and  when  such  combi- 
nation, conspiracy,  trust,  agreement,  or  contract  is  intended 
to  operate  in  restraint  of  lawful  trade,  or  free  competition 
in  lawful  trade  or  commerce,  or  to  increase  the  market 
price  in  any  part  of  the  United  States  of  any  article  or 
articles  imported  or  intended  to  be  imported  into  the 
United  States,  or  of  any  manufacture  into  which  such  im- 
ported article  enters  or  is  intended  to  enter.  Every 
person  who  is  or  shall  hereafter  be  engaged  in  the  impor- 
tation of  goods  or  any  commodity  from  any  foreign  country 
in  violation  of  this  section  of  this  act,  or  who  shall  combine 
or  conspire  with  another  to  violate  the  same,  is  guilty  of 
a  misdemeanor,  and,  on  conviction  thereof,  in  any  court 
of  the  United  States,  such  person  shall  be  fined  in  a  sum 
not  less  than  one  hundred  dollars  and  not  exceeding  five 
thousand  dollars  and  shall  be  further  punished  bj''  im- 
prisonment, in  the  discretion  of  the  court,  for  a  term  not 
less  than  three  months  nor  exceeding  twelve  months. 

Jurisdiction  of  United  States  Circuit  Courts — Prosecuting 
officers — Proceedings — Temporary  restraining  order,  etc. 

"Sec.  74.  That  the  several  circuit  courts  of  the  United 
States  are  hereby  invested  with  jurisdiction  to  prevent 
and  restrain  violations  of  section  seventy-three  of  this 
act;  and  it  shall  be  the  duty  of  the  several  district  attor- 
neys of  the  United  States,  in  their  respective  districts,  under 
the  direction  of  the  Attorney  General,  to  institute  pro- 
ceedings in  equity  to  prevent  and  restrain  such  violations. 
Such  proceedings  may  be  by  way  of  petitions,  setting 
forth  the  case  and  praying  that  such  violations  shall  be 
enjoined  or  otherwise  prohibited.  When  the  parties  com- 
plained of  shall  have  been  duly  notified  of  such  petition 
the  court  shall  proceed,  as  soon  as  may  be,  to  the  hearing 
and  determination  of  the  case;  and  pending  such  petition 
and  before  final  decree,  the  court  may  at  any  time  make 
such  temporary  restraining  order  or  prohibition  as  shall 
be  deemed  just  in  the  premises. 

2  17 


§  14  TERMS   AND   DEFINITIONS 

Summoning  additional  parties — Subpoenas. 

''Sec.  75.  That  whenever  it  shall  appear  to  the  court 
before  which  any  proceeding  under  the  seventy-fourth 
section  of  this  act  may  be  pending  that  the  ends  of  justice 
require  that  other  parties  should  be  brought  before  the 
court,  the  court  may  cause  them  to  be  summoned,  whether 
they  reside  in  the  district  in  which  the  court  is  held  or  not ; 
and  subpoenas  to  that  end  may  be  served  in  any  district 
by  the  marshal  thereof. 

Forfeiture,  etc.,  of  property  affected  by  trust. 

"Sec.  76.  That  any  property  owner  under  any  con- 
tract or  by  any  combination  or  pursuant  to  any  conspiracy 
(and  being  the  subject  thereof)  mentioned  in  section 
seventy-three  in  this  act,  and  being  in  the  course  of  trans- 
portation from  one  State  to  another,  or  to  or  from  a  Ter- 
ritory, or  the  District  of  Columbia,  shall  be  forfeited  to 
the  United  States,  and  may  be  seized  and  condemned  by 
like  proceedings  as  those  provided  by  law  for  the  for- 
feiture, seizure,  and  condemnation  of  property  imported 
into  the  United  States  contrary  to  law. 

Suits  by  parties  injured — Damages. 

"Sec.  77.  That  any  person  who  shall  be  injured  in  his 
business  or  property  by  any  other  person  or  corporation 
by  reason  of  anything  forbidden  or  declared  to  be  unlaw- 
ful by  this  Act,  may  sue  therefor  in  any  circuit  court  of 
the  United  States  in  the  district  in  which  the  defendant 
resides  or  is  found,  without  respect  to  the  amount  in  con- 
troversy, and  shall  recover  threefold  the  damages  by  him 
sustained,  and  the  costs  of  suit,  including  a  reasonable 
attorney's  fee.^ 

»  The  foregoing  sections  were  expressly  preserved  in  the  Dingley  Act  of 
1897.  Section  34  of  that  Act  (30  Stat.  213;  U.  S.  Comp.  St.,  1901  p.  1702) 
concludes  as  follows: 

"  And  further  provided,  That  nothing  in  this  act  shall  be  construed  to  re- 
peal or  in  any  manner  affect  the  sections  numbered  seventy-three,  seventy- 
four,  seventy-five,  seventy-six,  and  seventy-seven  of  an  act  entitled  'An 
act  to  reduce  taxation,  to  provide  revenue  for  the  Government,  and  for 
other  purposes,'  which  became  a  law  on  the  twenty-eighth  day  of  August, 
eighteen  hundred  and  ninety-four." 

As  to  enforcing  trust  and  interstate  commerce  laws — Exemptions  from  testi- 
fying— Perjuries  excepted,  see  also: 

18 


TERMS   AND    DEFINITIONS  §  15 

§  15.  Terms  and  Definitions  Involved  in  Meeming  and 
Application  of  Sherman  Anti-Trust  Act. 

The  terms  of  the  Sherman  Anti-Trust  Act  ^  requiring 

"An  act  making  appropriations  for  the  legislative,  executive,  and  jiuiicial 
expenses  of  the  Government  for  the  fiscal  year  ending  June  thirtieth,  nineteen 
hundred  and  four,  and  for  other  purposes,"  providing  as  follows: 

"  *  *  *  That  for  (he  enforcement  of  the  provision  of  the  Act  entitled  'An 
Act  to  regulate  commerce,'  approved  February  fourth,  eighteen  hundred 
and  eighty-seven,  and  all  Acts  amendatory  thereof  or  supplemental  thereto 
and  of  the  Act  entitled  'An  Act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,'  approved  July  second,  eighteen  hun- 
dred and  ninety,  and  all  Acts  amendatory  thereof  or  supplemental  thereto, 
and  sections  seventy-three,  seventy-five,  and  seventy-six  of  the  Act  en- 
titled 'An  Act  to  reduce  taxation,  to  provide  revenue  for  the  government, 
and  for  other  purposes  '  api)roved  August  twentj'-seventh,  eighteen  hun- 
dred and  ninety-four,  the  sum  of  five  hundred  thousand  dollars,  to  be  im- 
mediately available,  is  hereby  ai)proi)riated,  out  of  any  money  in  the 
Treasurj'  not  heretofore  appropriated,  to  be  expended  under  the  direction 
the  Attorney-General  in  the  employment  of  special  counsel  and  agents  of 
the  Department  of  Justice  to  conduct  proceedings,  suits,  and  prosecutions 
under  said  Acts  in  the  court  of  the  United  States:  Provided,  That  no  person 
shall  be  prosecuted  or  be  subjected  to  any  penalty  or  forfeiture  for  or  on 
account  of  any  transaction,  matter,  or  thing  concerning  which  he  may 
testify  or  produce  evidence,  documentary  or  otherwise,  in  any  proceeding, 
suit,  or  prosecution  under  said  Acts:  Provided  further,  That  no  person  so 
testifying  shall  be  exempt  from  prosecution  or  punishment  for  perjury 
committed  in  so  testifying.  *  *  * 

Approved  February  25,  1903,  chap.  755,  32  Stat.  854,  903;  U.  S.  Comp. 
Stat.,  Suppl.  1905,  pp.  602,  606. 

As  to  enforcing  trust,  etc.,  laws — Assistant  to  attorney  general  authorized, 
see  also: 

"An  act  making  appropriations  to  supply  deficiencies  in  the  appropriations 
for  the  fiscal  year  ending  June  thirtieth,  nineteen  hundred  and  three,  and  for 
■prior  years,  and  for  other  purposes,"  providing  as  follows: 

"  *  *  *  That  under,  and  to  be  paid  from,  the  appropriation  of  five  hun- 
dred thousand  dollars  for  the  enforcement  of  the  provisions  of  the  Act  en- 
titled 'An  Act  to  regulate  commerce,'  approved  February  fourth,  eighteen 
hundred  and  eighty-seven,  and  all  Acts  amendatory  thereof  or  supplemental 
thereto,  and  other  Acts  mentioned  in  said  appropriation,  made  in  the  legi.-^- 
lativc,  executive  and  judicial  appropriation  Act  for  the  fiscal  year  nineteen 
hundred  and  four,  the  President  is  authorized  to  appoint,  by  and  with  the 
advice  and  consent  of  the  Senate,  an  assistant  to  the  Attorney-General 
with  compensation  at  the  rate  of  seven  thousand  dollars  per  annum  and 
an  Assistant  Attorney-General  at  a  compensation  at  the  rate  of  five  thou- 
sand dollars  per  annum;  and  the  Attorney-General  is  authorized  to  ap- 
point and  employ,  without  reference  to  the  rules  and  regulations  of  the 
civil  service  two  confidential  clerks  at  a  compensation  at  the  rate  of  one 

*  See  §§  13,  14,  herein. 

19 


§  15  TERMS   AND   DEFINITIONS 

definition  are:  contract;^  combination;^  trust;  ^  con- 
spiracy; '°  restraint  of  trade  or  commerce;  ^Hrade;  ^^ 
commerce;  ^^  trade  or  commerce  among  the  several  States 
or  with  foreign  nations;  ^^  monopoHst/^  monopohze/^ 
and  monopoly.  ^^  Other  definitions  are  involved  in  the 
construction  of  the  statute  in  order  to  ascertain  its  ap- 
plication as  well  as  its  meaning.  ^^  So  in  construing  this 
statute,  the  following  divisions  may  be  made:  (1)  Contract 
in  restraint  of  trade.  (2)  Combination  in  restraint  of 
trade.  (3)  Conspiracy  in  restraint  of  trade.  And  ''there 
can  be  no  question  but  that  the  second  and  third  parts 
as  thus  put  receive  color  from  the  first.  *  *  *  The  second 
section  is  limited  by  its  terms  to  monopolies,  and  evidently 
has  as  its  basis  the  engrossing  or  controlling  of  the  market. 
The  first  section  is  undoubtedly  in  pari  materia,  and  so  has 
as  its  basis  the  engrossing  or  controlling  of  the  market,  or 


thousand  six  hundred  dollars  each  per  annum,  to  be  paid  from  said 
appropriation.  Said  assistant  to  the  Attorney-General  and  Assistant- 
Attorney-General  shall  perform  such  duties  as  may  be  required  of  them  by 
the  Attorney-General.  *  *  * 

Approved  March  3,  1903,  32  Stat.  1031,  1062. 

As  to  anti-trust  cases  being  given  precedence  in  Circuit  Courts — Certificate  of 
attorney  general — Composition  of  court — Revision  by  Supreme  Court — Appeal 
direct  to  Supreme  Court — Proviso  pending  appeals,  see  also: 

"An  act  to  expedite  the  hearing  and  determination  of  suits  in  equity  pend- 
ing or  hereafter  brought  under  the  act  of  July  second,  eighteen  hundred  and 
ninety  entitled  '  an  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopoUes.'  An  act  to  regulate  commerce '  approved  Febru- 
ary fourth,  eighteen  hundred  and  eighty-seven  or  by  any  other  acts  having  a 
like  purpose  that  may  be  hereafter  enacted."  Act  of  Feb.  11,  1903,  c.  544, 
32  Stat.  823;  U.  S.  Comp.  Stat.,  Suppl.  1905,  pp.  622,  623. 

^  See  §  25,  herein. 

*See  §  1,  herein. 

9  See  §§  12,  29,  herein. 

"  See  §§  3,  4,  20,  herein. 

"  See  §§  23,  24,  herein. 

'-  See  §  25,  herein. 

"  See  §§  10,  17,  herein. 

^^  See  §  16,  herein. 

'*  See  §  9,  herein. 

'^  See  §  22,  herein. 

"  See  §§  8,  22,  herein. 

'*  Some  of  these  have  been  given  under  general  definitions,  while  others 
are  given  under  this  chapter, 

20 


TERMS   AND   DEFINITIONS  §  16 

of  lines  of  trade."  ^'■^  Again,  in  order  to  violate  the  Sher- 
man Anti-Trust  Act  there  must  be  a  contract,  combi- 
nation or  conspiracy,  which  in  purpose  or  effect  tends  to 
restrain  trade  or  commerce  among  the  States,  or  to  mo- 
nopoHze  some  portion  thereof.  Whether  in  purpose  or 
effect  violative  of  the  act,  such  contract,  combination  or 
conspiracy  nmst  have  the  ordinary  effect  attached  to 
those  words.  There  must  be  a  meeting  of  the  minds  of 
two  or  more  to  accomplish  some  common  purpose  directly 
violative  of  the  statute,  or  a  purpose  which  will,  whether 
intentional  or  not,  in  eifect  constitute  a  restraint  of  trade 
and  commerce  among  the  several  States. -° 

§  16.  Commerce — Interstate  Commerce — Commerce 
with  Foreign  Nations  Defined. 

While  domestic  commerce  and  interstate  commerce 
are  different  things,  still  both  are  comprehended  in  the 
single  word  commerce.-'  Commerce,  in  its  simplest 
signification,  moans  an  exchange  of  goods;  but  in  the  ad- 
vancement of  society,  labor,  transportation,  intelligence, 
care,  and  various  mediums  of  exchange,  become  com- 
modities, and  enter  into  commerce;  the  subject,  the 
vehicle,  the  agent,  and  their  various  operations,  become 
the  objects  of  commercial  regulation.  Shipbuilding,  the 
carrying  trade,  and  propagation  of  seamen  are  vital 
agents  of   commercial   prosperity.-'-     Another  definition 

'9  United  States  v.  Patterson  (U.  S.  C.  C),  55  Fed.  605,  640,  per  Put- 
nam, J.,  in  analyzing  the  Sherman  Anti-Trust  Act. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

20  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

2'  State  V.  SchUtz  Brewing  Co.,  104  Tenn.  715,  744,  745,  59  S.  W.  1033, 
78  Am.  St.  Rep.  941,  per  Caldwell,  J.,  in  construing  anti-trust  statute  of 
the  State. 

"  Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.)  1,  229,  230,  per  Mr.  Justice 
Johnson. 

.4«  elcclric  liglit  in  iii  ?7.s  nature  on  nrtirlc  of  commerce.  Hull  Electric  Light 
Co.  V.  Ottawa  Electric  Light  Co.,  K:ip.  Jud.  Quebec,  14  C.  S.  124. 

21 


§  IG  TERMS   AND    DEFINITIONS 

is  this:  commerce,  briefly  stated,  is  the  sale  or  exchange 
of  commodities.  But  that  which  the  law  looks  upon  as 
the  bodj^  of  commerce  is  not  restricted  to  specific  acts  of 
sale  or  exchange.  It  includes  the  intercourse — all  the 
initiatory  and  intervening  acts,  instrumentalities,  and 
dealings — that  directly  bring  about  the  sale  or  exchange. 
The  whole  transaction  from  initiation  to  culmination  is 
commerce.  ^^ 

"Commerce"  is  a  broader  term  than  "trade."  It  is 
the  word  in  that  clause  of  the  Constitution  by  which  power 
is  conferred  on  Congress  "to  regulate  commerce  with 
foreign  nations,  and  among  the  several  States,  and  with 
the  Indian  Tribes."  ^^  In  a  broader  and  more  distinct 
exercise  of  that  power  than  ever  before  asserted  Congress 
passed  ^^  the  enactments  known  as  the  "  Interstate  Com- 
merce Law."  The  Sherman  Anti-Trust  Act  is  another 
exercise  of  that  constitutional  power,  and  the  word  "com- 
merce" as  used  therein  should  not  be  given  a  more  re- 
stricted meaning  than  it  has  in  the  Constitution.^*^ 

"Commerce  "  in  the  Federal  Constitution  comprehends 
all  of  the  intercourse  between  the  parties  necessarily  or 
ordinarily  involved  in  a  commercial  transaction  with  refer- 
ence to  merchantable  commodities.^^ 

In  the  recent  Standard  Oil  Co.  case  ^^°  it  is  held  that 
the  commerce  referred  to  by  the  words  "any  part"  in 
§  2  of  the  Anti-Trust  Act,  as  construed  in  the  Hght  of  the 
manifest  purpose  of  that  act,  includes  geographically  any 
part  of  the  United  States  and  also  any  of  the  classes  of 
things  forming  a  part  of  interstate  or  foreign  commerce. 

In  the  great  case  of  Gibbons  v.  Ogden,^^  it  was  said  that 

"  United  States  v.  Swift  &  Co.  (U.  S.  C.  C),  122  Fed.  529,  531,  per 
Grosscup,  Cir.  J. 

"  U.  S.  Const.,  art.  1,  §  8. 

25  In  1887  and  1888. 

2«  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724,  749,  per  Woods,  Cir.  J. 
See  §  .58,  herein. 

^  F.  A.  Patrick  &  Co.  v.  Deschamp  (Wis.,  1911),  129  N.  W.  1096. 

27«  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ,  under  "Appendix  A,"  herein. 

28  9  Wheat.  (22  U.  S.)  1,  189-194,  6  L.  ed.  23.     See  §  26,  herein. 

22 


TERMS   AND    DEFINITIONS  §  16 

commerce,  undoubtedly  is  traffic,  but  it  is  something 
more,  it  is  intercourse.-^  It  describes  the  commercial 
intercourse  between  nations,  and  parts  of  nations,  in  all 
its  branches,^"  and  is  regulated  by  prescribing  rules  for 

29  Quoted  in  International  Textbook  Co.  v.  Pigg,  217  U.  S.  91,  lOG,  54 
L.  ed.  678,  30  Sup.  Ct.  481. 

^  Intercourse  incltides  means  by  which  trade  carried  on;  commerce  with 
foreign  nations  and  among  the  several  States  can  mean  nothing  more  than 
intercourse  with  those  nations  and  among  the  States  for  the  purposes  of 
trade,  be  the  objc^ct  of  the  trade  what  it  may;  and  this  intercour.se  must 
include  all  the  means  by  which  it  can  be  carried  on,  whether  bj'  the  free 
navigation  of  the  waters  of  the  several  States,  or  by  a  passage  over  land 
through  the  States  where  such  passage  becomes  necessary  to  the  commercial 
intercourse  between  the  States.  Corfield  v.  Coryell,  4  Wash.  (U.  S.  C.  C.) 
371,  378,  6  Fed.  Cas.  546,  550,  per  Washington,  J. 

Intercourse  by  telegraph  is  commerce;  is  also  interstate  and  foreign  commerce. 
Western  Union  Teleg.  Co.  v.  Commercial  Milhng  Co.,  218  U.  S.  406,  54 
L.  ed.  1088,  31  Sup.  Ct.  59  (is  interstate  commerce);  Leloup  v.  Port  of 
Mobile,  127  U.  S.  640,  8  Sup.  Ct.  1380,  1382,  32  L.  ed.  311  (telegraph  com- 
munications are  commerce,  and  when  carried  on  between  different  States 
is  interstate  commerce);  Western  Union  Teleg.  Co.  v.  Pendleton,  122  U.  S. 
347,  357,  7  Sup.  Ct.  1126,  30  L.  ed.  1187,  (cited  in  International  Textbook 
Co.  v.  Pigg,  217  U.  S.  91,  107,  54  L.  ed.  678,  30  Sup.  Ct.  481);  ^^'cstern  Union 
Teleg.  Co.  v.  Texas,  105  U.  S.  460,  464,  26  L.  ed.  1007  (telegraph  company 
is  instrument  of  foreign  and  interstate  commerce;  its  business  is  commerce 
itself);  Pensacola  Teleg.  Co.  v.  Western  Union  Teleg.  Co.,  96  U.  S.  1,  9,  24 
L.  ed.  708  (rule  that  commercial  intercourse  is  an  element  of  commerce 
applied  to  telegraph  companies  cited  in  International  Textbook  Co.  v. 
Pigg,  217  U.  S.  91,  106,  54  L.  ed.  678,  30  Sup.  Ct.  481).  See  Joyce  on 
Electric  Law  (2d  ed.),  §  43.  See  also  Id.,  §  44,  that  telephone  is  instrument 
of  commerce  and  interstate  commerce. 

Statute  regulating  the  receiving  and  transmission  of  telegraph  messages; 
wlien  not  interstate  commerce.  When  messages  are  interstate  commerce,  see 
Vermilye  v.  Western  Union  Teleg.  Co.,  (Mass.,  1911),  93  N.  E.  635. 

Intercourse  or  communication  through  the  mails  or  otherunse,  between  per- 
sons in  different  States,  and  relating  to  matters  of  regular  continuous  busi- 
ness, such  as  teaching  by  corresj)ondcncc,  and  the  making  of  contracts  re- 
lating to  the  transportation  thereof,  is  commerce  among  the  States  within 
the  commerce  clause  of  the  Federal  Constitution.  International  Textbook 
Co.  V.  Pigg,  217  U.  S.  91,  30  Sup.  Ct.  481,  54  L.  ed.  678,  rev'g  76  Kan.  328, 
91  Pac.  74. 

The  making  of  a  contract  of  insurance  is  a  mere  incident  of  commercial  in- 
tercourse; the  business  of  insurance  is  not  commerce,  nor  the  contract  an 
instrumentality  thereof.  In  these  respects  there  is  no  distinction  between 
fire  or  marine  insurance.  Nutting  v.  Massachusetts,  183  U.  S.  553,  46  L. 
ed.  634,  22  Sup.  Ct.  238.  239;  Hooper  v.  California,  155  U.  S.  648,  655,  15 
Sup.  Ct.  207,  39  L.  ed.  297;  Paul  v.  Virginia,  8  AVall.  (75  U.  S.)  168,  183, 
19  L.  ed.  357.    Insurance  contracts  or  pohcies  are  not  articles  of  commerce, 

23 


§  16  TERMS   AND    DEFINITIONS 

carrying  on  that  intercourse.^^  The  term  necessarily 
inckidcs  navigation.^-  The  words  "commerce  with  foreign 
nations, ^^  and  among  the  several  States,''^  and  with  the 
Indian  tribes,"  ^^  as  used  in  the  Federal  Constitution, 
comprehend  every  species  of  commercial  intercourse 
between  the  United  States  and  with  foreign  nations  and 
among  the  several  States.  It  includes  every  sort  of  trade 
carried  on  between  this  country  and  any  other,  nor  does 
it  stop  at  the  external  boundary  of  a  State.  "  Commerce  " 
as  the  word  is  used  in  the  Constitution  is  a  unit  every 
part  of  which  is  indicated  by  the  term.^*'     Goods  actually 

they  are  not  subjects  of  trade  and  barter  as  something  having  an  existence 
and  value  independent  of  the  parties  to  them;  they  are  not  commodities 
to  be  shipped  and  forwarded  and  put  up  for  sale,  per  Mr.  Justice  Field, 
See  Joyce  on  Franchises,  §  87. 

''  Not  every  species  of  properly  is  subject  to  the  control  of  Congress,  even 
though  it  is  the  subject  of  commerce,  or  is  used  or  even  essential  in  commerce. 
Trade-Mark  Cases,  100  U.  S.  82,  95,  25  L.  ed.  5.50. 

'^  Power  to  regulate  applies  to  navigation  and  navigable  streams  ivithin  a 
State  wi'.enever  such  streams  are  used  as  a  means  for  the  carrying  on  of 
commerce  among  the  States  or  with  foreign  nations.  Such  power  also  ex- 
tends to  navigation  carried  on  by  vessels  exclusively  employed  in  transpor- 
tation of  passengers.    Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.)  1,  6  L.  ed.  23. 

'^  Co7nmerce  with  foreign  nations,  vnthout  doubt,  means  commerce  be- 
tween citizens  of  the  United  States  and  citizens  or  subjects  of  foreign  gov- 
ernments as  individuals.  United  States  v.  Holliday,  3  Wall.  (70  U.  S.)  407, 
417,  18  L.  ed.  182,  per  Mr.  Justice  Miller. 

"All  commerce  betiveen  nations  is  permissive  or  conventional.  The  first 
includes  every  allowance  of  it,  under  what  is  termed  by  writers  upon  in- 
ternational law  the  liberty,  or  freedom  of  commerce — its  allowance  by 
statutes,  or  by  the  orders  of  any  magistracy  having  the  power  to  exercise 
the  sovereignty  of  a  nation  in  respect  to  commerce.  Conventional  com- 
merce is,  of  course,  that  which  nations  carry  on  with  each  other  under 
treaty  stipulations."  Passenger  Cases  (Smith  v.  Turner),  7  How.  (48 
U.  S.)  283,  415,  12  L.  ed.  702,  per  Mr.  Justice  Wayne. 

^*  Commejcce  between  nations  or  among  the  States  has  several  branches.  It 
con.sists  in  selling  the  superfluity;  in  purchasing  articles  of  necessity,  as 
well  productions  as  manufactures;  in  bringing  from  one  nation  and  selling 
to  another,  or  in  transporting  merchandi.so  from  the  seller  to  the  buyer  to 
gain  the  freight.  Passenger  Cases  (Smith  v.  Turner),  7  How.  (48  U.  S.) 
283,  416,  12  L.  ed.  702,  per  Mr.  Justice  Wayne. 

^'  Commerce  with  the  Indian  tribes  means  commerce  with  the  individuals 
composing  these  tribes.  United  States  v.  Holliday,  3  Wall.  (70  U.  S.)  407, 
417,  18  L.  ed.  182,  per  Mr.  Justice  Miller. 

^•^  Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.)  1,  189,  19.3,  194,  21.5,  6  L.  ed.  23, 
per  Mr.  Chief  Justice  Marshall. 

24 


TERMS   AND    DEFINITIONS  §  16 

destined  for  export  are  necessarily  in  interstate,  as  well  as 
in  foreign,  commerce,  when  they  actually  start  in  the 

For  nlher  defndtions,  description  or  construction  of  the  terms  commerce, 
interstate  commerce,  and  commerce  with  foreign  nations  see  the  following 
cases: 

United  States:  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197, 
368,  24  Sup.  Ct.  436,  474,  48  L.  ed.  679  (per  Mr.  Justice  WTiite  in  dissenting 
opinion,  quoting  in  part  from  Gibbons  v.  Ogden,  in  above  text);  Ware  & 
Leland  v.  Mobile  County,  209  U.  S.  405,  409,  52  L.  ed.  855,  28  Sup.  Ct. 
526,  aff' g  146  Ala.  163,  41  So.  153  (interstate  and  intrastate  commerce  dis- 
tinguished); Lottery  Ca.se  (Champion  v.  Ames),  188  U.  S.  321,  346,  23  Sup, 
Ct.  321,  322,  47  L.  ed.  492  (per  Mr.  Justice  Harlan,  quoting  from  Gib- 
ons  V.  Ogden,  in  above  text);  Lindsay  &  Phelps  Co.  v.  Mullen,  176  U.  S. 
126,  147,  44  L.  ed.  400,  20  Sup.  Ct.  325  (per  Mr.  Justice  Brewer;  consists  of 
intercourse  and  traffic,  including  navigation  and  transportation,  and  transit 
of  persons  and  property);  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  1, 
12,  15  Sup.  Ct.  249,  3  L.  ed.  325  (per  Mr.  Chief  Justice  Fuller,  quoting  from 
Gibbons  v.  Ogden,  in  above  text) ;  O'Neil  v.  Vermont,  144  U.  S.  223,  36  L. 
ed.  450,  12  Sup.  Ct.  693  (per  Mr.  Justice  Field  in  dissenting  opinion,  quoting 
from  91  U.  S.  275,  280,  given  below);  Rahrer,  In  re,  140  U.  S.  545,  556,  11 
Sup.  Ct.  865,  35  L.  ed.  572  (per  Mr.  Chief  Justic(^  Fuller,  quoting  from  Gib- 
bons v.  Ogden,  in  above  text);  Ividd  v.  Pearson,  128  U.  S.  1,  20,  32  L.  ed. 
346,  9  Sup.  Ct.  6  (per  Mr.  Justice  Lamar);  Bowman  v.  Chicago  &  N.  W.  R. 
Co.,  125  U.  S.  465,  479,  480,  31  L.  ed.  700,  8  Sup.  Ct.  689,  696,  698,  699 
(bringing  of  good.s  to  the  buyer  from  the  seller  is  commerce,  whether  inter- 
change of  the  commodities  is  by  land  or  by  water);  Wabash,  St.  Louis  & 
Pacific  Ry.  Co.  v.  Illinois,  118  U.  S.  557,  7  Sup.  Ct.  4,  30  L.  ed.  244  (trans- 
portation is  commerce  among  the  States,  even  as  to  such  part  of  the  car- 
riage as  lies  within  the  State  where  it  includes  the  transportation  of  goods 
under  one  contract  and  by  one  voyage  from  the  interior  of  such  State  to 
another  State);  Gloucester  Ferry  Co.  v.  Pennsylvania,  114  U.  S.  196,  5 
Sup.  Ct.  826,  29  L.  ed.  159  (commerce  among  the  States  consists  of  inter- 
coiU"se  and  traffic  between  their  citizens,  and  includes  the  transportation  of 
persons  and  property,  and  the  navigation  of  public  waters  for  that  purpose, 
as  well  as  the  purchiise,  .sale  and  exchange  of  commodities;  and  this  applies 
to  commerce  with  foreign  nations) ;  Mobile,  County  of,  v.  Kimball,  102  U.  S. 
691,  697,  702,  26  L.  ed.  238  ("commerce  embraces  navigation,  the  im- 
provement of  the  harbors  and  bays  along  our  coast,  and  of  navigable  rivers 
within  the  States  connecting  them."    Case  also  gives  substantially  same 
definition  as  in  114  U.  S.  196,  ante);  Railroad  Co.  (Hannibal  it  St.  Joseph 
Rd.  Co.)  V.  Husen,  95  U.  S.  465,  469,  470,  24  L.  ed.  527  ("That  the  trans- 
portation of  propertj'  from  one  State  to  another  is  a  branch  of  interstate 
commerce  is  undeniable."     Transportation  is  essential  to  commerce,  or 
rather  it  is  commerce  itself,  per  Mr.  Justice  Strong);  Henderson  v.  Mayor  of 
New  York,  92  U.  S.  259,  270,  23  L.  ed.  543  [commerce  means  trade,  and  it 
means  intercourse.     It  means  commercial  intercourse  between  nations 
and  parts  of  nations  in  all  its  branches.    It  includes  navigation  as  the  prin- 
cipal means  by  which  foreign  intercourse  is  elTected,  per  Mr.  Justice  Miller; 
court  yuotis  also  froui  '.]  Wall.  (70  U.  S.)  417,  given  below];  Welton  v.  Mis- 

25 


§  16  TERMS   AND   DEFINITIONS 

course  of  transportation  to  another  State  or  are  delivered 
to  a  carrier  for  transportation;  this  is  the  same  whether 

souri,  91  U.  S.  275,  280,  23  L.  ed.  347  (commerce  is  a  term  of  the  largest 
import.  It  comprehends  intercourse  for  the  purposes  of  trade  in  any  or  all 
its  forms,  including  the  transportation,  purchase,  sale,  and  exchange  of 
commodities  between  the  citizens  of  our  country  and  the  citizens  or  sub- 
jects of  other  countries,  and  between  the  citizens  of  different  States,  per 
Mr.  Justice  Field);  Railroad  Co.  (Chicago  &  Northwestern  Rd.  Co.)  v. 
Fuller,  17  Wall.  (84  U.  S.)  o'oO,  5GS,  21  L.  ed.  710  (commerce  is  traffic,  but 
it  is  much  more.  It  embraces  also  transportation  by  land  and  water,  and 
all  the  means  and  appliances  necessarily  employed  in  carrying  it  on,  per 
Mr.  Justice  Swayne);  Case  of  the  State  Freight  Tax  (Reading  Rd.  Co.  v. 
I  Pennsylvania),  15  Wall.  (82  U.  S.)  232,  275,  21  L.  ed.  146  [commerce  in- 
I'ludes  not  only  traffic,  but  intercourse  and  navigation.  It  does  not  make 
any  difference  whether  the  interchange  of  commodities  is  by  land  or  by 
water.  In  either  case  the  bringing  of  the  goods  from  the  seller  to  the  buyer 
is  commerce,  per  Mr.  Justice  Strong,  quoting  also  from  7  How.  (48  U.  S.) 
283,  416,  given  belowj;  State  Tonnage  Tax  Cases,  12  Wall.  (79  U.  S.)  204, 
214  (commerce  as  used  in  the  Constitution,  comprehends  navigation,  and 
extends  to  every  species  of  commercial  intercourse  between  the  United 
States  and  foreign  nations,  and  to  all  commerce  in  the  several  States,  ex- 
cept such  as  is  completely  internal  and  which  does  not  extend  to  or  affect 
other  States,  per  Mr.  Justice  Clifford);  United  States  v.  Holhday,  3  Wall. 
(70  U.  S.)  407,  417,  18  L.  ed.  182  (per  Mr.  Justice  Miller,  quoting  first  part 
of  Gibbons  v.  Ogden,  in  above  text);  Cooley  v.  Board  of  Wardens  of  Phila., 
12  How.  (53  U.  S.)  299,  13  L.  E.  996  (regulations  of  navigation  are  reg- 
ulations of  commerce);  Passenger  Cases  (Smith  v.  Turner),  7  How.  (48 
U.  S.)  283,  401,  12  L.  ed.  702  ("Commerce  is  defined  to  be  'an  exchange  of 
commodities.'  But  this  definition  does  not  convey  the  full  meaning  of  the 
term.  It  includes  'navigation  and  intercourse.'  That  the  transportation 
of  passengers  is  a  part  of  commerce  is  not  now  an  open  question,"  per  Mr. 
Justice  McLean);  Brown  v.  Maryland,  12  Wheat.  (25  U.  S.)  419,  446,  6 
L.  ed.  678  (commerce  is  intercourse;  one  of  the  most  ordinary  ingredients 
is  traffic,  per  Mr.  Chief  Justice  Marshall) ;  Postal  Teleg.  Cable  Co.  v.  City 
of  Mobile  (U.  S.  C.  C),  179  Fed.  955;  Zikos  v.  Oregon  R.  &  Nav.  Co.  (U. 
S.  C.  C),  179  Fed.  893,  898;  Sunset  Teleph.  &  Teleg.  Co.  v.  City  of  Eureka 
(U.  S.  C.  C),  172  Fed.  755;  La  Moine  Lumber  &  Trading  Co.  v.  Kesterson 
(U.  S.  C.  C),  171  Fed.  980,  983  (per  Washburn,  Dist.  J.,  quoting  Pomeroy 
on  Const.  Law,  p.  376  and  114  U.  S.  196,  given  above);  Riverside  Mills  v. 
Atlantic  Coast  Line  R.  Co.  (U.  S.  C.  C),  168  Fed.  987,  989  (per  Speer, 
Dist.  J.,  quoting  from  Gibbons  v.  Ogden,  at  p.  230,  in  above  text);  United 
States  V.  Erie  R.  Co.  (U.  S.  D.  C),  166  Fed.  352;  United  States  v.  American 
Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700;  United  States  v.  Chicago  &  N.  W. 
Ry.  Co.  (U.  S.  D.  C),  157  Fed.  616;  United  States  v.  Colorado  &  N.  W.  R. 
Co.,  157  I'ed.  321,  85  C.  C.  A.  27;  United  States  v.  Standard  Oil  Co.  of 
Ind.  (U.  S.  D.  C),  155  Fed.  305;  Charge  to  Grand  Jury,  In  re  (U.  S.  D.  C), 
151  Fed.  834;  Snead  v.  Central  of  Georgia  Ry.  Co.  (U.  S.  C.  C),  151  Fed. 
608,  612,  613  (per  Speer,  Di.st.  J.,  quoting  from  Mr.  Chief  Justice  Marshall 
and  Mr.  Justice  Johnson  in  Gibbons  v.  Ogden,  in  above  text);  United 

26 


TERMS   AND   DEFINITIONS  §  Itj 

the  goods  are  shipped  on  through  Ijills  of  lading  or  on  an 
initial  bill  only  to  the  terminal  within  the  same  State 

States  V.  Coal  Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252,  265  (per  Mor- 
row, Cir.  J.,  quoting  114  U.  S.  196,  given  above;  also,  it  cannot  stop  at 
the  external  boundary  of  each  State,  but  may  be  introduced  into  the 
interior);  United  States  v.  Cassidy  (U.  S.  D.  C),  67  Fed.  698,  705  (same 
as  last  case,  per  Morrow,  Dist.  J.);  Jervey,  Ex  parte  (U.  S.  C.  C),  66 
Fed.  957,  959  (per  Simonton,  Cir.  J.,  quoting  114  U.  S.  196,  given  above; 
also  transportation  is  essential  to  commerce  or  rather  is  commerce  itself. 
See  95  U.  S.  465,  470,  given  above) ;  Anderson  v.  Louisville  &  Nashville  R. 
Co.  (U.  S.  C.  C),  62  Fed.  46,  49  (transportation  of  passengers  is  commerce, 
per  Barr,  Dist.  J.);  Louisville  &  Nashville  Rd.  Co.  v.  Railroad  Commission 
of  Tenn.  (U.  S.  C.  C),  19  P^ed.  679,  709  (definition  in  114  U.  S.  190,  given 
above);  Green,  In  re  (U.  S.  C.  C),  52  Fed.  104,  113  (per  Jackson,  Cir.  J.; 
see  definitions  in  114  U.  S.  203;  102  U.  S.  691,  702,  given  above). 

Arkansas:  St.  Louis  &  San  Francisco  R.  Co.  v.  State,  87  Ark.  562,  113 
S.  W.  203. 

California:  People  v.  Raymond,  34  Cal.  492,  497  (commerce  includes  in- 
tercourse with  foreign  nations  and  between  the  several  States,  and  is  not 
limited  to  an  exchange  of  commodities  only;  intercourse  includes  transpor- 
tation of  passengers);  Carson  River  Lumbering  Co.  v.  Patterson,  33  Cal. 
334,  339  (commerce  coextensive  with  intercourse). 

Florida:  Webb  v.  Dunn,  18  Fla.  721,  724  [same  as  in  12  Wall.  (79  U.  S.) 
214,  given  above]. 

Georgia:  Williams  v.  Fears,  110  Ga.  584,  589,  35  S.  E.  699,  701,  50  L.  R. 
A.  685  [per  Cobb,  J.,  quoting  from  114  U.  S.  196,  102  U.  S.  691,  17  Wall. 
(84  U.  S.)  568,  12  Wheat.  (25  U.  S.)  419,  all  given  above;  and  Gibbons  v. 
Ogden,  in  above  text] ;  Paddleford,  Fay  &  Co.  v.  Mayor,  etc.,  of  Savannah, 
14  Ga.  438,  514  (commerce  declared  not  to  mean  intercourse  or  na\aga- 
tion). 

Idaho:  State  v.  Duckworth,  5  Idaho,  642,  51  Pac.  456  (commerce  means 
not  only  traffic  but  also  intercourse.  As  applied  to  States  it  means  com- 
mercial intercourse  between  them). 

Illinois:  State  v.  Illinois  Cent.  R.  Co.,  246  111.  188,  210,  92  N.  E.  814,  per 
Carter,  J. 

Indiana:  State  v.  Indiana  &  Illinois  Southern  Rd.  Co.,  133  Ind.  09,  83, 
32  N.  E.  817,  18  L.  R.  A.  502  (per  Olds,  C.  J.,  quoting  Webster  and  Century 
Diets.);  Fry  v.  State,  63  Ind.  552,  562,  30  Am.  Rep.  238  (commerce  includes 
interstate  passenger  traffic). 

Iowa:  State  v.  Eckenrode,  (Iowa,  1910),  127  N.  W.  56;  Campbell  v. 
Chicago,  Milwaukee  &  St.  Paul  Ry.  Co.,  86  Iowa,  587,  589,  53  N.  W.  351, 
17  L.  R.  A.  443  (per  Robinson,  C.  J.,  quoting  from  102  U.  S.  702,  91  U.  S. 
280,  both  given  above,  and  from  Gibbous  v.  Ogden,  in  above  text);  Coun- 
cil Bluffs,  City  of,  V.  Kansas  City,  St.  Joseph  &  Council  Bluffs  R.  Co.,  45 
Iowa,  338,  349,  24  Am.  Rep.  773,  per  Miller  Ch.  J.;  Fuller  v.  Chicago  &  N. 
W.  R.  Co.,  31  Iowa,  187,  207,  per  Beck,  J. 

Kansas:  Ijcibengood  v.  Missouri,  Kansas  &  Topeka  Rj'.  Co.,  83  Kan.  25, 
109  Pac.  988;  Kinsley,  City  of,  v.  Dyerly,  79  Kan.  1,  98  Pac.  228;  Patterson 
V.  Missouri  Pac.  Ry.  Co.,  77  Kan.  236,  94  Pac.  138;  State  v.  Phipps.  50 

27 


§  16  TERMS   AND   DEFINITIONS 

where  they  are  to  be  delivered  to  a  carrier  for  the  foreign 
destination." 

Kan.  609,  31  Pac.  1097,  18  L.  R.  A.  657,  34  Am.  St.  Rep.  152;  Hardy  v. 
Atchison,  Topeka  &  Santa  Fe  R.  Co.,  32  Kan.  698,  5  Pac.  6,  10. 

Kentucky:  United  States  Fidelity  &  Guaranty  Co.  v.  Commonwealth, 
139  Ky.  27,  129  S.  W.  314;  Commonwealth  v.  Eclipse  Hay  Press  Co.,  31  Ky. 
L.  Rep  824,  104  S.  W.  224  (what  acts  constitute  interstate  commerce). 

Maryland:  Postal  Teleg.  Cable  Co.  v.  State,  110  Md.  608,  618,  73  Atl. 
679. 

Massachusetts:  Opinion  of  Justices,  In  re,  204  Mass.  607,  613,  91  N.  E. 
405,  27  L.  R.  A.  (N.  S.)  483;  Commonwealth  v.  Housatonic  R.  Co.,  143 
Mass.  264,  9  N.  E.  547. 

Michigan:  Imperial  Curtain  Co.  v.  Jacob  (Mich.,  1910),  17  Det.  Leg. 
N.  751,  127  N.  W.  772. 

Minnesota:  Gray  v.  Minneapolis  &  St.  Louis  R.  Co.  110  Minn.  527,  124 
N.  W.  1100;  Hardwick  Farmers'  Elevator  Co.  v.  Chicago,  Rock  Island  & 
Pacific  Ry.  Co.,  110  Minn.  25,  124  N.  W.  819;  State  v.  Chicago,  St.  Paul, 
Minneapolis  &  Omaha  Ry.  Co.,  40  Minn.  267,  268,  41  N.  W.  1047,  12  Am. 
St.  Rep.  730,  3  L.  R.  A.  238. 

Missouri:  Mires  v.  St.  Louis  &  San  Francisco  R.  Co.,  134  Mo.  App.  379, 
114  S.  W.  1052. 

Montana:  McNaughton  Co.  v.  McGu-1,  20  Mont.  124,  49  Pac.  631,  653,  38 
L.  R.  A.  367,  63  Am.  St.  Rep.  610;  Territory  v.  Farnsworth,  5  Mont.  303, 

5  Pac.  869,  874. 

Nebraska:  State  v.  Missouri  Pac.  Ry.  Co.,  81  Neb.  15,  115  N.  W.  614. 

Nevada:  Western  Union  Teleg.  Co.  v.  Atlantic  &  Pacific  States  Teleg. 
Co.,  5  Nev.  102,  108,  109,  Crandall,  Ex  parte,  1  Nev.  294,  302. 

New  Jersey:  Lehigh  &  WUkes-Barre  Coal  Co.  v.  Borough  of  Junction,  75 
N.  J.  922,  68  Atl.  806,  case  affirms  75  N.  J.  L.  68,  66  Atl.  923;  State,  Lehigh 

6  Wilkes-Barre  Coal  Co.  v.  Carrigan,  39  N.  J.  L.  35,  37;  State  v.  Delaware, 
Lackawanna  &  Western  R.  Co.,  30  N.  J.  L.  473,  487. 

New  York:  People  v.  Klaw,  106  N.  Y.  Supp.  341,  55  Misc.  12;  Dillon  v. 
Erie  R.  Co.,  43  N.  Y.  Supp.  320,  325,  19  Misc.  116. 

North  Carolina:  Reid  v.  Southern  Ry.  Co.,  153  N.  C.  490,  69  S.  E.  618; 
Bagg  V.  Wilmington,  Columbia  &  Augusta  R.  Co.,  109  N.  C.  279,  280,  281, 
14  S.  E.  79,  80,  14  L.  R.  A.  596,  26  Am.  St.  Rep.  569. 

Oklahoma:  Farris  v.  Henderson,  1  Okla.  384,  393,  33  Pac.  380,  383. 

Pennsylvania:  List  v.  Commonwealth,  118  Pa.  St.  322,  12  Atl.  277,  279; 
Commonwealth  v.  Gloucester  Ferry  Co.,  98  Pa.  St.  105,  120;  Master  Gran- 
ite &  Blue  Stone  Cutters'  Assoc,  23  Pa.  Co.  R.  517,  520. 

tSouth  Carolina:  Venning  v.  Atlantic  Coast  Line  R.  Co.,  78  S.  C.  42,  12 
L.  R.  A.  (N.  S.)  1217,  58  S.  E.  983. 

South  Dakota:  State  v.  Morgan,  2  S.  Dak.  32,  50,  48  N.  W.  314,  320. 

Tennessee:  State  v.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59  S.  W.  1033, 
1039,  78  Am.  St.  Rep.  941. 

Texas:  Queen  Ins.  Co.  v.  State,  86  Tex.  250,  24  S.  W.  397,  401,  22  L.  R. 
A.  483. 

"  Southern  Pacific  Terminal  Co.  v.  Interstate  Commerce  Commission, 

28 


TERMS   AND   DEFINITIONS  §  17 

§  17.  Intrastate  Commerce  Defined. 

A  transportation  of  goods  which  is  begun  and  ended 

Vermont:  International  Text  Book  Co.  v.  Lynch,  81  Vt.  101,  60  Atl. 
541,  case  reversed  in  218  U.  S.  664,  54  Iv.  od.  1201,  31  Sup.  Ct.  225. 

Washington:  State  v.  Grays  Harbor  &  Puget  Sound  Ry.  Co.,  54  VVa^h. 
530,  103  Pac.  809. 

West  Virginia:  State  v.  United  States  Express  Co.,  63  W.  Va.  299,  60 
S.  E.  144. 

Wisconsin:  Loverin  <t  Browne  Co.  v.  Travis,  135  Wis.  322,  115  N.  W. 
829;  United  States  Gypsum  Co.  v.  Gleason,  135  Wis.  539,  116  N.  W. 
238. 

219  U.  S.  498,  55  L.  ed.  — ,  31  Sup.  Ct.  — ,  citing  and  relying  upon  Coe  v, 
Errol,  116  U.  S.  517,  29  L.  ed.  715,  6  Sup.  Ct.  475. 

Interstate  commerce  does  not  begin  until  the  articles  have  been  shipped  or 
started  for  transportation  from  one  State  to  the  other.  Reid  v.  Southern 
Ry.  Co.,  153  N.  C.  490,  69  S.  E.  618. 

Equipment  of  interstate  railroad,  including  cars  for  transportation  of  its 
own  fuel  are  instruments  of  interstate  commerce.  Interstate  Commerce 
Commission  v.  Illinois  Cent.  Rd.  Co.,  215  U.  S.  452,  30  Sup.  Ct.  155,  54 
L.  ed.  280  rev'g  173  Fed.  930. 

Railroad  carrier's  business  as  part  of  trade  or  commerce — Interstate  com- 
merce. See  United  States  v.  Joint  Traffic  Association,  171  U.  S.  505,  570, 
19  Sup.  Ct.  25,  43  L.  cd.  259,  per  Peckham,  J.,  quoted  from  in  Joyce  on 
Franchises,  §  106. 

Exchange  by  transportation  not  sole  lest  of  interstate  commerce  bid  only  an 
adjunct — Transaction  includes  each  essential  part,  reaching  as  entirety  into 
two  or  more  Slates.  "When  commerce  *  *  *  is  between  parties  dealing 
from  different  States — to  be  effected  so  far  as  the  immediate  act  of  ex- 
change goes  by  transportation  from  State  to  State — it  is  'commerce  be- 
tween the  States,'  within  the  meaning  of  the  Constitution,  and  the  statute 
known  as  the  Sherman  Act."  (See  §§  13,  14,  herein.)  "But  it  is  not  the 
transportation  that  constitutes  the  transaction  interstate  commerce.  That 
is  an  adjunct  only,  essential  to  commerce,  but  not  the  sole  test.  The 
underlying  test  is  that  the  transaction,  as  an  entirety,  including  each  part 
calculated  to  bring  about  the  result,  reaches  into  two  or  more  States;  and 
that  the  parties  dealing  with  reference  thereto  deal  from  different  States. 
An  interstate  commercial  transaction  is,  in  this  sense,  an  affair  rising  from 
different  States,  and  centering  in  the  act  of  exchange,  each  essential  part 
of  the  affair  being  as  much  commerce  as  is  the  center."  United  States  v. 
Swift  &  Co.  (U.  S.  C.  C),  122  Fed.  529,  531,  per  Grosscup,  Cir.  J. 

The  assumption,  "that  commerce  in  the  constitutional  sense  only  embrace-'^ 
shipments  in  a  technical  sense  and  docs  not  therefore  extend  to  carriers  engaged 
in  interstate  commerce,  certainly  in  so  far  as  so  engaged  and  the  instru- 
mentalities bj'  which  such  commerce  is  carried  on"  is  a  doctrine,  the  "un- 
soundness of  which  has  been  apparent  ever  since  the  decision  in  Gibbons 
v.  Ogden,  9  Wheat.  (22  U.  S.)  1,  6  L.  ed.  23,  and  which  has  not  since  been 
open  to  question."     Interstate  Commerce  Commission  v.  Illinois  Cent. 

29 


§  18  TERMS   AND   DEFINITIONS 

within  the  limits  of  a  State,  and  disconnected  with  any 
carriage  outside  the  State  is  exclusively  commerce  within 
the  State.  ^^  In  other  words,  commerce  which  is  completely 
internal  is  that  which  is  carried  on  between  persons,  or 
man  and  man,  in  a  State,  or  between  different  parts  of 
the  same  State,  and  which  does  not  extend  to  or  affect 
other  States. ^^ 

§  18.  Commodity,  Commodities  Defined. 

Commodity  means,  primarily,  convenience,  profit, 
advantage,  interest.  It  also  means  that  which  affords 
ease,  convenience,  profit,  or  advantage;  anything  that  is 
useful,  particularly  in  commerce,  including  everything 
movable  that  is  bought  and  sold;  commodities  are 
movables,  valuable  by  money,  the  common  measure;  the 
synonjrm  is  merchandise,  goods,  wares,  stock. ''^ 

38  Wabash,  St.  Louis  &  Pacific  Ry.  Co.  v.  Illinois,  118  U.  S.  557,  7  Sup. 
Ct.  4,  30  L.  ed.  244  (case  relates  to  right  of  State  to  regulate  carrier's  rates). 
See  a.lso  Oregon  Ry.  &  Nav.  Co.  v.  Campbell  (U.  S.  C.  C),  180  Fed.  253. 
Examine  Joyce  on  Franchises,  §  369. 

M  Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.  )1,  194,  6  L.  ed.  23,  per  Mr. 
Chief  Justice  Marshall. 

Internal  commerce  is  that  which  takes  place  entirely  within  the  limits 
of  a  State.    Paddleford,  Fay  &  Co.  v.  Mayor  of  Savannah,  14  Ga.  438,  514. 

Commerce  which  is  completely  internal  is  not  within  the  scope  of  the 
"commerce  clause"  of  the  Federal  Constitution,  and,  therefore,  is  not  the 
subject  of  congressional  regulation.  Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.) 
1,  6  L.  ed.  23. 

^"Webster's  Universal  Diet.  (ed.  1910-1911);  substantially  same  defi- 
nition is  given  in  Rohlf  v.  Kasemeier,  140  Iowa,  182,  186,  118  N.  W.  276. 
See  also  Best  v.  Bauder,  29  How.  Pr.  (N.  Y.)  489,  492.  Compare  Queen 
Ins.  Co.  v.  State,  86  Tex.  250,  265,  24  S.  W.  397,  401,  22  L.  R.  A.  483,  per 
Gaines,  Assoc.  J. 

Commx>dity,  anything  that  is  useful;  any  object  of  commerce;  anything 

Rd.  Co.,  215  U.  S.  452,  474,  30  Sup.  Ct.  155,  54  L.  ed.  280,  rev'g  173  Fed. 
930,  per  Mr.  Justice  White. 

Interstate  commerce  embraces  the  right  to  send  liquors  from  one  State  into 
another  and  also  the  act  of  sending  the  same,  and  is  within  the  power  given 
by  the  Federal  Constitution  to  regulate  commerce.  Vance  v.  W.  A.  Van- 
dercook  Co.,  170  U.  S.  438,  18  Sup.  Ct.  674,  42  L.  ed.  1100.  See  also  Joyce 
on  Actions  and  Defenses  by  and  Against  Corporations,  §§  51-54.  So 
ardent  spirits  are  the  subject  of  sale  and  lawful  commerce.  The  License 
Cases  (Thurlow  v.  Massachusetts),  5  How.  (46  U.  S.)  504,  599,  12  L.  ed. 
256,  per  Mr.  Justice  Catron. 

30 


TERMS   AND    DEFINITIONS  §  18 

The  word  "commodities,"  under  a  constitutional 
clause  *^  giving  to  the  legislature  power  and  authority  to 
impose  and  levy  reasonable  duties  and  excises  upon  any 
produce,  goods,  wares,  merchandise  and  commodities, 
whatsoever,  brought  into,  produced,  manufactured,  or  be- 
ing within  the  State,  includes  the  transfer  of  shares  in  the 
capital  stock  of  a  corporation,  association  or  company, 
domestic  or  foreign  made  in  said  State,  also  all  agreements 
for  such  transfers.^-    Under  a  Kentucky  decision  it  is 

that  can  be  bought  or  sold,  animals  excepted;  goods;  wares;  merchandise. 
Synonym  of  goods;  merchandise;  wares.    Stormonth's  Eng.  Diet. 

CommodUy.  1.  An  article  of  trade  or  convenience,  a  movable  article  of 
value;  something  that  is  bought  and  sold.  *  *  *  2.  Convenience;  suitable- 
ness; advantage;  profit.    3.  A  supply  furnished;  quantity.    Standard  Diet. 

For  other  definitions  of  "commodity"  or  "commodities"  see  the  follow- 
ing cases: 

United  States:  Hamilton  Mfg.  Co.  v.  Massachusetts,  6  Wall.  (73  U.  S.) 
632,  640,  18  L.  ed.  904  (commodities  does  not  mean  goods  and  wares  alone 
but  also  signifies  convenience,  privilege,  profit  and  gain,  per  Mr.  Jus- 
tice ChfTord). 

Alabama:  Shuttleworth  v.  State,  35  Ala.  415,  417  ("article"  and  "com- 
modity" embrace  most  movable  things  which  may  become  the  subject  of 
commerce). 

Kentucky:  Barnett  v.  Powell,  16  Ky.  (6  Littell)  409,  410  (the  term  com- 
modity is  properly  used  to  signify  almost  any  description  of  articles  called 
movable  or  personal  estate). 

Massachusetts:  Commonwealth  v.  Lancaster  Sav.  Bk.,  123  Mass.  493, 
495  ("commodity"  is  a  general  term  and  includes  the  privilege  and  con- 
venience of  transacting  a  particular  business). 

Texas:  Queen  Ins.  Co.  v.  State,  86  Tex.  250,  265,  24  S.  W.  397,  401,  22 
L.  R.  A.  483  (the  word  is  ordinarilj-  used  in  the  commercial  sense  of  any 
movable  and  tangible  thing  that  is  ordinarily  used  or  produced  as  the  sub- 
ject of  barter  or  sale.    Webster's  definition  also  given). 

"  Const.  Mass.,  art.  4,  §  1,  c.  1,  pt.  2. 

*^  Opinion  of  the  Justices  (Mass.,  1908),  85  N.  E.  545.  See  also  Hamilton 
Company  v.  Massachusetts,  6  Wall.  (73  U.  S.)  632,  640,  18  L.  ed.  904,  per 
Mr.  Justice  Clifford. 

Corporate  franchises  as  conimoditics.  "It  has  been  repeatedly  held  that 
corporate  franchises  enjoj'ed  by  grant  from  the  government  are  com- 
modities nnd  subject  to  an  excise.  So  with  corporate  franchises  granted  by 
a  foreign  government."  Glcason  v.  McKay,  1.34  Mass.  419,  424,  425,  per 
Morton,  C.  J.  The  defendant  in  this  case  was  not  a  corporation,  but  merely 
a  partnership.  See  Finch's  Law  of  England,  126  (38).  Where  a  State  con- 
stitution empowers  the  legislature  to  impose  and  levy  reasonable  duties  and 
excises  upon  "commodities,"  etc.,  an  act  of  incorporation  is  declared  to  be 
a  commodity  or  privilege.  Commonwealth  v.  People's  Five  Cent  Sav. 
Bank,  5  Allen  (87  Mass.),  428,  435,  per  Bigelow,  C.  J.,  who  says:  "Cer- 

31 


§  19  TERMS   AND   DEFINITIONS 

not  an  indictable  offense  to  conspire  to  fix  insurance  rates, 
either  by  virtue  of  the  statute  "  against  conspiracies  to 
regulate  the  prices  of  "merchandise,  manufactured  arti- 
cles or  property  of  any  kind,"  or  by  the  common  law 
as  it  existed  prior  to  the  fourth  year  of  King  James  I.'** 
Insurance  has,  however,  been  held  a  commodity  within 
the  meaning  of  a  code  provision  ^^  prohibiting  the  for- 
mation of  combinations  between  individuals  or  corpora- 
tions to  regulate  or  fix  the  price  of  ''oil,  lumber,  coal  *  *  * 
or  any  other  commodity,"  and  a  compact  between  local 
agents  in  a  city  to  fix  rates  upon  all  risks  therein,  imposing 
certain  penalties  for  taking  of  risks  at  less  rates  than  those 
fixed  by  the  association  is  within  the  inhibition  of  said 
code  so  forbidding  the  formation  of  combinations  or  con- 
federations to  regulate  the  price  of  any  commodity/^ 
The  term  ''commodity,"  as  used  in  the  Iowa  code  ^^  re- 
lating to  an  unlawful  combination,  pool  or  trust  to  control 
the  price  or  limit  the  quantity  of  any  article  of  merchan- 
dise, or  commodity  manufactured,  mined,  produced  or 
sold  in  the  State,  does  not  comprehend  personal  services, 
either  skilled  or  unskilled.  ^^ 

§  19.  Competing  Line  Defined. 

The  term  "competing  line"  means  that  no  railroad 
or  railway  line  is  "competing"  until  it  is  constructed. 
Competition  as  between  railroads  necessarily  relates  to 

tainly  it  is  most  just  and  reasonable  that  a  privilege,  or  to  use  the  words  of 
the  Constitution,  'a  commodity,'  which  an  act  of  incorporation  fur- 
nishes *  *  *  should  bear  a  portion  of  the  public  burdens,  in  the  form  of 
an  excise." 

"  Ky.  Stat.,  §  3915. 

"  iEtna  Ins.  Co.  v.  Commonwealth,  106  Ky.  864,  25  Ky.  L.  Rep.  503, 
45  L.  R.  A.  355,  51  S.  W.  624.  Sec  Queen  Ins.  Co.  v.  State,  86  Tex.  250, 
24  S.  W.  397,  22  L.  R.  A.  483. 

*^  Iowa  Code,  §  5454. 

«  Beechley  v.  Mulvillc,  102  Iowa,  602,  63  Am.  St.  Rep.  479,  70  N.  W. 
107,  71  N.  W.  428.  Examine  State  ex  inf.  Firemen's  Fund  Ins.  Co.,  152 
Mo.  1,  45  L.  R.  A.  363,  52  S.  W.  595. 

"  §  5060. 

^«Rohlf  V.  Kasemeier,  140  Iowa,  182,  118  N.  W.  276.  Examine  also 
State  V.  Henke,  19  Mo.  225,  226,  holding  that  "commodity"  under  a 
statute  prohibiting  buying,  selling  or  receiving  "any  commodity  whatso- 
ever" from  a  slave,  etc.,  did  not  include  the  manual  labor  of  a  slave. 

33 


TERMS    AND    DEFINITIONS  §  20 

transportation,  and  in  respect  to  transportation,  the 
term  ''competing"  signifies  a  road  complete  and  ready 
for  operation.  ""^  "  For  tliese  reasons  we  think  the  proper 
construction  of  the  phrase,  a  'parallel  or  competing  line,' 
is  that  it  includes  a  projected  road,  surveyed,  laid  out, 
and  in  process  of  construction,  as  we  have  found  to  be  the 
fact  in  this  case,  if  such  road,  when  completed  and  in 
operation,  would  actually  compete  with  the  road  seeking 
control.  Before  competition  it  is  'parallel';  when  com- 
pleted it  becomes  'competing.' "  ^° 

§  20.  Conspiracy  Defined — Conspiracy  in  Restraint  of 
Trade  Defined. =^ 

The  conspiracy  which  the  Federal  Anti-Trust  Act  refers 
to  has  been  defined  as  the  agreement,  confederation,  com- 
bination, design,  scheme,  plan,  or  purpose  of  two  or  more 
parties  to  accomplish  by  their  concerted  action  or  co- 
operation an  unlawful  result  by  either  lawful  or  unlawful 
means,  or  a  lawful  result  by  unlawful  means.  Here  it  is 
the  unlawful  or  criminal  results  which  are  made  punish- 
able, and  those  results  are  the  monopolizing  of  trade  and 
commerce  among  the  several  States  and  with  foreign 
nations,  and  the  restraint  of  trade  and  commerce  among 
the  several  States  and  with  foreign  nations.  The  law  con- 
demns these  two  results,  and  when  two  or  more  persons 

«  Mannington  v.  Hocking  Valley  Ry.  Co.  (U.  S.  C.  C),  183  Fed.  133, 
150;  construed  in  connection  with  Gen.  Code,  Ohio,  §  8S06. 

^  Pennsylvania  Rd.  Co.  v.  Commonwealth  (Pa.,  1886),  7  Atl.  368,  373, 
per  Simonton,  P.  J.,  case  where  injunction  was  sought  to  restrain  one  rail- 
road company  from  obtaining  and  exercising  control  of  another  railroad 
company  upon  ground  of  constitutional  prohibition. 

What  are  not  "competing  lines."  See  Kimball  v.  Atchison,  Topeka  & 
Santa  Fe  R.  Co.  (U.  S.  C.  C),  46  Fed.  888,  890,  under  Mo.  Rev.  Stat., 
§2569.  "I  will  say,  that  when  the  statute  speaks  of  competing  roads  it 
evidently  means  roads  that  are  substantial  competitors  for  business;  it 
refers  to  competition  of  some  practical  importance,  such  as  is  liable  to  have 
an  appreciable  effect  on  rates."    Id.,  890,  per  Thayer,  J. 

Parallel  lines  are  not  necessarily  competing  lines,  as  they  not  infrequently 
connect  entirely  different  termini  and  command  the  traffic  of  distinct  terri- 
tories." Louisville  &  Nashville  Rd.  Co.  v.  Kentucky,  161  U.  S.  677,  698,  40 
L.  ed.  849,  16  Sup.  Ct.  714,  per  Mr.  Justice  Brown. 

''  See  §§  3,  4,  herein, 

3  33 


§  21  TERMS   AND   DEFINITIONS 

conspire  to  produce  either  of  these  results  there  is  a  vio- 
lation of  the  statute."  Again,  '''conspiracy'  is,  unlike 
'combination'  a  term  of  art.  In  the  anti-trust  law  it  is  to  be 
interpreted  independently  of  the  preceding  words. ^^  *  *  * 
The  elements  of  a  conspiracy  to  be  here  considered  are 
that  it  must  depend  upon  the  concerted  action  of  two 
or  more  persons  to  accomplish  an  unlawful  result  by 
any  means,  or  a  lawful  result  by  unlawful  means. ^^  The 
statute  declares,  in  effect,  that  if  the  purpose  of  the  con- 
certed action  is  to  restrain  trade  between  the  States,  such 
purpose  is  unlawful,  and  the  concert  of  action  is  a  con- 
spiracy. It  is  wide  enough  to  cover,  not  only  a  destruction 
of  the  trade  of  competitors  by  wrongful  means  ^^  but  any 
restraint  of  interstate  trade  if  the  same  be  accomplished 
by  a  predetermined  and  concerted  action  of  two  or  more 
individuals."  ^^  Again,  a  conspiracy  in  restraint  of 
trade,  made  criminal  by  the  Sherman  Anti-Trust  Act, 
is  more  than  a  contract  in  restraint  of  trade;  the  latter 
is  instantaneous,  but  the  former  is  a  partnership  in  crim- 
inal purposes  and  as  such  may  have  continuance  in 
time." 

§  21.  Contract  Defined. 

A  contract  is  an  agreement  upon  sufficient  consideration 
to  do  or  not  to  do  a  particular  thing.  ^^  It  has  also  been 
defined  as  a  compact  between  two  or  more  persons,  and  it 

*2  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed. 
455,  460,  per  Sheppard,  Dist.  J. 

Conspiracy  defined  as  a  combination  between  two  or  more  persons  to  ac- 
complish an  unlawful  end  by  lawful  means  or  a  lawful  end  by  unlawful 
means  (in  connection  with  words  "a  conspiracy  in  restraint  of  trade"  in 
Sherman  Anti-Trust  Act.  United  States  v.  Addyston  P.  &  S.  Co.,  85  Fed. 
271,  293,  29  C.  C.  A.  141,  per  Taft,  Cir.  J. 

53  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  725,  747. 

"  Pettibone  v.  United  States,  148  U.  S.  197,  13  Sup.  Ct.  542,  37  L.  ed. 
419. 

«  United  States  v.  Patterson  (U.  S.  C.  C),  55  Fed.  605. 

^  United  States  v.  MacAndrcws  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 
823,  831,  per  Hough,  Dist.  J. 

"  United  States  v.  Kissel,  218  U.  S.  601,  31  Sup.  Ct.  — ,  54  L.  ed.  1168, 
reversing  173  Fed.  823;  see  §  52,  herein. 

^  Anderson's  Diet,  of  Law,  citing  2  Blackstone's  Comm.  442, 

34 


TERMS   AND   DEFINITIONS  §  21 

is  either  executory  or  executed.  An  executory  contract 
is  one  in  which  a  party  binds  himself  to  do  or  not  to  do  a 
particular  thing.  A  contract  executed  is  one  in  which  the 
object  of  the  contract  is  performed,  and  this  differs  in 
nothing  from  a  grant.  A  contract  executed,  as  well  as 
one  that  is  executory,  contains  obligations  binding  on 
the  parties.  ^^ 

'9  Dartmouth  College  v.  Woodward,  4  Wheat.  (17  U.  S.)  518,  4  L.  ed. 
629,  holding  that  the  charter  of  a  private  corporation  is  a  contract.  Sec  on 
this  point  Joyce  on  Franchises,  §§  311  el  seq. 

For  other  definitions  oj  contract  see  the  following  cases: 

United  States:  Edwards  v.  Kearzey,  96  U.  S.  595,  599,  600,  24  L.  ed.  793, 
per  Mr.  Justice  Swayne;  Larabee  v.  Dolley  (U.  S.  C.  C),  175  Fed.  365. 

Arkansas:  Arkansas  Stave  Co.  v.  State  (Ark.,  1910),  125  S.  W.  1001; 
Simmons-Burks  Clothing  Co.  v.  Linton,  90  Ark.  73,  78,  117  S.  W.  775; 
Haney  v.  Caldwell,  43  Ark.  184,  189. 

California:  American  Can  Co.  v.  Agricultural  Ins.  Co.,  12  Cal.  App.  133, 
106  Pac.  720;  House  v.  McMullen  (Cal.  App.,  1909),  100  Pac.  344,  346,  per 
Burnett,  J.  (under  Code). 

Colorado:  Brothers  v.  Brothers,  29  Colo.  69,  71,  66  Pac.  901,  per  Gab- 
bert,  J. 

Connecticut:  Skelly  v.  Bristol  Sav.  Bk.,  63  Conn.  83,  87,  26  Atl.  474,  475, 
19  L.  R.  A.  599,  38  Am.  St.  Rep.  340,  per  Andrews,  C.  J. 

Delaware:  Merritt  &  Co.  v.  Layton,  (Del.  Super.,  1910),  75  Atl.  795. 

Illinois:  Canterberry  v.  Miller,  76  111.  355,  357,  per  Craig,  J. 

Indiana:  Haskell  &  Barker  Car  Co.  v.  Allegheny  Forging  Co.  (Ind.  App., 
1910),  91  N.  E.  975,  976. 

Iowa:  Churchill  v.  Gronewig,  81  Iowa,  449,  454,  46  N.  W.  1063,  1065,  per 
Granger,  J.;  Quinn  v.  Shields,  62  Iowa,  129,  139, 17  N.  W.  437,  442,  49  Am. 
Rep.  141,  per  Beck,  J. 

Maryland:  Miller  v.  Palmer,  58  Md.  451,  460,  per  Stone,  J. 

Missouri:  Weinsberg  v.  St.  Louis  Cordage  Co.,  135  Mo.  App.  553,  565, 
116  S.  W.  461,  per  Nortoni,  J.;  Embry  v.  Hargadine-McKittrick  Dry  Goods 
Co.,  127  Mo.  App.  383,  387,  388,  105  S.  W.  777,  per  Goode,  J. 

Nebraska:  Leman  v.  Chipman  82  Neb.  392,  117  N.  W.  885,  887,  per 
Calkins,  C. 

New  York:  Justice  v.  Lang,  42  N.  Y.  493,  496,  497,  1  Am.  Rep.  576,  per 
Lott,  J. 

North  Carolina:  Wilcox  v.  Cherry,  123  N.  C.  79,  83,  31  S.  E.  369,  370, 
per  Douglas,  J. 

Oklahoma:  Love  v.  Cavett  26  Okla.  179,  109  Pac.  553;  Shelby  v.  Ziegler, 
22  Okla.  799,  98  Pac.  989,  994,  per  Williams,  C.  J.;  McCormick  v.  Bonfils,  9 
Okla.  605,  616,  60  Pac.  296,  299,  per  Irwin,  J. 

Texas:  Williams  v.  Rogan,  59  Tex.  438,  440. 

Vermont:  Franklin  County  Grammar  School  v.  Bailey,  62  Vt.  467,  476,  20 
Atl.  820,  822,  10  L.  R.  A.  405,  per  Ross,  J.;  Edgerton  v.  Hodge,  41  Vt.  676, 
680,  per  Wilson,  J. 

35 


§§  22,  23  TERMS   AND   DEFINITIONS 

§  22.  Monopoly,  "  Monopolize  "  Defined.^^ 
''Monopoly"  has  been  given  its  common-law  meaning 
as  being  the  construction  clearly  intended  by  Congress 
under  the  Sherman  Anti-Trust  Act.^^  The  word  ''monop- 
olize" in  the  Sherman  Anti-Trust  Act  "is  hard  to  define, 
and  no  attempt  at  an  exhaustive  definition  need  be  made. 
It  will  suffice  to  say  that  the  mere  extent  of  acquisition 
of  business  or  property  achieved  by  fair  or  lawful  means 
cannot  be  the  criterion  of  monopoly.  In  addition  to 
acquisition  and  acquirement,  there  must  be  an  intent 
by  unlawful  means  to  exclude  others  from  the  same  traffic 
or  business,  or  from  acquiring  by  the  same  means  property 
and  material  things."  ^^ 

§  23.  Contract  in  Restraint  of  Trade  Defined. 

The  contract  in  restraint  of  trade,  which  originally  fell 
under  the  condemnation  of  the  common  law,  was  one 
whereby  a  party  bound  himself  not  to  follow  some  particu- 
lar occupation,  trade,  calling,  or  profession,  or  to  engage 
in  some  particular  business  for  a  period  within  a  particular 
territory.  ^^  Contracts  in  restraint  of  trade  have  been 
known  and  spoken  of  for  hundreds  of  years  both  in  Eng- 
land and  in  this  country,  and  the  term  includes  all  kinds 
of  those  contracts  which  in  fact  restrain  or  may  restrain 

^  See  §§  8,  9,  herein. 

^'  Corning,  In  re,  51  Fed.  205,  212  (case  of  indictment;  monopoly;  re- 
straint of  trade  and  commerce  in  distillery  products  among  the  several 
States),  Act  July  2,  1890.    See  also  §§  8,  9,  herein  and  citations. 

'"To  engross  or  obtain,  by  any  means,  the  exclusive  right  of,  especially 
the  right  of  trading,  to  any  place  or  with  any  country,  or  district;  as  to 
monopolize  the  India  or  Levant  trade."'  Greene,  In  re,  52  Fed.  104,  116, 
as  appUed  to  Act  of  July  2,  1890  (Webster's  def.). 

'"A  sole  engrossing  to  a  man's  self  by  means  which  prevent  other  men 
from  engaging  in  competition  with  him.'"  Greene,  In  re,  52  Fed.  104,  116, 
as  applied  to  Act  of  July  2,  1890. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appenchx  A,"  herein. 

«2  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  456,  per 
Gray,  Cir.  J. 

63  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  523,  121  N.  W.  395, 
per  Elliott,  J. 

36 


TERMS   AND   DEFINITIONS  §  24 

trade.  Some  of  those  contracts  have  been  held  void  and 
unenforceable  in  the  courts  by  reason  of  their  restraint 
being  unreasonable,  while  others  have  been  held  vahd  be- 
cause they  were  not  of  that  nature.  A  contract  may  be 
in  restraint  of  trade  and  still  be  vaUd  at  common  law. 
Although  valid,  it  is  nevertheless  a  contract  in  restraint 
of  trade,  and  would  be  so  described  either  at  common  law 
or  elsewhere.  ^^ 

§  24.  "  Restraint  of  Trade  "— "  Restraint "— "  In  Re- 
straint of  Trade  or  Commerce  "  Defined. 

The  term  "restraint  of  trade"  as  used  in  the  Federal 
Anti-Trust  Act  ^°  is  no  new  one.  It  had  theretofore  been 
used  by  courts  in  applying  the  doctrines  of  the  common 
law  in  determining  the  validity  of  contracts.  It  is  to  be 
presumed  that  the  lawmakers  when  they  chose  that 
phrase,  intended  that  it  should  have,  when  used  in  the 
statute,  no  other  or  different  meaning  from  that  which 
had  always  been  given  to  it  in  judicial  decisions  and  in  the 
common  understanding.  The  title  indicates  that  the 
phrase  is  so  used,  for  the  act  is  described  as  one  *'to  pro- 
tect trade  and  commerce  against  unlawful  restraints  and 
monopolies  " ;  and,  though  the  title  to  an  act  cannot  control 
its  words,  it  may  furnish  some  aid  in  showing  what  was 
in  the  mind  of  the  legislator.  The  "restraint  of  trade" 
which  is  obnoxious  to  the  provisions  of  the  first  section, 
must  be  of  such  kind  as  was,  before  the  passage  of  the  act, 
recognized  as  unlawful.  ^^     "Restraint"  as  used  in  the 

"  United  States  v.  Trans-Missouri  Freight  Assoc,  166  U.  S.  290,  328,  17 
Sup.  Ct.  540,  41  L.  ed.  1007,  per  Mr.  Justice  Peckham  in  construing  the 
Sherman  Anti-Trust  Act. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix,"  A  herein. 

*^  See  §  13,  herein. 

«  Dueber  Watch-Case  Mfg.  Co.  v.  Howard  Watch  &  Clock  Co.  (U.  S. 
C.  C.  A.),  66  Fed.  637,  643,  14  C.  C.  A.  14  (action  for  damages  caused  by 
unlawful  acts  and  combination).  See  also  United  States  v.  Patterson  (I'. 
S.  C.  C),  55  Fed.  605,  639,  640,  noted  under  §§  15,  58,  herein. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

37 


§  25  TERMS   AND   DEFINITIONS 

Sherman  Anti-Trust  Act  "is  a  comprehensive  word,  and 
covers  the  several  kinds  thereof  described  in — check; 
hinder;  repress;  curb;  restrict.  By  the  use  of  this  broad 
phrase,  4n  restraint  of  trade  or  commerce,'  it  would  seem 
that  one  of  the  objects  Congress  had  in  view  was  the 
maintenance  of  that  natural,  free  flow  of  commerce  in- 
cident to  its  commercial  competitive  character.  We  are 
therefore  justified  in  holding  that,  although  the  word 
'competition'  is  not  used  therein,  this  act,^^  was  'aimed  to 
maintain  interstate  commerce  on  the  basis  of  free  com- 
petition.'" «8 

§  25.  Trade  Defined. 

In  its  general  sense,  trade  comprehends  every  species 
of  exchange  or  dealing,  but  its  chief  use  is  to  denote  the 
barter  or  purchase  and  sale  of  goods,  wares,  and  mer- 
chandise, either  by  wholesale  or  retail,  and  so  it  is  used 
in  the  Sherman  Anti-Trust  Act.®^ 

The  word  "trade  "  in  its  broadest  signification,  includes 


"  "As  said  in  Chesapeake  &  Ohio  Fuel  Co.  v.  United  States,  115  Fed. 
610,  620,  53  C.  C.  A.  256,  266  (a  case  in  which  two  of  the  present  justices 
of  the  Supreme  Court  sat)." 

<»  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  460,  per 
Gray,  Cir.  J. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

«»  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724,  749,  per  Woods, 
Cir.  J. 

Trade  undeniably  includes  dealings  in  both  imported  and  domestic  com- 
modities. State  V.  Schlitz  Brewing  Co.,  104  Tenn.  715,  744,  59  S.  W.  1033, 
78  Am.  St.  Rep.  941,  per  Caldwell,  J.,  in  construing  State  Anti-Trust 
Statute. 

To  trade  is  to  engage  in  the  purchase  or  sale  of  goods,  wares  and  mer- 
chandise. Jackson  v.  Town  of  Union,  82  Conn.  266,  269,  73  Atl.  773,  per 
Hall,  J. 

"Trading  or  mercantile  business,"  within  a  State  statute  providing  for  the 
taxation  of  the  property  of  such  a  business,  covers  the  business  of  purchas- 
ing standing  timber  and  cutting,  sawing  and  selling  it.  Jackson  v.  Town 
of  Union,  82  Conn.  266,  73  Atl.  773. 

"Trade  and  manufacture"  are  not  technical  words.  A  place  of  trade  is  a 
place  devoted  to  the  business  of  buying  and  selling  or  of  plying  some 
mechanical  vocation.    Sharpe  v.  Hasey,  134  Wis.  618,  114  N.  W.  1118. 

38 


TERMS   AND   DEFINITIONS  §  26 

not  only  the  business  of  exchanging  commodities  by 
barter,  but  the  business  of  buying  and  selHng  for  money, 
or  commerce  and  traffic  generally.'" 

The  word  "trade"  embraces  within  its  meaning  com- 
mercial traffic,  and  it  also  has  a  limited  and  restricted 
significance  which  appHes  to  mechanical  pursuits;  but  in 
its  broad  and  general  sense  it  covers  and  embraces  all 
occupations  in  business,  with  the  possible  exception  of 
the  learned  professions  and  those  that  pertain  to  Uberal 
arts  and  the  pursuit  of  agriculture.^^ 

The  commercial  sense  of  the  word  ''trade  "  and  possibly 
the  most  common  signification  given  to  it  has  reference 
to  the  business  of  selling  or  exchanging  some  tangible 
substance  or  commodity  for  money,  or  the  business  of 
dealing  by  way  of  sale  or  exchange  in  commodities.  In 
the  broader  sense,  ''trade  "  is  any  occupation  or  business 
carried  on  for  subsistence  or  profit.  ^^ 

' '  Trade  "  within  the  meaning  of  a  State  anti-trust  statute, 
declaring  unlawful  trusts  and  combinations  in  restraint 
of  trade,  etc.,"  relates  only  to  domestic  trade,  and  not  to 
trade  or  commerce  between  citizens  of  different  States, 
or  interstate  commerce.'^ 

§  26.  Traffic  Defined. 

"Traffic"  is  commerce,  trade,  sale  or  exchange  of 
merchandise,  bills,  money  and  the  like.     It  is  the  passing 

"  May  V.  Sloan,  101  U.  S.  231,  237,  25  L.  ed.  797,  per  Mr.  Justice  Brad- 
ley. 

"  Geise  v.  Pennsylvania  Fire  Ins.  Co.  (Tex.  Civ.  App.,  1908),  107  S.  W. 
555. 

"  State  V.  Phipps,  50  Kan.  609,  614,  31  Pac.  1097,  1098,  34  Am.  St.  Rep. 
152,  18  L.  R.  A.  657,  per  Simpson,  C,  quoting  from  Pinkney,  In  re,  47 
Kan.  89,  27  Pac.  179. 

"  Kan.  Laws  of  1889,  chap.  257. 

^*  State  V.  Phipps,  50  Kan.  609,  34  Am.  St.  Rep.  152,  IS  L.  R.  A.  657. 
For  other  definitions  see  the  following  cases:  United  States  v.  Coal 
Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252,  265,  per  Morrow,  J.;  United 
States  V.  Cassidy  (U.  S.  D.  C),  67  PVd.  698,  705,  per  Morrow,  Dist.  J.; 
Binns  v.  Vitagraph  Co.  of  America,  124  N.  Y.  Supp.  515,  67  Misc.  327, 
what  constitutes  unlawful  purposes  of  trade  or  advertising  under  State 
statute  prohibiting  use  of  name  or  jjicture  without  consent. 

39 


§  27  TERMS   AND   DEFINITIONS 

of  goods  or  commodities  from  one  person  to  another  for 
an  equivalent  in  goods  or  money.  ^^ 

The  word  "  traffic,"  Uke  ''  trade,"  comprehends  every 
species  of  deahng  in  the  exchange  or  passing  of  goods  or 
merchandise  from  hand  to  hand  for  an  equivalent,  un- 
less the  retaining  may  be  expected. '^^ 

"Traffic  "  is  either  State  or  interstate  traffic,  according 
to  its  origin  and  destination.  It  is  shipped  by  the  con- 
signor in  the  State  where  the  consignee  dwells,  or  it  is  not. 
If  not  it  is  interstate  traffic.  ^^ 

§  27.  Transportation  Defined. 

Transportation  is  the  means  by  which  commerce  is 
carried  on;  without  transportation  there  would  be  no 
commerce  between  nations  or  among  the  States, '^^  as 
transportation  is  essential  to  commerce,  or  rather  is  com- 
merce itself.'^  The  word  "transportation"  in  the  Act 
of  Congress  amending  the  Interstate  Commerce  Act  ^° 

76  Williams  v.  Fears,  110  Ga.  584,  590,  35  S.  E.  699,  701,  50  L.  R.  A.  685, 
per  Cobb,  J.,  quoting  Bouvier's  L.  Diet,  and  Anderson's  Diet,  of  Law. 

7«  State  V.  Small,  82  S.  C.  93,  63  S.  E.  4,  per  Pope,  Ch.  J.,  quoting  Cur- 
ten  V.  Atkinson,  54  N.  C.  133. 

Traffic  is  the  buying  of  something  from  another  or  the  selling  of  some- 
thing to  another  and  is  alUed  to  trade.  Cameron  Town  Mut.  Fire,  Light- 
ning &  Windstorm  Ins.  Co.,  In  re  (U.  S.  D.  C),  96  Fed.  756,  757. 

"Deal  or  traffic"  synonymous.  Clifford  v.  State,  29  Wis.  327,  329  (in- 
dictment; intoxicating  liquor  case). 

"  Fort  Worth  &  Denver  City  Ry.  Co.  v.  Whitehead,  6  Tex.  Civ.  App. 
595,  598,  26  S.  W.  172. 

'^  Council  Bluffs,  City  of,  v.  Kansas  City,  St.  Joseph  &  Council  Bluffs  R. 
Co.,  45  Iowa,  338,  349,  24  Am.  Rep.  773. 

™  Jervey,  Ex  parte  (U.  S.  C.  C),  66  Fed.  957,  959,  per  Simonton,  Cir.  J. 

Exchange  by  transportation  not  sole  test  of  interstate  commerce  but  only  an 
adjunct.  Transaction  includes  each  essential  part,  reaching  as  entirety  into 
two  or  more  States.  United  States  v.  Swift  &  Co.  (U.  S.  C.  C),  122  Fed. 
529,  531,  see  quotation  from  this  case  in  last  note  to  §  16,  herein. 

"Transportation  companies;"  railroad  company  within  meaning  of  words. 
Texas  &  Pacific  Ry.  Co.  v.  Henson  (Tex.),  132  S.  W.  118;  case  modifies 
(Tex.  Civ.  App.,  1909),  121  S.  W.  1127. 

Liability  of  express  company  as  "transportation  company,"  see  Southern 
Express  Co.  v.  Keiler  (Va.,  1909),  64  S.  E.  38. 

80  Act  June  29,  1906,  34  Stat.  584,  c.  3591,  §  1;  U.  S.  Comp.  Stat.  Supp., 
1907,  p.  892,  amending  Act  Feb.  4,  1887,  c.  104,  24  Stat.  380;  U.  S.  Comp. 
Stat.,  1901,  p.  3155. 

40 


TERMS   AND    DEFINITIONS  §§  28,  29 

includes  all  kinds  of  instrumentalities  of  shipment  and 
carriage.  ^^ 

§  28.  "  Transportation  Within  the  State  "—Meaning 
of. 

The  words  "transportation  within  the  State,"  used  in  a 
statute,  covering  the  obligation  of  railroad  companies 
to  transport  freight  received,  do  not  embrace  interstate 
transportation,  and  such  an  enactment  cannot  have 
operation  beyond  the  territory  of  the  State.  ^^ 

§29.  "Trust"— "Holding"  Corporation  or  Com- 
pany.^'^ 

A  ''trust,"  or  at  least  a  combination  in  restraint  of 
interstate  and  international  commerce,  exists  under  the 
Sherman  Anti-Trust  Act,^^  where  stockholders  of  railroad 
corporations,  having  competing  and  substantially  parallel 
lines  crossing  several  States,  combined  and  conceived  a 
scheme  of  organizing  a  corporation  which  should  hold  the 
shares  of  the  stock  of  the  constituent  companies,  such 
shareholders,  in  lieu  of  their  shares  in  those  companies, 
to  receive,  upon  an  agreed  basis  of  value,  shares  in  the 
holding  corporation;  and  pursuant  to  such  combination 
a  securities  company  was  organized  as  the  holding  cor- 
poration through  which  that  scheme  should  be  executed, 
and  under  that  scheme  said  holding  company  became  the 
holder,  or  rather  the  custodian,  of  a  large  majority  of  the 
stock  of  each  of  the  combining  corporations,  the  stock- 

"  United  States  v.  Baltimore  &  Ohio  R.  Co.,  165  Fed.  113,  91  C.  C.  A. 
147. 

For  other  definitions  of  transportation  see  the  following  cases:  United 
States  V.  Hamburg-American  Line,  159  Fed.  104,  86  C.  C.  A.  294  (means 
carriage  from  one  place  to  another;  alien  deportation  act);  Salinger  v. 
Western  Union  Teleg.  Co.  (Iowa,  1910),  126  N.  W.  362  (if  transportation 
may  be  con.strued  as  something  more  than  a  free  pass  it  might  also  be  con- 
strued as  something  less  or  other  than  regular  fare);  People  v.  Montena, 
123  N.  Y.  Supp.  1074,  13  App.  Div.  421  ("transportation"  of  fish  and 
game). 

82  Hunter  v.  Charleston  &  Western  Carolina  Ry.  Co.,  81  S.  C.  169,  G9 
S.  E.  13. 

"  See  §  12,  herein. 

"  See  §  13,  herein. 

41 


§  29  TERMS  AND   DEFINITIONS 

holders  of  the  companies,  who  deUvered  their  stock, 
receiving,  upon  the  agreed  basis,  shares  of  stock  in  the 
holding  corporation.  Under  the  above  arrangement  the 
constituent  companies  necessarily  ceased  to  be  in  active 
competition  for  trade  and  commerce  along  their  respective 
lines,  and  became  practically  one  consolidated  corpora- 
tion, by  the  name  of  a  holding  corporation,  the  principal, 
if  not  the  sole  object  for  the  formation  of  which  was 
to  carry  out  the  purpose  of  the  original  combination  under 
which  competition  between  the  constituent  companies 
would  cease.*^ 

85  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

Other  definitions  are  as  follows : 

"A  combination  of  interests  in  the  form  of  a  company,  organization,  or 
association,  holding  a  controlling  share  of  the  stock  of  several  smaller  cor- 
porations engaged  in  the  same  or  allied  branches  of  business  or  industry,  a 
majority  of  the  stock  in  each  of  the  component  corporations  being  trans- 
ferred to  a  central  committee  or  board  of  trustees,  in  whom  the  supreme 
authority  is  vested,  and  who,  while  issuing  to  the  stockholders  certificates 
showing  their  individual  interests  and  rights  to  dividends,  use  the  voting 
power  of  the  stock  in  electing  boards  of  directors  for  the  various  associated 
corporations,  and  in  any  other  way  that  may  be  deemed  judicious,  thus  di- 
recting their  policy  for  the  common  object  of  unifying  management,  sup- 
pressing or  lessening  competition,  regulating  prices  and  output,  cheapening 
cost  of  production,  expanding  business,  and  increasing  profits."  Webster's 
Universal  Diet,  (ed.,  1910-1911). 

"A  consolidation  or  combination  of  several  individuals,  companies,  or  cor- 
porations, engaged  in  or  pursuing  the  same  or  allied  branches  of  business 
or  industry,  into  one  corporation,  which  becomes  the  absolute  owner  of 
the  stock,  properties,  and  interests  of  the  component  companies  or  corpora- 
tions, new  stock  certificates  and  bonds  being  issued  in  accordance  with  the 
capitalization,  the  policy,  and  the  scope  of  the  new  organization,  and  the 
general  affairs  of  which  are  administered  by  one  centralized  management 
consisting  of  a  board  of  directors  and  executive  officers,  whose  object  is  to 
expand  business  and  increase  profits  by  lessening  or  efiminating  competi- 
tion, lowering  the  cost  of  production,  and  regulating  the  amount  produced; 
a  single  corporation  owning  or  controlUng  most,  if  not  all,  the  individuals, 
companies,  or  corporations  engaged  in  the  same  or  an  alUed  branch  of  in- 
dustry, including  their  stock,  properties,  and  appurtenances."  Webster's 
Universal  Diet,  (ed.,  1910-1911). 

In  an  address  on  "Some  Needed  Legislative  Reforms  in  Corporate  Man- 
agement" deUvered  before  the  New  York  County  Lawyers'  Association,  at 
Hotel  Astor,  N.  Y.,  .Jan.  .5,  1911,  by  Samuel  Untermeyer  of  N.  Y.,  he  said 
in  part,  as  to  holding  companies: 

"The  first  corporate  abuse  to  which  I  desire  to  direct  attention  (o-day  as 

42 


TERMS   AND   DEFINITIONS  §  29 

requiring  legislative  attention  is  the  financial  device  known  an  the  'holdinj? 
Company.'  It  is  a  recent  abomination  and  one  of  the  most  proline  means 
of  oppression.  It  is  mainly  responsible  for  the  loss  of  public  confidence  in 
security-values  which  is  so  largely  the  cause  of  the  financial  panics  and  de- 
pressions of  recent  times.  If  it  were  made  impossible,  as  it  should  be  both 
by  State  and  Federal  legislation,  many  of  the  corporate  evils  from  which 
we  are  sufTering  would  disappear  fvith  it.  It  is  only  of  late  years  that  cor- 
porations have  had  the  power  to  hold  the  shares  of  other  corporations. 
Like  many  other  powers  with  which  they  have  been  clothed  it  was  the 
result  of  the  vicious  competition  between  the  States  in  bidding  against  one 
another  for  the  patronage  of  the  corporations  in  laxity  of  requirements  and 
improper  special  privileges.  *  *  *  If  you  can  get  rid  of  the  holding  Com- 
pany, as  you  can,  you  will  have  abated  the  most  serious  of  the  corporate 
evils  of  the  present.  *  *  *  I  do  not  mean  to  say  that  it  does  not  sometimes 
happen  that  the  Companies  of  which  the  control  is  thus  acquired  are  im- 
proved and  enlarged  on  the  rare  occasions  on  which  that  course  happens  to 
suit  the  purpose  of  the  holding  Company.  But  even  in  those  cases  the 
power  to  oppress  the  minority  is  utilized  to  gather  in  the  stock  at  low 
prices  before  the  plans  of  the  majority  are  put  into  effect.  *  *  *  But  great 
as  have  been  and  are  the  abuses  practiced  in  the  affairs  of  industrial  cor- 
porations the  greatest  frauds  upon  minority  stockholders  through  the 
medium  of  the  holding  Company  have  been  perpetrated  by  railroad  and 
other  public  service  corporations;  for  here  the  opportunities  are  greater 
and  the  minority  interest  is  generally  more  widely  distributed.  Of  late 
years  since  the  enforcement  of  the  laws  against  railroads  acquiring  control 
of  parallel  or  competing  lines,  the  evils  from  this  source  are  somewhat 
diminished;  but  they  are  still  very  acute  and  substantial  with  regard  to  con- 
necting lines.  *  *  *  Incidentally  it  may  be  well  to  remember  that  but  for 
the  device  of  the  holding  company  the  majority  of  the  trusts  that  are  af- 
flicting the  country,  especially  the  great  ones,  could  never  have  been 
born.  *  *  *  The  principle  of  the  holding  Company  can  be  and  has  been 
of  late  so  extended  and  utihzed  that  a  small  minority  may  absolutely 
dominate  the  corporation.  *  *  *  The  suppression  of  the  holding  com- 
pany is  only  one  of  the  necessary  legislative  reforms,  but  it  is  the  most  im- 
portant of  them  all." 


43 


§§  30,  31  TERMS  AND   DEFINITIONS 


CHAPTER  III 

TERMS    AND    DEFINITIONS   RELATING   TO    LABOR   OR  TRADE 

UNIONS 

§  30.  Blacklist  Defined.  ization — Trade  Union  De- 

31.  Boycott  Defined.  fined. 

32.  Boycott — Essential  Elements      §  39.  Lockout  Defined. 

of.  40.  Open  Shop  Defined. 

33.  Boycotting  Defined.  41.  Strike  Defined. 

34.  Secondary  Boycott.  42.  "Legal  Strike"  Definer'. 

35.  Picket  Defined.  43.  Strikes  and  Boycotts  Distin- 

36.  "Picketing"  Defined.  guished. 

37.  Closed  Shop    Defined.  44.  Trade  Union  Defined. 

38.  Labor  Union — Labor  Organ-         45.  Union  Shop  Defined. 

§  30.  Blacklist  Defined. 

Blacklist  is  defined  as  a  list  of  persons  debarred  from 
employment  or  credit,  or  thought  unworthj^  of  trust.  To 
put  upon  a  blacklist;  to  proscribe;  to  boycott. ^> 

§  31.  Boycott  Defined. 

A  boycott  is  defined  as  a  combination  of  several  persons 
to  cause  a  loss  to  a  third  person  by  causing  others  against 
their  will  to  withdraw  from  him  their  beneficial  business 
intercourse  through  threats  that,  unless  a  compliance 
with  their  demands  be  made,  the  persons  forming  the 
combination  will  cause  loss  or  injurj?-  to  him;  or  an  organ- 
ization formed  to  exclude  a  person  from  business  relations 
with  others  by  persuasion,  intimidation,  and  other  acts, 
which  tend  to  violence,  and  thereby  cause  him  through  fear 

1  Webster's  Universal  Diet.  (ed.  1910),  titles  "Black";  "Blacklist." 
"Blacklist."    See  Masters  v.  Lee,  39  Neb.  574,  58  N.  W.  222,  225.     See 
next  following  note. 

"Blacklisting."  Mattison  v.  Lake  Shore  &  M.  S.  Ry.  Co.,  2  Ohio  N.  P. 
276,  279,  3  Ohio  Dec.  526,  529;  John  D.  Park  &  Sons  Co.  v.  National  Whole- 
sale Druggists'  Assoc,  175  N.  Y.  1,  12,  67  N.  E.  136,  139,  62  L.  R.  A.  632, 
96  Am.  St.  Rep.  578. 

44 


TERMS  AND   DEFINITIONS  §  31 

of  resulting  injury  to  submit  to  dictation  in  the  manage- 
ment of  his  affairs.  Such  acts  constitute  a  conspiracy.  ^ 
A  boycott  is  also  defined  as  a  combination  of  many  to 
cause  a  loss  to  one  person  by  coercing  others,  against  their 
will,  to  withdraw  from  him  their  beneficial  business  inter- 
course, through  threats  that,  unless  those  others  do  so, 
the  many  will  cause  similar  loss  to  them.  Ordinarily, 
when  such  a  combination  of  persons  does  not  use  violence, 
actual  or  threatened,  to  accomplish  their  purpose,  it  is 
difficult  to  point  out  with  clearness  the  illegal  means  or 
end  which  makes  the  combination  an  unlawful  conspiracy.' 
Another  definition  is  as  follows:  boycott  means  not  only 
the  right  to  the  concerted  withdrawal  of  social  and  busi- 
ness intercourse,  but  the  right  by  all  legitimate  means,  of 
fair  publication,  and  fair  oral  or  written  persuasion,  to 
induce  others  interested  in  or  sympathetic  with  their 
cause,  to  withdraw  their  social  intercourse  and  business 
patronage  from  the  employer.  They  may  even  request 
another  to  withdraw  his  patronage  from  the  employer, 
and  use  moral  intimidation  or  coercion  of  threatening 
a  like  boycott  against  him  if  he  refuses  to  do  so.  "  To  say 
that  a  boycott  is  a  'conspiracy'  immediately  implies 
illegality,  and  puts  the  conduct  of  the  boycotters  under 
the  ban  of  the  law.  So  also  does  the  definition  which 
describes  boycotting  as  '  illegal  coercion'  designed  to  ac- 
complish a  certain  end,  *  *  *  boycott  *  *  *  is  an  or- 
ganized effort  to  persuade  or  coerce,  which  may  be  legal 
or  illegal,  according  to  the  means  employed."'* 

2Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  446,  114  S.  W.  997, 
citing  Gray  v.  Building  Trades  Council,  91  Minn.  171,  179,  97  N.  W.  663. 
666,  63  L.  R.  A.  753,  103  A.  St.  Rep.  477,  where  it  is  also  said  (at  p.  179) 
that  a  boycott  is  held  by  nearly  all  the  authorities  to  be  an  unlawful  con- 
spiracy. 

^  Toledo,  Ann  Arbor  &  North  Michigan  Ry.  Co.  v.  Pennsylvania  Co. 
(U.  S.  C.  C),  54  Fed.  730,  73S,  per  Taft,  Cir.  J. 

*  Pierce  v.  Stablemen's  Union,  156  Cal.  70,  76,  77,  103  Pac.  324. 

For  other  definilions  and  meanings  of  boycott  see  the  following  cases: 

United  States:  Oxley  Stave  Co.  v.  Coopers'  International  Union  (U.  S. 
C.  C),  72  Fed.  695,  699;  Casey  v.  Cincinnati  Typographical  Union 
(U.  S.  C.  C),  45  Fed.  135, 143,  12  L.  R.  A.  193. 

Arkansas:  Meier  v.  Speer  (Ark.,  1910),  132  S.  W.  988. 

45 


§  32  TERMS   AND   DEFINITIONS 

§  32.  Boycott — Essential  Elements  of. 

It  is  said  that  intimidation  and  coercion  are  essential 
elements  of  a  boycott,  and  that  it  must  appear  that  the 
means  used  are  threatening  and  intended  to  overcome  the 
will  of  others  and  compel  them  to  do  or  refrain  from  doing 
that  which  they  would  or  would  not  otherwise  have  done. 
^^^lat  amounts  to  coercion,  intimidation,  or  threats  of  in- 
jury must  necessarily  depend  upon  the  facts  of  each  par- 
ticular case.^  But  it  is  also  declared  that :  ''The  experience 
of  Captain  Boycott  has  added  to  our  language  a  substan- 
tive and  a  verb.  There  is  little,  if  any,  question  as  to  the 
meaning  of  the  substantive,  but  there  is  no  commonly  ac- 
cepted definition  of  the  verb.  Some  courts  have  defined  it 
as  necessarily  implying  violence,  or  intimidation,  or  the 
threat  thereof;  others  as  but  necessarily  implying  ab- 
stention. *  *  *    I  think  that  the  verb  'to  boycott'  does 

Connecticut:  State  v.  Glidden,  55  Conn.  46,  76,  8  Atl.  890,  896,  3  Am. 
St.  Rep.  23. 

Maine:  Davis  v.  Starrett,  97  Me.  568,  574,  55  Atl.  516,  518. 

Michigan:  Beck  v.  Railway  Teamsters'  Protective  Union,  118  Mich.  497, 
525,  77  N.  W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

Minnesota:  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W. 
663,  666,  63  L.  R.  A.  753. 

Missouri:  Walsh  v.  Association  of  Master  Plumbers,  97  Mo.  App.  280, 
292,  71  S.  W.  455,  459. 

Nevada:  Branson  v.  Industrial  Workers  of  the  World,  30  Nev.  270,  294, 
95  Pac.  354. 

New  Jersey:  Barr  v.  Essex  Trades  Council,  53  N.  J.  Eq.  101,  121,  30  Atl. 
881,  888. 

New  York:  John  D.  Park  &  Sons  Co.  v.  National  Wholesale  Druggists' 
Assoc,  175  N.  Y.  1,  67  N.  E.  136,  139,  62  L.  R.  A.  632,  96  Am.  St.  Rep. 
578;  Matthews  v.  Shankland,  56  N.  Y.  Supp.  123,  128,  129,  25  Misc.  604. 

Pennsylvania:  Brace  Bros.  v.  Evans,  5  Pa.  Co.  Ct.  R.  163,  171. 

Virginia:  Crump,  In  re,  84  Va.  927,  6  S.  E.  620,  627,  10  Am.  St.  Rep. 
895. 

5  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W.  663,  63  L.  R. 
A.  753,  103  Am.  St.  Rep.  477.  See  State  v.  Duncan,  78  Vt.  364,  63  Atl. 
225. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

As  to  last  point  in  text  see  also  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo. 
421,  448, 114  S.  W.  997,  1004,  citing  Plant  v.  Woods,  176  Mass.  492,  57  N.  E. 
1011,  51  L.  R.  A.  339,  79  Am.  St.  Rep.  330;  Sherry  v.  Perkins,  147  Mass. 
212,  17  N.  E.  307,  9  Am.  St.  Rep.  689. 

46 


TERMS   AND    DEFINITIONS  §  33 

not  necessarily  signify  that  the  doers  employ  violence, 
intimidation  or  other  unlawful  coercive  means,  but  that  it 
may  be  correctly  used  in  the  sense  of  the  act  of  a  combina- 
tion in  refusing  to  have  business  dealings  with  another 
until  he  removes  or  ameliorates  conditions  which  are 
deemed  inimical  to  the  welfare  of  the  members  of  the 
combination,  or  some  of  them,  or  grants  concessions  which 
are  deemed  to  make  for  that  purpose.  And  as  such  a 
combination  may  be  formed  and  held  together  by  argu- 
ment, persuasion,  entreaty  or  by  the  'touch  of  nature,' 
and  may  accomplish  its  purpose  without  violence  or  other 
unlawful  means,  i.  e.,  simply  by  abstention.  I  think  it 
cannot  be  said  that  'to  boycott'  is  to  offend  the  law."* 

§  33.  Boycotting  Defined. 

''Boycotting"  commonly  so  called  includes  an  organ- 
ized attempt  to  induce  the  public  to  refrain  from  purchas- 
ing the  products  of  a  manufacturer  and  to  deprive  him  of 
a  part  of  his  trade  market,  such  attempt  having  for  its 
object  the  compelling  of  the  manufacturer  to  unionize 
his  business  and  the  submission  of  its  conduct  to  the  regu- 
lations of  a  labor  union  whereby  an  irreparable  injury  to 
his  property  is  occasioned.^ 

6  Mills  V.  United  States  Printing  Co.,  91  N.  Y.  Supp.  185,  99  App.  Div. 
605,  609,  611,  per  Jenks,  J.,  quoted  in  part,  and  relied  on,  in  Lindsay  &  Co., 
Ltd.,  V.  Montana  Federation  of  Labor,  37  Mont.  264,  96  Pac.  127. 

'  Jonaa  Glass  Co.  v.  Glass  Bottle  Blowers'  Assoc,  72  N.  J.  Eq.  653,  65 
Atl.  953.  See  Crump,  In  re,  84  Va.  927,  939,  6  S.  E.  620,  627,  10  Am.  St. 
Rep.  895. 

See  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct. ;  United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed. 

,  31  Sup.  Ct. ,  under  "Appendix  A,"  herein. 

"Boycotting.  A  combination  between  persons  to  suspend  or  discontinue 
dealings  or  patronage,  with  another  person  or  persons  because  of  refusal 
to  comply  with  a  request  made  of  him  or  them.  The  purpose  is  to  constrain 
acquiescence  or  to  force  submi.ssion  on  the  part  of  the  individual  who  by 
non-compliance  with  the  demand  has  rendered  himself  obnoxious  to  the  im- 
mediate parties,  and,  perhaps  to  their  personal  and  fraternal  associates. 
The  persons  directly  so  confederating  have  hitherto  as  a  class  been  em- 
ployees as  against  either  their  own  employer  or  the  employer  of  others  in 
a  like  business,  or  else  of  retail  dealers  as  against  a  particular  manufacturer 
or  wholesale  dealer.  The  means  employed  have  been  the  \\ithdrawal  of 
custom  and  good-will  in  business  of  the  immediate  parties  and  of  such 

47 


§§  34-36  TERMS   AND   DEFINITIONS 

§  34.  Secondary  Boycott. 

A  ''secondary  boycott "  so  called,  exists  where  striking 
employees  seek  to  compel  third  persons  who  have  no 
quarrel  with  their  employer  to  withdraw  from  all  associ- 
ation with  the  latter  by  moral  intimidation,  coercion  or 
threats,  that  unless  such  third  person  so  withdraw  the 
striking  employees  will  inflict  similar  injury  or  a  like  boy- 
cott on  such  third  person.  The  legality  of  this  boycott 
is  denied  by  the  English  and  Federal  courts  and  by  many 
of  the  State  courts,  but  in  certain  respects  the  California 
courts  recognize  no  substantial  distinction  between  the 
primary  and  secondary  boycotts  so  called.^ 

§  35.  Picket  Defined. 

"Picket "  is  defined  as  "a  body  of  men  appointed  by  a 
labor  organization  to  prevent  the  emplojnnent  of  non- 
union labor,  especially  during  a  strike,  by  patrolling  the 
neighborhood  of  the  place  of  employment  and  by  other 
means."  * 

§  36.  "  Picketing  "  Defined. 

"Picketing"  may  simply  mean  the  stationing  of  men 
for  observation.  If  in  the  doing  of  this  act,,  solely  for  such 
a  purpose,  there  be  no  molestation  or  physical  annoyance, 
or  let  or  hindrance  of  any  person,  then  it  cannot  be  said 

others  as  they  could  influence.  The  word  may  refer  to  the  fact  of  combining 
or  to  the  resolution  as  executed.  The  practice  takes  its  name  from  one 
Boycott,  an  agent  for  Lord  Erne  on  certain  estates  in  the  western  part  of 
Ireland.  Having  lost  favor  with  the  tenants,  from  evictions  and  other 
harsh  treatment,  they  agreed  not  to  work  for  him,  and  the  tradesmen  of 
the  community  not  to  deal  with  him."  Anderson's  Diet,  of  Law.  See  fur- 
ther as  to  origin  of  word:  State  v.  Glidden,  55  Conn.  46,  76,  8  Atl.  890,  3 
Am.  St.  Rep.  23;  Crump's  Case,  84  Va.  927,  939,  6  S.  E.  620,  10  Am.  St. 
Rep.  895. 

8  Pierce  v.  Stablemen's  Union,  156  Cal.  70,  76,  77,  103  Pac.  324. 

»  Webster's  Universal  Diet,  (ed.,  1910-1911). 

"Picket."  "  *A  body  of  men  belonging  to  a  trad(\s  union  sent  to  watch  and 
annoy  men  working  in  a  shop  not  belonging  to  the  union,  or  against  which 
a  strike  is  in  progress.'  Cent.  Diet.,  Webst.  Diet.  The  word  originally 
had  no  such  meaning.  This  definition  is  the  result  of  what  has  been  done 
under  it,  and  the  common  application  that  has  been  made  of  it."  Beck  v. 
Railway  Teamsters'  Protective  Union,  118  Mich.  497,  520,  521,  77  N.  W.  13. 
48 


TERMS   AND   DEFINITIONS  §§  37-39 

that  such  an  act  is  per  se  unlawful.  But  "picketing  "  may 
also  mean  the  stationing  of  a  man  or  men  to  coerce  or  to 
threaten,  or  to  intimidate  or  to  halt  or  to  turn  aside 
against  their  will  those  who  would  go  to  and  from  the 
picketed  place  to  do  business,  or  to  work,  or  to  seek  work 
therein,  or  in  some  other  way  to  hamper,  hinder  or  harass 
the  free  dispatch  of  business  by  the  employer.  In  that 
case  picketing  may  well  be  said  to  be  unlawful. ^° 

§  37.  Closed  Shop  Defined. 

A  shop  becomes  a  ''closed  "  shop  the  moment  men  are 
discriminated  against  with  reference  to  their  employment, 
because  they  are  union  men.^^ 

A  "closed  shop"  is  one  in  which  only  union  labor  is 
employed.^- 

§  38.  Labor  Union — Labor  Organization — Trade  Union 
Defined. 

The  ordinary  definition  of  a  labor  organization  or  trade 
union  is  as  follows:  "A  combination  of  workmen  of  the 
same  trade  or  of  several  allied  trades  for  the  purpose  of 
securing  by  united  action  the  most  favorable  conditions 
as  regards  wages,  hours  of  labor,  etc.,  for  its  members."  ^^ 

§  39.  Lockout  Defined. 

A  lockout  is  the  closing  of  a  factory  or  workshop  by  an 
employer,  usually  in  order  to  bring  the  workmen  to  satis- 

lo  Mills  V.  United  States  Printing  Co.,  91  N.  Y.  Supp.  185,  99  App.  Div. 
605. 

"  Sackett  &  Wilhelms  Lithographing  &  Print.  Co.  v.  National  Associa- 
tion of  Employing  Lithographers,  61  Misc.  R.  (N.  Y.)  150,  113  N.  Y.  Supp. 
110. 

12  Irving  V.  Joint  District  Council  (U.  S.  C.  C),  ISO  Fed.  896. 

1*  Stone  V.  Textile  Examiners'  &  Shrinkers'  Employers'  Assn.,  187  App. 
Div.  (N.  Y.),  655,  122  N.  Y.  Supp.  137,  quoting  from  28  Am.  &  Eng.  Ency. 
of  Law  (2d  ed.),  440.    See  also  §  44,  herem. 

"A  Labor  Union  is  defined  as  an  association  of  workmen  usually,  but  not 
necessarily  employed  in  the  same  trade  for  the  purpose  of  combined  action 
in  securing  the  most  favorable  wages  and  conditions  of  labor."  Stone  v. 
Textile  Examiners'  &  Shrinkers'  Employers'  Assn.,  137  App.  Div.  (N.  Y.) 
655,  122  N.  Y.  Supp.  137,  quoting  from  24  Cyc.  816. 

4  49 


§§  40,  41  TERMS   AND   DEFINITIONS 

factory  terms  by  a  suspension  of  wages. ^^  A  lockout  is 
also  defined  as  the  shutting  up  of  a  manufactory  or  other 
place  of  business  by  the  employers  because  of  unwillingness 
of  employees  to  work  on  terms  satisfactory  to  the  former.  ^^ 

§  40.  Open  Shop  Defined. 

The  term  ''open  shop"  has  a  distinctive  trade  meaning 
and,  in  reference  to  trade  matters  means,  that  in  select- 
ing employees,  there  shall  be  no  discrimination  against 
union  or  nonunion  men.  The  principle  of  an  ''open 
shop  "  is  that  in  it  men  are  employed  regardless  of  whether 
they  are  union  or  nonunion.  Defining  the  term  as  mean- 
ing nonrecognition  of  unions  as  such  is  not  sufficient.^® 

§  41.  Strike  Defined. 

A  strike  is  briefly  defined  as  a  simultaneous  cessation 
of  work  on  the  part  of  the  workmen,  and  its  legality  or 
illegality  must  depend  on  the  means  by  which  it  is  enforced 
and  on  its  objects. ^^  Another  definition  is  this:  A  strike 
is  a  combination  among  laborers,  those  employed  by  others, 
to  compel  an  increase  of  wages,  a  change  in  the  hours  of 
labor,  some  change  in  the  mode  or  manner  of  conducting 
the  business  of  the  principal,  or  to  enforce  some  particular 
policy  in  the  character  or  number  of  the  men  employed, 
or  the  like.^^ 

In  a  case  in  the  Circuit  Court  of  Appeals  it  was  said 
that  the  following  definition  was  proffered  to  the  court 
at  the  argument  below,  as  one  recognized  by  the  labor 
organizations  of  the  country:  "A  strike  is  a  concerted 
cessation  of  or  refusal  to  work  until  or  unless  certain  con- 

"  Matthews  v.  People,  202  111.  389,  398,  67  N.  E.  28,  95  Am.  St.  Rep. 
241,  63  L.  R.  A.  73. 

"  Standard  Dictionary. 

1'  Sackett  &  Wilhelms  Lithographing  &  Print.  Co.  v.  National  Associa- 
tion of  Employing  Lithographers,  61  Misc.  R.  (N.  Y.)  150,  113  N.  Y.  Supp. 
110. 

"Farree  v.  Close,  L.  R.  4  Q.  B.  611,  per  Sir  James  Hannen,  quoted  in 
Longshore  Printing  Co.  v.  Howell,  26  Oreg.  527,  542,  38  Pac.  547,  46  Am. 
St.  Rep.  640,  28  L.  R.  A.  464. 

»  Delaware,  Lackawanna  &  Western  R.  R.  Co.,  58  N.  Y.  573,  582,  per 
Allen,  J. 

50 


TERMS   AND    DEFINITIONS  §§  42,  43 

ditions  which  obtain  or  are  incident  to  the  terms  of  employ- 
ment are  changed.  The  employee  declines  to  longer 
work,  knowing  full  well  that  the  employer  may  immedi- 
ately employ  another  to  fill  his  place,  also  knowing  that  he 
may  or  may  not  be  re-employed  or  returned  to  service. 
The  employer  has  the  option  of  acceding  to  the  demand 
and  returning  the  old  employee  to  service,  of  employing 
new  men,  or  of  forcing  conditions  under  which  old  men  are 
glad  to  return  to  service  under  the  old  conditions."  The 
court  said  after  referring  to  tliis  definition:  ''The  learned 
judge  below  said  that  a  more  exact  definition  of  a  strike 
was  a  combined  effort  among  workmen  to  compel  the 
master  to  the  concession  of  a  certain  demand  by  prevent- 
ing the  conduct  of  his  business  until  compliance  with  the 
demand."  ^^ 

§  42.  "  Legal  Strike  "  Defined. 

In  a  case  decided  in  1893  in  the  Federal  Circuit  Court 
a  temporary  injunction  was  granted  against  the  chief  of 
the  Brotherhood  of  Locomotive  Engineers  who  had  sent 
out  a  dispatch  that  there  was  "a.  legal  strike  in  force  upon " 
certain  railroads,  etc.,  and  it  was  said  that:  "a  'legal' 
strike,  in  brotherhood  parlance,  means  one  consented  to 
by  the  grand  chief.  His  consent  is  necessary,  under 
the  rules  of  the  order,  to  entitle  the  men  thus  out  of  em- 
ployment to  the  three  months'  pay  allowed  to  striking 
members."  ^° 

§  43.  Strikes  and  Boycotts  Distinguished. 

There  is  a  distinction  between  strikes  and  boycotts. 
The  latter  though  unaccompanied  by  violence  or  intimi- 
dation have  been  generally  pronounced  as  unlawful  by  the 

"Arthur  v.  Oakes,  63  Fed.  310,  326,  11  C.  C.  A.  209.  The  court  re- 
versed the  judgment  of  the  court  below  on  the  ground  that  the  injunction 
order  did  not  sufficiently  describe  the  strikes  which  the  injunction  was  in- 
tended to  restrain.  In  F'armers'  Loan  tt  Trust  Co.  v.  Northern  Pac.  R.  Co. 
(U.  S.  C.  C),  60  Fed.  803,  821,  a  definition  similar  to  that  above  stated  by 
the  court  was  given. 

**  Toledo,  Ann  Arbor  &  North  Michigan  Ry.  Co.  v.  Pennsylvania  Co. 
(U.  S.  C.  C),  5-4  Fed.  730,  733, 

51 


§§  44,  45  TERMS   AND   DEFINITIONS 

courts  of  the  United  States  and  of  England.  Strikes, 
however,  are  not  necessarily  unlawful,  the  right  of  em- 
ployees to  combine  and  peaceably  to  leave  the  employ 
of  their  employer  because  any  of  the  terms  of  their  em- 
ployment are  unsatisfactory  being  generally  recognized. 
So  it  is  said:  "The  distinction  between  an  ordinary  law- 
ful and  peaceable  strike  entered  upon  to  obtain  conces- 
sions in  the  terms  of  the  strikers'  employment  is  not  a 
fanciful  one,  or  one  which  needs  the  power  of  fine  dis- 
tinction to  determine  which  is  which."  ^^ 

§  44.  Trade  Union  Defined. 

An  organized  association  of  workmen  skilled  in  any 
trade  or  industrial  occupation,  formed  for  the  protection 
and  promotion  of  their  common  interests,  especially  to 
secure  remunerative  wages  for  their  labor.  ^^ 

§  45.  Union  Shop  Defined. 

A  union  shop  is  one  in  which  none  but  members  of  an 
association  are  engaged  as  workmen.  ^^ 

2'  Thomas  v.  Cincinnati,  N.  O.  &  T.  P.  Ry.  Co.  (U.  S.  C.  C),  62  Fed. 
803,  817,  818,  per  Taft,  C.  J. 

^  Standard  Dictionary.    See  also  §  38,  herein. 

Trade  Union.  "A  combination  of  workmen  of  the  same  trade  or  of  sev- 
eral allied  trades  for  the  purpose  of  securing  to  each  member  by  united  ac- 
tion the  conditions  most  favorable  for  labor;  an  association  of  workmen 
formed  principally  for  the  purposes  of  regulating  the  prices  and  the  hours 
of  labor  and,  in  many  cases,  the  number  of  men  engaged  by  an  employer, 
the  number  of  apprentices  which  may  be  bound  in  proportion  to  the  jour- 
neymen employed  by  a  master,  and  the  like.  As  accessories  these  unions 
may  collect  funds  for  benefit  societies,  insurance  of  tools,  Ubraries,  and 
reading  rooms;  but  their  fund  to  which  every  member  must  regularly  con- 
tribute a  stated  sum,  is  principally  reserved  for  enabling  the  men  to  resist, 
by  strikes  and  otherwise,  such  action  on  the  part  of  the  employers  as  would 
tend  to  lower  the  rate  of  wages  or  lengthen  the  hours  of  labor."  Webster's 
Universal  Diet,  (ed.,  1910-1911). 

"  People  v.  Fisher,  50  Hun  (N.  Y.),  552,  554,  3  N.  Y.  Supp.  786. 


62 


DISTINCTIONS  AND   SYNONYMS  GENERALLY 


§4G 


CHAPTER  IV 


DISTINCTIONS   AND   SYNONYMS   GENERALLY 


§46.  Distinctions — Monopolies  Re-      §52. 
suiting  from  Grant  or  Con- 
tract. 

47.  Distinctions — Monopolies  and 

Enpros-sing.  53. 

48.  Distinctions— Monopolies  and 

Combinations. 

49.  Distinctions — E.xclusive  Priv- 

ilege and  Monopoly. 

50.  "Monopolize"  Used  in  Stat- 

ute Synonymous  with  "Ag-         54. 
gregate"  or  "Concentrate." 

51.  "Combination  in  the  Form  of 

Trust"  Used  in  Statute 
Synonymous  with  "Pool- 
ing." 


Distinction  Between  State 
Anti-Trust  Statute  and 
Contracts  in  Restraint  of 
Trade. 

Distinction  Between  Con- 
tracts Per  Se  in  Restraint 
of  Trade  and  Contracts 
Which  Tend  to  Destroy 
Competition  and  Create 
Monopolies. 

Distinctions  —  "Restrictions 
in  Trade"  in  Statute  Not 
Synonymous  with  "Re- 
straint of  Trade." 


§  46.  Distinctions — Monopolies  Resulting  from  Grant 
or  Contract.^ 

According  to  the  early  definitions  of  "monopoly"  it 
arose  from  a  grant  or  commission  from  the  sovereign;  '^ 
and  the  modern  monopolies  are  generally  such  as  result 
indirectly  from  the  sovereign  power  or  State  by  grant 
of  some  exclusive  privilege,  or  the  right  to  carry  on  a 
business  which  is  dependent  upon  the  existence  of  some 
special  privilege  or  franchise.  Such  a  grant  is  not,  how- 
ever, essential  to  the  existence  of  a  monopoly,  as  a  practical 
monopoly  may  exist  without  such  aid,  and  it  is  clear, 
from  the  decisions  and  the  language  of  the  courts,  that 
competitors  may  by  means  of  contracts  or  combinations 
obtain  such  a  control  of  a  trade  industry  or  commodity 

'  See  §§  70-74,  herein. 

-  Part  3,  Coke's  Inst.  181,  Cap.  85;  4  Blackatone's  Comm.  159;  Bacon's 
Abridg.,  title  "Monopoly."  See  also  cases  cited  ante,  herein,  under  defini- 
tions of  "monopoly." 

53 


§  47  DISTINCTIONS  AND  SYNONYMS  GENERALLY 

as  to  result  in  a  monopoly,  with  the  power  to  suppress 
competition  and  practically  control  prices  in  that  trade, 
industry,  or  commodity  and  so  substantially  or  wholly 
suppress  competition.^  So  it  is  decided  in  a  Federal  Su- 
preme Court  case  that  the  idea  of  monopoly  is  not  now 
confined  to  a  grant  of  privileges.  It  is  understood  to 
include  "a  condition  produced  by  the  acts  of  mere  in- 
dividuals." Its  dominant  thought  now  is,  "the  notion 
of  exclusiveness  or  unity."  In  other  words,  the  suppres- 
sion of  competition  by  the  unification  of  interest  or  man- 
agement, or  it  may  be  through  agreement  and  concert 
of  action.  And  the  purpose  is  so  definitely  the  control 
of  prices  that  monopoly  has  been  defined  to  be  ''unified 
tactics  with  regard  to  prices."  It  is  the  power  to  control 
prices  which  makes  the  inducement  of  combinations  and 
their  profit.  It  is  such  power  that  makes  it  the  concern 
of  the  law  to  prohibit  or  limit  them.'*  Again,  in  an  early 
Federal  case  the  court,  in  construing  a  State  statute  in 
connection  with  the  Sherman  Anti-Trust  Act,  said:  "In 
construing  Federal  or  State  statutes,  we  exclude  from 
consideration  all  monopolies  which  exist  by  legislative 
grant ;  for  we  think  the  word  *  monopolize '  cannot  be 
intended  to  be  used  with  reference  to  the  acquisition  of 
exclusive  rights  under  government  concession,  but  that  the 
law-maker  has  used  the  word  to  mean  '  to  aggregate '  or 
'concentrate'  in  the  hands  of  a  few,  practically,  and,  as 
a  matter  of  fact,  and  according  to  the  known  results  of 
human  action,  to  the  exclusion  of  others."  '•' 

§  47.  Distinctions — Monopolies  and  Engrossing. 
Monopolies  have  been  declared  to  be  much  the  same 

3  See  State  v.  Duliith  Board  of  Trade,  107  Minn.  506,  529,  121  N.  W.  395. 

4  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  129,  25  Sup.  Ct.  382, 
49  L.  ed.  689  (suit  brought  under  the  Anti-Trust  Acts  of  Texas  to  forfeit 
the  license  of  the  National  Cotton  Oil  Co.,  to  do  business  in  Texas  for  violat- 
ing those  statutes)  quoted  in  United  States  v.  American  Tobacco  Co.  (U. 
S.  C.  C),  164  Fed.  700,  720,  per  Noyes,  Cir.  J. 

^  American  Biscuit  &  Mfg.  Co.  v.  Klotz  (U.  S.  C.  C),  44  Fed.  721,  724, 
construing  Act  of  La.,  July  5,  1890,  in  connection  with  Federal  Anti-Trust 
Act,  .July  2,  1890,  chap.  647,  26  Stat.  209;  U.  S.  Comp.  Stat.,  1901,  p.  3200 
(a  case  of  the  pooling  of  bakeries  of  twfslve  different  States). 

54 


DISTINCTIONS  AND  SYNONYMS  GENERALLY   §§  48,  49 

offense  in  other  branches  of  the  trade  that  engrossing  was 
in  provisions,^  but  it  is  also  asserted  that  monopoly  and 
engrossing  differ  only  in  this,  that  the  first  is  by  patent 
from  the  king,  the  other  by  act  of  the  subject,  between 
party  and  party,  but  that  they  are  both  equally  injurious 
to  trade,  and  the  freedom  of  the  subject,  and  therefore 
are  equally  restrained  at  the  common  law.^ 

§  48.  Distinctions — Monopolies  and  Combinations. 

The  statutes  of  most  States,  up  to  very  recent  years, 
were  aimed  only  at  monopolies  brought  about  through 
combinations.  So  that  in  treating  of  the  subject  of  mo- 
nopoly, both  text-book  writers  and  judges  have  spoken  of 
them  as  though  monopoly  and  combination  were  one  and 
the  same,  thus  causing  many  to  consider  that  there  could 
be  no  monopoly  except  there  was  combination,  while, 
as  a  matter  of  fact,  combination  is  simply  a  means,  and 
but  one  or  many  means,  by  which  a  monopoly  is  acquired; 
monopoly  being  the  end  sought,  combination  a  means 
therefor.^ 

§  49.  Distinctions — Exclusive  Privilege  and  Monopoly. 

An  exclusive  privilege  is  not  necessarily  a  monopoly.^ 
And  although  the  strict  legal  meaning  of  the  word  ''mo- 
nopoly" and  its  essential  quality  is  the  power  to  exclude  all 
others  from  the  field  monopolized,  still  the  term  has  a 
different  and  a  commoner  and  equally  well-understood 
meaning.  When  a  person  or  persons  have,  in  fact,  obtained 
a  substantially  complete  control  of  a  particular  business 
or  article  of  trade,  they  are  said  to  have  a  monopoly,  al- 
though they  have  no  legal  power  to  prevent  others  from 
competing  or  attempting  to  compete  with  them.^"^ 

*  4  Blackstone's  Comm.  159. 

^  Bacon's  Abridg.  (Bouvier's  ed.,  1860),  "monopoly"  citing  Skin.  169. 

« State  V.  Central  Lumber  Co.  24  S.  Dak.  136,  123  N.  W.  504,  509,  per 
Whiting,  J. 

» City  of  Laredo  v.  International  Bridge  &  Tramway  Co.,  66  Fed.  246, 
248,  14  C.  C.  A.  1. 

'«  Burrows  v.  Interborough  Metropolitan  Co.  (U.  S.  C.  C),  156  Fed. 
389,  392. 

55 


§§  50-53    DISTINCTIONS  AND  SYNONYMS  GENERALLY 

§  50.  "  Monopolize,"  Used  in  Statute  Synonymous 
with  "  Aggregate  "  or  "  Concentrate." 

The  word  ''monopoUze"  as  used  in  a  statute,  has  been 
defined  as  meaning  the  same  as  "to  aggregate"  or  ''con- 
centrate" in  the  hands  of  a  few  to  the  exclusion  of  others; 
to  accompUsh  this  end  by  what  is  expressed,  in  popular 
language,  by  the  word  pooling.  ^^ 

§  51.  "  Combination  in  the  Form  of  Trust"  Used  in 
Statute  Synonymous  with  "  Pooling." 

The  words  ''combination  in  the  form  of  trust"  in  a 
State  statute  is  declared  to  mean  just  what  in  popular 
language  is  expressed  by  the  word  pooling;  that  is,  an 
aggregation  of  property  or  capital  belonging  to  different 
persons,  with  a  view  to  common  liabilities  and  profits.  ^^ 

§  52.  Distinction  Between  State  Anti-Trust  Statute 
and  Contracts  in  Restraint  of  Trade. 

A  distinction  is  made  in  Nebraska,  between  the  Anti- 
Trust  Act  of  that  State  and  contracts  in  restraint  of  trade, 
and  the  court  says:  "We  think  it  clear  from  an  examination 
of  the  title  and  the  body  of  this  act  that  it  is  directed 
against  combinations  and  conspiracies  to  interfere  with  the 
ordinary  conduct  of  trade  and  business,  and  that  it  is 
no  part  of  its  object  to  condemn  or  render  illegal  such  con- 
tracts in  partial  restraint  of  trade  as  have  for  many  years 
been  held  valid  by  the  courts  of  England  and  America."  ^^ 

§  53.  Distinction  Between  Contracts  Per  Se  in  Re- 
straint of  Trade  and  Contracts  Which  Tend  to  Destroy 
Competition  and  Create  Monopolies. 

Two  distinct  kinds  of  contracts  were  recognized  by  the 

"  American  Biscuit  &  Mfg.  Co.  v.  Klotz  (U.  S.  C.  C),  44  Fed.  721,  724, 
construing  Act  of  La.,  July  5,  1890,  in  connection  with  Sherman  Anti-Trust 
Act,  July  2,  1890  (case  of  pooling  of  bakeries). 

12  American  Biscuit  &  Mfg.  Co.  v.  Klotz  (U.  S.  C.  C),  44  Fed.  721,  724; 
Act  La.,  July  .5,  1890  (case  of  pooling  of  bakeries). 

13  Engles  V.  Morgenstem,  85  Neb.  51,  55,  122  N.  W.  G88,  per  Letton, 
J.,  construing  Comp.  Stat.  Neb.,  1901,  chap,  91a,  §  1,  "Trusts."  See 
§  20  ante. 

56 


DISTINCTIONS  AND  SYNONYMS  GENERALLY  §  54 

common  law  as  in  restraint  of  trade.  They  were:  (1)  con- 
tracts -per  se  in  restraint  of  trade  whereby  an  individual 
contracts  himself  out  of  a  trade;  and  (2)  contracts  which 
tend  to  destroy  competition  and  thus  create  monopolies. 
The  reasonableness  of  the  particular  contract  determined 
the  validity  of  the  first  ''while  the  second  class  are  against 
public  policy  and  invalid  because  of  their  tendencies 
without  reference  to  their  reasonableness."  ^^ 

§  54.  Distinctions — "  Restrictions  in  Trade  "  in  Stat- 
ute Not  Synonymous  with  "  Restraint  of  Trade." 

A  combination  between  two  or  more  insurance  com- 
panies to  increase  their  rates  or  to  diminish  the  rates  to  be 
paid  to  their  agents,  is  in  a  general  sense  a  combination 
in  restraint  of  trade.  But  where  a  statute  defines  and 
prohibits  trusts  and  combinations  of  capital  "to  create 
and  carry  out  restrictions  in  trade,  "etc.,  the  words  restric- 
tions in  trade  are  not  to  be  construed  as  synonymous  with 
the  words  "restraint  of  trade";  at  least  not  to  the  extent 
of  subjecting  such  a  combination  as  that  above  stated 
to  punishment  as  for  an  offense  under  the  statute.  ^^ 

"  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  526,  121  N.  W.  395, 
per  Elliott,  J. 

»'  Queen  Ins.  Co.  v.  The  State,  86  Tex.  250,  24  S.  W.  397,  22  L.  R.  A. 
483. 


67 


§§  55,  56  DISTINCTIONS  AND   SYNONYMS 


CHAPTER  V 

DISTINCTIONS  AND  SYNONYMS — SHERMAN  ANTI-TRUST   ACT 

§  55.  Distinctions  —  Combination  §  58.  Sherman     Anti-Trust     Act — 

and    Sale — Sherman    Anti-  "In    Restraint    of    Trade" 

Trust  Act.  Synonymous   with   "Trade 

56.  "Combination"     or     "Con-  or    Commerce" — "Trade" 

spiracy"    Synonymous    —  and  "Commerce"  Synony- 

Sherman  Anti-Trust  Act.  mous — "Contract    in    Re- 

57.  Distinctions — Conspiracy     in  straint    of    Trade"    Anal- 

Restraint    of    Trade    and  ogous  to  "Monopolize." 

Contract  in  Restraint  of 
Trade  —  Sherman  Anti- 
Trust  Act, 

§  55.  Distinctions — Combination  and  Sale — Sherman 
Anti-Trust  Act. 

A  combination  of  competitive  interests  when  a  com- 
bination, as  distinguished  from  a  sale,  is  a  combination 
which,  restraining  interstate  commerce,  violates  the 
Federal  anti-trust  statute .  Whether  a  transaction  amounts 
to  a  sale  or  to  a  combination  depends  upon  whether  the 
vendor  parts  with  all  interests  in  the  business  sold  or  merely 
changes  the  form  of  his  investment.  A  bona  fide  sale  of  a 
plant  for  cash  or  its  equivalent  possesses  none  of  the  ele- 
ments of  combination.  An  exchange  of  one  plant  for  an 
interest  in  united  plants  possesses  all  the  elements  of 
combination.^ 

§  56.  "  Combination  "  or  "  Conspiracy  "  Synonymous 
— Sherman  Anti-Trust  Act. 

The  words  '' combination  *  *  *  or  conspiracy"  as 
used  in  the  Federal  Anti-Trust  Act  in  relation  to  "restraint 
of  trade  or  commerce"  are  synonymous.^ 

1  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed,  700, 
718,  per  Noyes,  Cir.  J.;  Act  July  2,  1890. 

^Tribolet  v.  United  States,  11  Ariz.  430,  95  Pac.  85;  Act  July  2,  1890, 
c.  647,  §  3,  26  Stat.  209;  U.  S.  Comp.  Stat.,  1901,  p.  3201. 

58 


SHERMAN    ANTI-TRUST  ACT  §  57 

§  57.  Distinctions — Conspiracy  in  Restraint  of  Trade 
and  Contract  in  Restraint  of  Trade — Sherman  Anti- 
Trust  Act. 

A  conspiracy  in  restraint  of  trade  is  more  tiian  a  con- 
tract in  restraint  of  trade;  the  latter  is  instantaneous,  but 
the  former  is  a  partnership  in  criminal  purposes,  and  as 
such  may  have  continuance  in  time,  and  this  applies  and 
is  so  held  in  regard  to  a  conspiracy  made  criminal  by  the 
Sherman  Anti-Trust  Act.  And  although  mere  contin- 
uance of  result  of  a  crime  does  not  continue  the  crime  it- 
self, if  such  continuance  of  result  depends  upon  continuous 
co-operation  of  the  conspirators,  the  conspiracy  continues 
until  the  time  of  its  abandonment  or  success.^ 

3  United  States  v.  Kissel,  218  U.  S.  601,  31  Sup.  Ct.  1—,  54  L.  ed.  1168,  a 
case  of  a  writ  of  error  brought  by  the  United  States  to  reverse  a  judgment  of 
the  Circuit  Court  sustaining  pleas  in  bar  pleaded  to  an  indictment  by  the 
defendants  in  error.  "The  indictment  charges  a  conspiracy  beginning  in 
1903,  but  continuing  down  to  the  date  of  filing.  It  pretty  nearly  was  con- 
ceded that  if  a  conspiracy  of  this  kind  can  be  continuous,  then  the  pleas 
in  bar  are  bad.  Therefore  we  first  will  consider  whether  a  conspiracy  can 
have  continuance  in  time.  The  defendants  argue  that  a  conspiracy  is  a 
completed  crime  as  soon  as  formed,  that  it  is  simply  a  case  of  unlawful 
agreement;  and  that  therefore  the  conlinuando  may  be  disregarded  and  a 
plea  is  proper  to  show  that  the  statute  of  limitations  has  run.  Subsequently 
acts  in  pursuance  of  the  agreement  may  renew  the  conspiracy  or  be  evi- 
dence of  a  renewal,  but  do  not  change  the  nature  of  the  original  offense.  So 
also,  it  is  said,  the  fact  that  an  unlawful  contract  contemplates  future  acts 
or  that  the  results  of  a  successful  conspiracy  endure  to  a  much  later  date 
does  not  affect  the  character  of  the  crime.  The  argument,  so  far  as  the 
premises  are  true,  does  not  suffice  to  prove  that  a  conspiracy,  although  it 
exists  as  soon  as  the  agreement  is  made,  may  not  continue  bej'ond  the 
moment  of  making  it.  It  is  true  that  the  unlawful  agreement  satisfies  the 
definition  of  the  crime,  but  it  does  not  exhaust  it.  It  is  also  true,  of  course, 
that  the  mere  continuance  of  the  result  of  a  crime  does  not  continue  the 
crime.  United  States  v.  Pratt,  98  U.  S.  450,  25  L.  ed.  193.  But  when  the 
plot  contemplates  bringing  to  pass  a  continuous  result  that  will  not  continue 
without  the  continuous  co-operation  of  the  conspirators  to  keep  it  up,  and 
there  is  such  continuous  co-operation,  it  is  a  perversion  of  natural  thought, 
and  of  natural  language  to  call  such  continuous  co-operation  a  cinemato- 
graphic series  of  distinct  conspiracies,  rather  than  to  call  it  a  single  one. 
Take  the  present  case.  A  conspiracy  to  restrain  or  monopolize  trade  by 
improperly  excluding  a  competition  from  business  contemplates  that  the 
conspirators  will  remain  in  business  and  will  continue  their  combined  efforts 
to  drive  the  competitor  out  until  they  succeed.  If  they  do  continue  such 
efforts  in  pursuance  of  the  plan  the  conspiracy  continues  up  to  the  time  of 
abandonment  or  success.     A  conspiracy  in  restraint  of  trade  is  different 

59 


§  59  DISTINCTIONS   AND   SYNONYMS 

§  58.  Sherman  Anti-Trust  Act—"  In  Restraint  of 
Trade  "  Synonymous  with  "  Trade  or  Commerce  " — 
"  Trade  "  and  "  Commerce  "  Synonymous—"  Contract 
in  Restraint  of  Trade  "  Analogous  to  "  Monopolize." 

"In  restraint  of  trade"  in  the  Sherman  Anti-Trust  Acf* 
is  a  fixed,  well-known  conunon-law  expression  and  is 
synonymous  with  the  words  "trade  or  commerce"  under 
that  statute.  The  words  "trade"  and  "commerce" 
are  also  synonymous ;  and  an  indictment  must  allege  that 
there  was  a  purpose  to  restrain  trade  as  implied  in  the 
common-law  expression  "contract  in  restraint  of  trade" 
analogous  to  the  word  "monopolize"  in  the  second  section. 
This  is  the  basis  of  the  statute.  It  must  appear  some- 
where in  the  indictment  that  there  was  a  conspiracy  in 
restraint  of  trade  by  engrossing  or  monopolizing  or  grasp- 
ing the  market.  It  is  not  sufficient  simply  to  allege  a 
purpose  to  drive  certain  competitors  out  of  the  field  by 
violence,  annoyance,  intimidation  or  otherwise.^    "So in 

from  and  more  than  a  contract  in  restraint  of  trade.  A  conspiracy  is  con- 
stituted by  an  agreement,  it  is  true,  but  it  is  the  result  of  the  agreement, 
rather  than  the  agreement  itself,  just  as  a  partnership,  although  constituted 
by  a  contract,  is  not  the  contract  but  is  the  result  of  it.  The  contract  is 
instantaneous,  the  partnership  may  endure  as  one  and  the  same  partner- 
ship for  years.  A  conspiracy  is  a  partnership  in  criminal  purposes.  That 
as  such  it  may  have  continuation  in  time  is  shown  by  the  rule  that  an  overt 
act  of  one  partner  may  be  the  act  of  all  without  any  new  agreement  spe- 
cifically directed  to  that  act."  Opinion  of  the  court,  per  Mr.  Justice  Holmes, 
pp.  607,  608. 

In  the  case  of  United  States  v.  Kissel  (U.  S.  C.  C),  173  Fed.  823, which  was 
reversed  by  the  above-cited  Supreme  Court  decision  it  was  declared  that 
the  word  "conspiracy"  instead  of  being  employed  with  a  sinister  meaning, 
as  usually  understood,  has,  as  used  in  the  Sherman  Anti-Trust  Act,  sub- 
stantially the  same  meaning  as  the  word  "contract."  A  conspiracy  in  re- 
straint of  trade  is  nothing  but  a  contract  or  agreement  between  two  or 
more  persons  in  restraint  of  trade. 

*  See  §  13,  herein. 

6  United  States  v.  Patterson  (U.  S.  C.  C),  55  Fed.  605,  639,  640.  See 
United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed.  823,  831. 

What  is  only  necessary  to  show  to  vitiate  a  combination  such  as  the  Sherman 
Anti-Trust  Act  of  July  2,  1890,  condemns.  See  Northern  Securities  Co. 
V.  United  States,  193  U.  S.  197,  24  Sup.  Ct.  4.36,  454,  48  L.  ed.  679, 
698;  United  States  v.  Trans-Missouri  Freight  Assoc,  166  U.  S.  290, 
41  L.  ed.  1007,  17  Sup.  Ct.  540;  both  cases  are  considered  elsewhere 
herein. 

60 


SHERMAN  ANTI-TRUST  ACT  §  58 

this  statute  ^  I  think  the  words  '  trade  or  commerce '  mean 
substantially  the  same  thing.  But  the  use  of  the  word 
'trade'  nevertheless  is  significant.  In  my  judgment,  i( 
was  probably  used  because  it  was  a  part  of  the  common- 
law  expression,  4n  restraint  of  trade.'  *  *  *  This  has  be- 
come a  fixed,  well-known  common-law  expression."^  "The 
word  'commerce'  is  undoubtedly  in  its  usual  sense,  a 
larger  word  than  'trade'  in  its  usual  sense.  Sometimes 
'commerce'  is  used  to  embrace  less  than  'trade,'  and 
sometimes  'trade'  is  used  to  embrace  as  much  as  'com- 
merce.' They  are,  in  the  judgment  of  the  court,  in  this 
statute  ^  synonymous."  ^ 

•  Sherman  Anti-Trust  Act.     See  §  13,  herein. 

^  United  States  v.  Patterson  (U.  S.  C.  C),  55  Fed.  605,  640,  per  Put- 
nam, J.     See  §  16,  herein. 

*  Sherman  Anti-Trust  Act.    Sec  §  13,  herein. 

"  United  States  v.  Patterson  (U.  S.  C.  C),  55  Fed.  605,  639,  per  Put- 
nam, J.;  United  States  v.  Coal  Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252, 
265  ("Trade"  in  a  business  sense  has  been  defined  as  "The  exchange  of 
commodities  for  other  commodities  or  for  money;  the  business  of  buj'ing 
and  selling;  dealing  by  way  of  sale  or  exchange."  The  word  "commerce" 
as  used  in  the  statute  (Sherman  Anti-Trust  Act)  and  under  the  terms  of 
the  Constitution,  has,  however,  a  broader  meaning  than  the  word  "trade," 
per  Morrow,  Cir.  J.  Same  words  m  United  States  v.  Cassidy  (U.  S.  D.  C), 
67  Fed.  698,  705,  per  Morrow,  Dist.  J.    See  §  16,  herein. 

Distinction  between  "trade"  and  "commerce."  See  also  United  States  v. 
Coal  Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252,  265,  per  Morrow,  Cir.  J.; 
United  States  v.  Cassidy  (U.  S.  D.  C),  67  Fed.  698,  705,  per  Morrow, 
Dist.  J.;  Hooker  v.  Vandewater,  4  Denio  (N.  Y.),  349,  353,  47  Am.  Dec.  258. 
In  this  case  (decided  in  1847)  the  statute  of  New  York,  (2  Rev.  Stat.  691, 
§  8)  provided  that:  "If  two  or  more  persons  shall  conspire,  to  commit  any 
act  injurious  to  trade  or  commerce,  they  shall  be  guilty  of  a  misdemeanor." 
[See  3  Birdseye's  Cumming  &  Gilbert's  Consol.  Laws  N.  Y.  (as  amended  to 
1910)  annot.,  p.  3845,  Laws  1909,  chap.  88,  §  580,  subdiv.  6J.  The  court 
per  Jowett,  J.,  said:  "The  words  trade  and  commerce  are  said  by  Jacobs,  in 
his  Law  Dictionary,  not  to  be  synonymous;  that  commerce  relates  to 
dealings  with  foreign  nations;  trade,  on  the  contrary,  means  mutual  traffic 
among  ourselves,  or  the  buying,  selling  or  exchanging  of  articles  between 
members  of  the  same  community."  It  would  seem,  however,  that  such  a 
distinction  would  not  now  obtain.    See  §  16,  herein. 


61 


§  59  ESSENTIALS   OR  TEST  OF  CONSPIRACY 


CHAPTER  VI 

NATURE   ESSENTIALS   OR   TEST   OF   CONSPIRACY 

§  59.  Unlawfulness    —     Exclusive  §  61.  Motive  or  Intention. 

Combination — Restraint  of  62.  Overt  Acts. 

Trade.  63.  Overt  Acts— New  York. 

60.  Combination    or    Confedera-  64.  Conspiracy    to    Commit   Of- 

tion  and  Unlawful  Design  or  fense  Against,  or  to  Defraud 

Means  Employed.  United  States — Overt  Acts. 

§  59.  Unlawfulness  —  Exclusive  Combination  —  Re- 
straint of  Trade. 

An  exclusive  combination  is  not  necessarily  a  conspiracy. 
Thus,  in  a  frequently  cited  and  discussed  English  case 
decided  in  1888  the  principal  points  were  the  engrossing 
of  a  particular  trade,  a  combination  or  conspiracy  to  keep 
up  rates  of  freight  and  the  exclusion  of  rival  traders  from 
the  combination.  The  defendants,  who  were  firms  of 
shipowners  trading  between  China  and  Europe,  with  a 
view  to  obtaining  for  themselves  a  monopoly  of  the  home- 
ward tea  trade  and  thereby  keeping  up  the  rate  of  freight, 
formed  themselves  into  an  association,  and  offered  to  such 
merchants  and  shippers  in  China  as  shipped  their  tea 
exclusively  in  vessels  belonging  to  members  of  the  asso- 
ciation a  rebate  of  five  per  cent  on  all  freights  paid  by 
them.  The  plaintiffs,  who  were  rival  shipowners  trading 
between  China  and  Europe,  were  excluded  by  the  de- 
fendants from  all  the  benefits  of  the  association,  and  in 
consequence  of  such  exclusion,  sustained  damage : — It  was 
held  that  the  association,  being  formed  by  the  defendants 
with  the  view  of  keeping  the  trade  in  their  own  hands, 
and  not  with  the  intention  of  ruining  the  trade  of  the 
plaintiffs,  or  through  any  personal  malice  or  ill-will  toward 
them,  was  not  unlawful,  and  that  no  action  for  a  con- 
62 


ESSENTIALS  OR  TEST  OF    CONSPIRACY  §  59 

spiracy  was  maintainable.'  In  this  case  Lord  Chief 
Justice  Coleridge  said:  "It  cannot  be,  nor  indeed  was  it, 
denied  that  in  order  to  found  this  action  there  must  be 
an  element  of  unlawfulness  in  the  combination  on  which 
it  is  founded,  and  that  this  element  of  unlawfulness  must 
exist  alike  whether  the  combination  is  the  subject  of  an 
indictment  or  the  subject  of  an  action.  *  *  *  It  is  there- 
fore no  doubt  necessary  to  consider  the  object  of  the  com- 
bination as  well  as  the  means  employed  to  effect  the  object, 
in  order  to  determine  the  legality  or  illegality  of  the  com- 
bination. And  in  this  case  it  is  clear  that  if  the  object 
were  unlawful,  or  if  the  object  were  la^vful  but  the  means 
employed  to  effect  it  were  unlawful,  and  if  there  were  a 
combination  either  to  effect  the  unlawful  object  or  to  use 
the  unlawful  means,  then  the  combination  was  unlawful, 
then  those  who  formed  it  were  misdemeanants,  and  a  per- 
son injured  by  their  misdemeanor  has  an  action  in  respect 
of  his  injury.  *  *  *  I  do  not  doubt  the  acts  done  by  the 
defendants  here,  if  done  wrongfully  and  maliciously,  or 
if  done  in  furtherance  of  a  wrongful  and  malicious  com- 
bination, would  be  ground  for  an  action  on  the  case  at 
the  suit  of  one  who  suffered  injury  from  them.  The 
question  comes  at  last  to  this,  what  was  the  character  of 
these  acts,  and  what  was  the  motive  of  the  defendants 
in  doing  them?  The  defendants  are  traders  with  enor- 
mous sums  of  money  embarked  in  their  adventures,  and 
naturally  and  allowably  desirous  to  reap  a  profit  from  their 
trade.  They  have  a  right  to  push  their  lawful  trade  by  all 
lawful  means.  They  have  a  right  to  endeavor  by  law- 
ful means  to  keep  their  trade  in  their  own  hands  and  by 
the  same  means  to  exclude  others  from  its  benefits,  if 
they  can.  Amongst  lawful  means  is  certainly  included 
the  inducing  by  profitable  offers  customers  to  deal  with 
them  rather  than  with  their  rivals.  It  follows  that  they 
may,  if  they  think  fit,  endeavor  to  induce  customers  to 
deal  with  them  exclusively  by  giving  notice  that  only 
to  exclusive  customers  will  they  give  the  advantage  of 
their  profitable  offer.     I  do  not  think  it  matters  that  the 

'  Mogul  Steamship  Co.  v.  McGregor,  21  Queens  B.  Div.  Law  Rep.  553. 

63 


§  60  ESSENTIALS  OR  TEST  OF   CONSPIRACY 

withdrawal  of  the  advantages  is  out  of  all  proportion  to 
the  injury  inflicted  on  those  who  withdraw  them  by  the 
customers,  who  decline  to  deal  exclusively  with  them, 
dealing  with  other  traders.  It  is  a  bargain  which  persons 
in  the  position  of  the  defendants  here  had  a  right  to  make, 
and  those  who  are  parties  to  the  bargain  must  take  it  or 
leave  it  as  a  whole.  *  *  *  One  word  in  passing  only  on 
the  contention  that  this  combination  of  the  defendants 
was  unlawful  because  it  was  in  restraint  of  trade.  It 
seems  to  me  it  was  no  more  in  restraint  of  trade,  as  that 
phrase  is  used  for  the  purpose  of  avoiding  contracts,  than 
if  two  tailors  in  a  village  agreed  to  give  their  customers 
five  per  cent  off  their  bills  at  Christmas  on  condition  of 
their  customers  dealing  with  them  and  with  them  only. 
Restraint  of  trade,  with  deference,  has  in  its  legal  sense 
nothing  to  do  with  this  question."  ^ 

§  60.  Combination  or  Confederation  and  Unlawful 
Design  or  Means  Employed. 

Confederation  and  unlawful  design  are  essential  to  the 
offense  of  conspiracy  which  necessarily  implies  a  united 
design  for  an  unlawful  object.^  A  conspiracy  is  formed 
when  two  or  more  persons  agree  together  to  do  an  unlaw- 
ful act;  in  other  words,  when  they  combine  to  accomplish, 
by  their  united  action,  a  crime  or  unlawful  purpose.^  The 
gravamen  of  the  offense  is  the  combination,  and  a  com- 
bination may  amount  to  a  conspiracy  although  its  object 
be  to  do  an  act  which  if  done  by  an  individual  would  not  be 
an  unlawful  act.^    An  act  harmless  when  done  by  one  may 

2  Mogul  Steamship  Co.  v.  McGregor,  21  Queens  B.  Div.  Law  Rep.  553. 

3  Commonwealth  v.  Tilly,  33  Pa.  Sup.  Ct.  35.  See  Patnode  v.  Westen- 
haven,  114  Wis.  460,  90  N.  W.  467.  Examine  West  Virginia  Transp.  Co.  v. 
Standard  Oil  Co.,  50  W.  Va.  611,  40  S.  E.  591. 

Essentials  of  conspiracy.  See  also  Jetton-Dekle  Lumber  Co.  v.  Mather, 
53  Fla.  969,  43  So.  590  (injunction;  labor  union);  Dunshee  v.  Standard  Oil 
Co.  (Iowa,  1910),  126  N.  W.  342;  Boasberg  v.  Walker,  111  Minn.  445,  127 
N.  W.  467;  United  States  v.  Kertel  (U.  S.  D.  C),  157  Fed.  396  (conspiracy 
to  defraud  United  States;  indictment). 

<  United  States  v.  Cole  (U.  S.  D.  C),  153  Fed.  801,  803  (indictment;  of- 
fense committed  against  United  States)  quoting  United  States  v.  Goldberg, 
12  Meyer  Fed.  Dec.  41,  42,  Fed.  Cas.  No.  15,233. 

6  FrankUn  Union  v.  The  People,  220  111.  355,  77  N.  E.  176  (case  of  labor 
64 


ESSENTIALS  OR  TEST  OF  CONSPmACY  §  60 

become  a  public  wrong  when  done  by  many  acting  in 
concert  and  become  the  object  of  a  conspiracy  operating 
in  restraint  of  trade  and  so  subject  to  the  police  power  of  a 
State.^  It  is  decided,  however,  that  what  a  person  may 
lawfully  do,  a  number  of  persons  may  unite  with  him  in 
doing  without  rendering  themselves  liable  to  the  charge 
of  conspiracy  provided  the  means  employed  be  not  un- 
lawful.'' It  is  also  asserted  that  if  the  act  done  is  lawful 
the  combination  of  several  persons  to  commit  it  does 
not  render  it  unlawful.  If  an  individual  is  clothed  with 
a  right  when  acting  alone,  he  does  not  lose  such  right 
merely  by  acting  with  others  each  of  whom  is  clothed 
with  the  same  right.  In  other  words,  the  mere  combi- 
nation of  action  is  not  an  element  which  gives  character 
to  the  act.  It  is  the  illegality  of  the  purpose  to  be  ac- 
complished, or  the  illegal  means  used  in  furtherance  of 
the  purpose,  which  makes  the  act  illegal.^  Again,  w^hether 
a  combination  or  conspiracy  is  wrongful  or  illegal  depends 
upon  the  quality  of  the  acts  charged  to  have  been  com- 
mitted. If  those  acts  are  not  wrongful  or  illegal,  no 
agreement  to  commit  them  can  properly  be  called  an 
illegal  or  wrongful  conspiracy,  unless  the  means  used  to 
accomplish  the  purpose,  the  purpose  itself  being  lawful, 
were  unlawful.^ 

union;  injunction;  contempt).  Compare  Bilafsky  v.  Conveyancers'  Title 
Ins.  Co.,  192  Mass.  504,  78  N.  E.  534. 

« Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  54  L.  ed.  826,  31 
Sup.  Ct.  535  (case  of  bill  in  equity  to  dissolve  association).  See  Quinn  v. 
Leathem,70  Law  J.  P.  C.  76  (1901),  App.  Cas.  495,  85  Law  T.  289,  50  WTily. 
R.  139. 

7  State  V.  Eastern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1. 

^  Lindsay  &  Co.,  Ltd.,  v.  Montana  Federation  of  Labor,  37  Mont.  264,  96 
Pac.  127,  citing  or  considering  the  following  cases: 

Indiana:  Clemmitt  v.  Watson,  14  Ind.  App.  38,  42  N.  E.  367. 

Massachusetts:  Vegelahn  v.  Guntner,  167  Mass.  92,  57  Am.  St.  Rep.  443, 
44  N.  E.  1077,  35  L.  R.  A.  722. 

Minnesota:  Bohn  Manufacturing  Co.  v.  Hollis,  54  Minn.  223,  40  Am.  St, 
Rep.  319,  55  N.  W.  119,  21  L.  R.  A.  337. 

New  York:  National  Protective  Assoc,  v.  Gumming,  170  N.  Y.  315,  88 
Am.  St.  Rep.  648,  63  N.  E.  369,  58  L.  R.  A.  135. 

Rhode  Island:  Macauley  Bros.  v.  Tierney,  19  R.  L  255,  61  Am.  St.  Rep. 
770,  33  Atl.  1,  37  L.  R.  A.  455. 

•Green  v.  Bennett  (Tex.  Civ.  App.,  1908),  110  S.  W.   108    (action  by 

5  65 


§§  61,  62     ESSENTIALS  OR  TEST  OF   CONSPIRACY 

§  61.  Motive  or  Intention. 

If  the  motives  of  the  confederates  be  to  oppress,  the 
means  they  use  unlawful,  or  the  consequences  to  others 
injurious,  their  confederation  will  become  a  conspiracy.^" 
And  it  is  declared  that  all  unlawful  conspiracies  must  be 
attended  with  a  corrupt  motive."  But  it  is  also  asserted 
that  a  conspiracy  consists  not  merely  in  the  intention  of 
two  or  more,  but  in  the  agreement  of  two  or  more  to  do  an 
unlawful  act,  or  to  do  a  lawful  act  by  unlawful  means.  So 
long  as  such  a  design  rests  in  intention  only  it  is  not 
indictable.  When  two  agree  to  carry  it  into  effect,  the 
very  plot  is  an  act  in  itself,  and  the  act  of  each  of  the 
parties,  promise  against  promise,  actus  contra  actum,  capa- 
ble of  being  enforced,  if  lawful,  punishable,  if  for  a  criminal 
object  or  for  the  use  of  criminal  means. ^^ 

§62.  Overt  Acts. 

The  gravamen  of  the  offense  of  conspiracy  is  the  com- 
bination and  this  is  complete  at  common  law,  by  the  com- 
bination itself,  and  it  is  unnecessary  to  prove  any  overt 
act  as  done  in  pursuance  of  it.  The  material  question  is 
the  imperious  tendency,  and  not  whether  the  intent  is 
evil.^^    So  a  conspiracy  if  entered  into  could  be  criminally 

Btockholders  complaining  of  certain  acts  of  defendants  in  placing  a  bank  in 
voluntary  liquidation).  See  Garland  v.  State,  112  Md.  83,  75  Atl,  631, 
State  V.  Bienstock  (N.  J.,  1909),  73  Atl.  530. 

10  State  V.  Eastern  Coal  Co.,  29  R.  I.  254,  70  Atl.  1,  4,  per  Dubois,  J., 
quoting  from  Run  v.  Barclay,  68  Pa.  St.  187, 8  Am.  Rep.  159,  per  Agnew,  J. 
See  Revere  Water  Co.  v.  Inhabitants  of  Winthrop,  192  Mass.  455,  78  N.  E. 
497. 

"  United  States  v.  Moore  (U.  S.  C.  C),  173  Fed.  122,  a  case  of  conspiracy 
to  defraud  the  United  States  under  Rev.  Stat.,  §  5440,  U.  S.  Comp.  Stat., 
1901,  p.  3676.  See  Revere  Water  Co.  v.  Inhabitants  of  Winthrop,  192 
Mass.  455,  78  N.  E.  497.  Examine  West  Virginia  Transp.  Co.  v.  Standard 
Oil  Co.,  50  W.  Va.  611,  40  S.  E.  591. 

12  Opinion  of  the  judges  in  Mulcahy  v.  Reg.,  L.  R.  3  H.  L.  317,  quoted  in 
Broom's  Leg.  Max.  (7th  Amer.  ed.,  1874),  note  pp.  312,  ♦SIS.  See  Patnode 
v.  Westenhaver,  114  Wis.  460,  90  N.  W.  467. 

"  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823  (a  case  under 
Anti-Trust  Act  of  Ind.,  Acts,  1899,  p.  257,  c.  148).  See  also  United  States 
V.  Raley  (U.  S.  D.  C),  173  Fed.  159;  United  States  v.  McLaughlin  (U.  S. 
D.  C),  169  Fed.  .302;  Friedman,  In  re  (U.  S.  D.  C),  164  Fed.  131;  Garland 
V.  State,  112  Md.  83,  75  Atl.  631;  Remmers  v.  Remmers,  217  Mo.  541,  117 

66 


ESSENTIALS  OK   TEST  OF  CONSPIRACY  §  63 

punished  at  common  law  whether  any  act  in  furtherance 
of  it  was  done  or  not.'' 

§  63.  Overt  Acts— New  York. 

It  is  declared  in  a  New  York  case  that  it  is  not  essential 
to  establish  a  criminal  conspiracy  to  prove  the  doing  of  an 
act  unlawful  in  itself,  or  which  might  injuriously  affect 
the  public,  where  an  unlawful  agreement  is  shown  and 
some  act  is  proved  showing  that  the  parties  have  pro- 
ceeded to  act  upon  the  agreement  the  offense  is  estab- 
lished. And  this  is  so  even  though  the  state  penal  code 
provides  that  no  agreement  simply,  with  certain  excep- 
tions, shall  constitute  such  a  conspiracy,  and  requires, 
aside  from  the  agreement,  some  act  done  in  pursuance 
thereof.  A  combination  between  independent  dealers  to 
prevent  competition  between  themselves  in  the  sale  of  an 
article  of  prime  necessity  is,  in  contemplation  of  law,  an 
act  inimical  to  trade  or  commerce,  without  regard  to  what 
may  be  done  under  and  in  pursuance  of  it,  and  although  the 
object  of  such  a  combination  was  merely  the  due  protec- 
tion of  the  parties  against  ruinous  rivalry,  and  no  attempt 
was  made  to  charge  undue  or  excessive  prices;  where  it 
appears  that  the  parties  acted  under  the  agreement  an 
indictment  for  conspiracy  is  sustainable.'^ 

S.  W.  1117;  People  v.  Miles,  108  N.  Y.  Supp.  510,  123  App.  Div.  862,  case 
affirmed  192  N.  Y.  541,  84  N.  E.  1117. 

''  United  States  v.  Kissel  (U.  S.  C.  C),  173  Fed.  823,  825. 

"  The  gist  of  the  offense  of  conspiracy,  however,  is  the  bare  engagement 
and  association  to  break  the  law,  whether  an  act  be  done  in  pursuance 
thereof,  by  the  conspirators  or  not  [per  Tindal,  C.  J.;  O'Connell  v.  Reg., 
11  CI.  &  F.  233;  Rex  v.  Kenrick,  5  Q.  B.  61  (48  E.  C.  L.  R.)];  and,  provided 
the  indictment  show  either  that  the  conspiring  together  was  for  an  unlawful 
purpose  or  to  effect  a  lawful  purpose  by  unlawful  means,  this  will  be  suffi- 
cient; and  whether  anything  has  been  done  in  pursuance  of  it  is  immaterial, 
so  far  as  regartls  the  sufficiency  of  the  indictment."  Broom's  Leg.  Max. 
(7th  Amer.  ed.,  1874),  pp.  312,  *313. 

16  People  V.  Sheldon,  139  X.  Y.  251,  34  N.  E.  785,  23  L.  R.  A.  221,  36 
Am.  St.  Rep.  G90  (combination  among  retail  coal  dealers),  cited  in  State 
V.  Eastern  Coal  Co.  29  R.  I.  254,  70  Atl.  1,  4;  followed  in  Kellogg  v. 
Sowerly,  190  N.  Y.  370,  373,  375,  83  N.  E.  47  (civil  action  for  damages 
caused  by  conspiracy);  cited  in  Park  &  Sons  Co.  v.  National  Wholesale 
Druggists'  Assoc,  175  N.  Y.  1,  34,  36,  67  N.  E.  136  (injunction  against 
continuance  of  alleged  conspiracy,  etc.). 

67 


§  64  ESSENTIALS   OR   TEST  OF  CONSPIRACY 

§  64.  Conspiracy  To  Commit  Offense  Against,  or  to 
Defraud  United  States— Overt  Acts. 

The  offense  of  conspiracy  under  the  Federal  statute 
covering  a  conspiracy  to  commit  an  offense  against  or  to 
defraud  the  United  States,  ^^  differs  from  a  like  offense  at 
cormnon  law  ^"  and  an  overt  act  is  necessary  apart  from  the 
conspiracy,  to  establish  such  statutory  offense:  ^^  under 
that  enactment  a  mere  conspnacy  is  not  an  offense,  but, 
in  addition  to  the  conspiracy  one  or  more  of  the  parties 
to  it  must  do  some  act  to  effect  its  object  before  a  criminal 
prosecution  can  be  maintained.     No  indictment  can  be 

>«  Rev.  Stat.  §  5440;  U.  S.  Com.  Stat.  1901,  p.  3676,  providing  that:  "If 
two  or  more  persons  conspire  either  to  commit  any  offense  against  the 
United  States,  or  to  defraud  the  United  States  in  any  manner  or  for  any 
purpose,  and  one  or  more  of  such  parties  do  any  act  to  effect  the  object  of 
the  conspiracy,  all  the  parties  to  such  conspiracy  shall  be  liable  to  a  pen- 
alty," etc. 

"  United  States  v.  Black  (U.  S.  C.  C.  A.)  160  Fed.  431,  434,  87  C.  C.  A. 
383.    See  also  Id.  as  to  essentials  of  conspiracy. 

Cojispiracy  to  commit  offense  against  United  States  not  a  felony  at  comm^on 
law;  and  if  made  a  felony  by  statute,  an  indictment  for  so  conspiring  ia 
not  defective  by  reason  of  failing  to  aver  that  it  was  feloniously  entered 
into.  Bannon  &  Mulkey  v.  United  States,  156  U.  S.  464,  15  Sup.  Ct.  467, 
39  L.  ed.  494. 

18  United  States  v.  Cole  (U.  S.  D.  C),  153  Fed.  801. 

Overt  act — Indictment — Conspiracy  to  defraud  United  States.  A  charge 
that  an  overt  act  was  done  according  to  and  in  pursuance  of  a  conspiracy 
which  had  been  previously  recited,  is  equivalent  to  charging  that  it  was 
done  to  effect  the  object  of  the  conspiracy.  Dealy  v.  United  States,  152 
U.  S.  539,  38  L.  ed.  545,  14  Sup.  Ct.  680. 

When  overt  act  may  be  done  anywhere — Conspiracy  against  United  States — 
When  crime  complete.  If  an  illegal  conspiracy  be  entered  into  within  the 
limits  of  the  United  States  and  within  the  jurisdiction  of  the  court  the 
crime  is  complete,  and  the  subsequent  overt  act  in  pursuance  thereof  may 
be  done  anywhere.  Dealy  v.  United  States,  152  U.  S.  539,  38  L.  ed.  545, 
14  Sup.  Ct.  680;  compare  American  Banana  Co.  v.  United  Fruit  Co.,  213 
U.  S.  347,  53  L.  ed.  826,  29  Sup.  Ct.  511,  considered  at  beginning  of  this 
section. 

Indictment — Fact  of  conspiring  must  be  charged  against  all  the  conspira- 
tors, but  the  doing  of  overt  acts  in  furtherance  of  the  conspiracy  may  be 
charged  only  against  those  who  committed  them,  in  an  indictment  for 
conspiracy  under  §  5440,  U.  S.  Rev.  Stat.  Bannon  &  Mulkey  v.  United 
States,  156  U.  S.  464,  15  Sup.  Ct.  467,  39  L.  ed.  494. 

Indictment — Conspiracy  must  be  sufficiently  charged;  cannot  be  aided  by 
averments  of  acts  done  by  one  or  more  of  the  conspirators  in  furtherance  of 
the  object  of  the  conspiracy  in  indictment  under  U.  S.  Rev.  Stat.  §  5440. 
United  States  v.  Britton,  108  U.  S.  199,  27  L.  ed.  698,  2  Sup.  Ct.  531. 

68 


ESSENTIALS  OR  TEST  OF  CONSPIRACY  §  64 

brought  in  the  United  States  for  the  offence  of  conspiracy 
at  the  common  law  because  it  has  not  been  made  an 
offense  by  any  Federal  statute.  ^^  Where,  however,  Con- 
gress has  made  a  certain  act  a  crime  and  indictable,  it 
follows  that  if  two  or  more  conspire  to  commit  the  prohib- 
ited act  they  conspire  to  commit  an  offense  against  the 
United  States  within  the  terms  of  the  above  statute.-" 

'»  United  States  v.  Kissel  (U.  S.  C.  C),  173  Fed.  823,  825. 
"  United  States  v.  Stevenson  (No.  2),  215  U.  S.  200,    30  Sup.  Ct.  37, 
54  L.  ed.  157;  Rev.  Stat.  U.  S.  §  5440. 


69 


§65 


ESSENTIALS   OR   TEST   OF   MONOPOLIES 


CHAPTER  VII 


NATURE   ESSENTIALS   OR  TEST  OF  MONOPOLIES 


§  65.  Restraint    of    Competition —      §  70.  Monopoly  as  Essential   Fea- 


Control  of  Production — 
Commodities  and  Prices. 

66.  Same  Subject. 

67.  Monopoly— "To Monopolize" 

— Power  to  Raise  Prices  or 
Exclude  Competition  Dis- 
tinguished— Motive . 

68.  What  Degree  of  Restraint  of 

Competition  Essential  — 
Monopoly  and  Restraint  of 
Competition  Distinguished. 

69.  Effect  of  Personal  Service  or 

Occupation. 


71. 


72. 


ture  of  Charter  or  Franchise 
— Whether  Such  Grant  Ex- 
clusive in  Nature. 

Same  Subject — Rule  of  Con- 
struction of  Grants  Appli- 
cable. 

When  Grants  of  Charters 
Franchises    are    Exclu- 


or 


Bive. 

73.  Same  Subject. 

74.  When  Grants  of  Charters  or 

Franchises  are  not  Exclu- 
sive. 


§  65.  Restraint  of  Competition — Control  of  Production 
— Commodities  and  Prices. 

It  is  a  well  settled  general  rule  that  all  contracts  in 
which  the  public  are  interested  which  tend  to  prevent 
competition,  whenever  a  statute  or  known  rule  of  law 
requires  competition,  are  void.^  The  idea  of  monopoly  as 
understood  at  the  present  time  includes  the  suppression 
of  competition  by  unification  of  interests  or  management, 
or  through  agreement  and  concert  of  action.  It  is  the 
power  to  control  prices  which  makes  both  the  inducement 
to  make  such  combinations  and  the  concern  of  the  law  to 
prohibit  them.^  So  it  is  declared  in  a  Federal  case  that  the 
authorities  warrant  the  statement  that  a  monopoly,  in 
the  modern  sense,  is  created  when,  as  a  result  of  efforts  to 

1  Fishbum  v.  City  of  Chicago,  171  111.  .338,  63  Am.  St.  Rep.  236,  39 
L.  R.  A.  482,  49  N.  E.  532;  case  of  ordinance  making  it  indispensable  that 
asphaltum,  which  could  only  be  obtained  from  a  certain  corporation, 
should  be  used;  held  void  as  creating  a  monopoly. 

» National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  25  Sup.  Ct.  379,  49 
L.  ed.  689  (case  under  anti-trust  acts  of  Texas  of  1889,  1895  and  1899). 

70 


ESSENTIALS   OR   TEST   OF   MONOPOLIES  §  65 

that  end,  previously  competing  businesses  are  so  concen- 
trated in  the  hands  of  a  single  person  or  corporation,  or  a 
few  persons  or  corporations  acting  together,  that  they  have 
power  to  practically  control  the  prices  of  commodities  and 
thus  to  practically  suppress  competition.^  In  this  same 
sense  trade  and  commerce  are  said,  in  a  Minnesota  case, 
to  be  monopolized  within  the  meaning  of  the  Federal 
statute  and  the  constitution  and  statute  of  that  State. 
And  that:  "Like  the  ancient  monopolies  the  practical 
monopoly  is  under  the  ban  of  the  law  because  it  tends  to 
prevent  competition  and  enhance  the  price  or  deteriorate 
the  commodity  or  service  to  which  it  relates."  It  is  also 
asserted  in  the  same  case  that  the  definition  of  monopoly 
involves  the  principle  of  destruction  of  competition  in 
trade  or  commerce,  the  doing  of  acts  contrary  to  public 
policy.  And  that  contracts  and  combinations  which  tend 
to  create  a  monopoly  are  against  public  policy,  and,  there- 
fore, illegal,  because  they  deprive  the  community  of  the 

'  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700, 
721,  per  Noyes,  Cir.  J.,  citing  tlie  following  cases: 

United  States:  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  25  Sup. 
Ct.  382,  49  L.  ed.  689;  Swift  &  Co.  v.  United  States,  196  U.  S.  375,  49 
L.  ed.  518,  25  Sup.  Ct.  276;  Northern  Securities  Co.  v.  United  States,  193 
U.  S.  197,  24  Sup.  Ct.  436,  48  L.  ed.  679;  United  States  v.  E.  C.  Knight 
Co.,  156  U.  S.  1,  15  Sup.  Ct.  249,  39  L.  ed.  325;  Chesapeake  &  O.  Fuel 
Co.  V.  United  States,  115  Fed.  610,  53  C.  C.  A.  256;  United  States  v. 
Chesapeake  &  O.  Fuel  Co.,  (C.  C.)  105  Fed.  104;  American  Biscuit  & 
Mfg.  Co.  V.  Klotz  (C.  C),  44  Fed.  724. 

California:  Herriman  v.  Menzies,  115  Cal.  16,  44  Pac.  660,  46  Pac.  730, 
35  L.  R.  A.  318,  56  Am.  St.  Rep.  81. 

Illinois:  Harding  v.  American  Glucose  Co.,  182  111.  615,  55  N.  E.  577, 
64  L.  R.  A.  738,  74  Am.  St.  Rep.  189. 

Michigan:  Richardson  v.  Buhl,  77  Mich.  658,  43  N.  W.  1102,  6  L.  R.  A. 
457. 

New  York:  Lough  v.  Outenbridgc,  143  N.  Y.  271,  38  N.  E.  392,  25  L. 
R.  A.  674,  42  Am.  St.  Rep.  712;  People  v.  North  River  Sugar  Refining 
Co.,  54  Hun,  377,  n.,  3  N.  Y.  Supp.  401,  2  L.  R.  A.  33. 

South  Carolina:  Wood  v.  Glenwood  Hardware  Co.,  75  S.  C.  383,  55  S. 
E.  973,  9  L.  R.  A.  (N.  S.)  501. 

West  Virginia:  Pocahontas  Coke  Co.  v.  Powhatan  Coal,  etc.,  Co.,  60 
W.  Va.  508,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  90L 

Since  writing  the  above  text  i\w.  combination  in  the  principal  case 
(164  Fed.  700)  has  been  decreed  illegal  and  ordered  dissolved  etc.  See 
"  Appendix  A  "  herein. 

71 


§  66  ESSENTIALS   OR   TEST   OF   MONOPOLIES 

benefits  of  competition  and  thus  place  the  power  to  con- 
trol production  and  fix  prices  in  the  hands  of  a  few  per- 
sons.^ 


§  66.  Same  Subject. 

It  is  declared  that  combinations  in  the  nature  of  modem 
trusts,  so  soundly  condemned,  are  those  which  aim  at  a 
union  of  energy,  capital  and  interest  to  stifle  competition, 
and  enhance  the  price  of  articles  of  prime  necessity  and 
staples  of  commerce.  In  such  cases  there  is  absent  the 
element  of  exchange  of  one  valuable  right  or  thing  for 
another.^  It  is  also  asserted  in  a  California  case  that  a 
monopoly  exists  where  all,  or  so  nearly  all,  of  an  article  of 
trade  or  commerce  within  a  community  or  district  is 
brought  within  the  hands  of  one  man  or  set  of  men,  as  to 
practically  bring  the  handling  or  production  of  the  com- 
modity or  thing  within  such  control  to  the  exclusion  of 
competition  or  free  traffic  therein.^  And  in  case  of  a  grant 
the  idea  of  exclusion  of  all  competition  is  stated  as  fol- 
lows: "A  monopoly  is  that  which  has  been  granted  with- 
out consideration;  as  a  monopoly  of  trade;  or  of  the  manu- 
facture of  any  particular  article,  to  the  exclusion  of  all 
competition.  It  is  withdrawing  that  which  is  a  common 
right,  from  the  community,  and  vesting  it  in  one  or  more 
individuals  to  the  exclusion  of  all  others."  ^  In  a  West 
Virginia  case  it  is  asserted  that  the  word  ''monopoly"  as 
now  used  and  understood  embraces  any  combination  the 
tendency  of  which  is  to  prevent  competition  in  its  broad 

*  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  529,  544,  121  N.  W. 
395,  per  Elliott,  J. 

'  United  States  Chemical  Co.  v.  Provident  Chemical  Co.,  64  Fed.  946, 
950,  per  Priest,  Dist.  J.,  a  case  where  defense  was  set  up  that  a  certain 
contract  or  lease  sued  on  was  in  restraint  of  trade,  a  monopoly  and  void, 
but  as  it  conferred  no  special  or  exclusive  privilege  and  did  not  destroy 
competition,  defense  was  not  sustained. 

s  Grogan  v.  Chaffee,  156  Cal.  611,  613,  105  Pac.  745.  A  case  of  limita- 
tion of  price  on  resale  of  olive  oil;  condition  in  contract;  injunction;  re- 
straint of  trade. 

^  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  567, 
9  L,  ed.  773,  per  Mr.  Justice  M'Lean. 

72 


ESSENTIALS   OR   TEST   OF   MONOPOLIES     §§  67,  68 

and  general  sense  and  to  control  prices  to  the  detriment  of 
the  public.^ 

§  67.  Monopoly — "  To  Monopolize  " — Power  to  Raise 
Prices  or  Exclude  Competition  Distinguished — Motive. 

It  must  be  noted  that  the  authorities  hold  that  the 
material  consideration,  in  determining  whether  a  mo- 
nopoly exists,  is  not  that  prices  are  raised  and  that  com- 
petition is  excluded,  but  that  power  exists  to  raise  prices 
or  to  exclude  competition  when  it  is  desired  to  do  so.^ 
Where  a  statutory  offense  is  defined  to  ''combine  in  the 
form  of  trust,  or  otherwise,  in  restraint  of  trade  or  com- 
merce" and  "to  monopolize,  or  attempt  to  monopolize, 
any  of  the  trade  or  commerce"  it  is  declared  that  "To 
compass  either  of  these  things,  with  no  other  motive  than 
to  compass  them,  and  by  any  means,  constitutes  the 
offense.  One  just  and  decisive  test  of  the  meaning  of  the 
expression  'to  monopolize'  is  obtained  by  getting  at  the 
evil  which  the  law  maker  has  endeavored  to  abolish  and 
restrict.  The  statutes  show  that  the  evil  was  the  hin- 
drance and  oppression  in  trade  and  commerce  wrought  by 
its  absorption  in  the  hands  of  the  few,  so  that  the  prices 
would  be  in  danger  of  being  arbitrarily  and  exorbitantly 
fixed,  because  all  competition  would  be  swallowed  up,  so 
that  the  man  of  small  means  would  find  himself  excluded  ■ 
from  the  restrained  or  monopolized  trade  or  commerce  as 
absolutely  as  if  kept  out  by  law  or  force."  ^° 

§  68.  What  Degree  of  Restraint  of  Competition  Es- 
sential— Monopoly  and  Restraint  of  Competition  Dis- 
tinguished. 

Although  a  monopoly  may  deprive  the  conmiunity  of 
the  benefits  of  competition  and  place  the  control  of  pro- 

•  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  GO  \\.  Va.  508, 
520,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Arn.  St.  Rep.  901,  per  Co.x,  J. 

«  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C.)  164  Fed.  700, 
721,  per  Noyes,  Cir.  J.     See  end  of  note  3  last  preceding. 

»« American  Biscuit  &  Mfg.  Co.  v.  Klotz  (IT.  S.  C.  C),  44  Fed.  721,  725, 
per  the  court  construing  the  La.  Act,  July  5,  1890  and  the  Sherman  Anti- 
trust Act  of  July  2,  1890  (a  ca.so  of  pooling  of  bakeries  in  twelve  states). 

73 


§  68  ESSENTIALS   OR   TEST   OF   MONOPOLIES 

duction,  coinniodities  and  prices  in  the  hands  of  a  few, 
still  it  does  not  follow  necessarily  that  ''every  contract  or 
combination  which  in  any  degree  tends  to  restrict  com- 
petition is  illegal.  So  strict  a  rule  would  invalidate  innum- 
erable ordinary  business  transactions,  which  are  unobjec- 
tionable and  necessary  in  order  that  business  shall  not 
completely  stagnate."  "  So  in  a  case  where  the  defense 
was  set  up  that  a  certain  contract  or  lease  sued  on  was  in 
restraint  of  trade,  a  monopoly  and  void,  the  defense  was 
not  sustained,  as  the  contract  or  lease  conferred  no  special 
or  exclusive  privilege  and  did  not  destroy  competition.  ^^ 
The  words  of  Lord  Chief  Justice  Coleridge  in  a  well  known 
English  case  are  pertinent  here.  They  are  as  follows: 
"It  must  be  remembered  that  all  trade  is  and  must  be,  in  a 
sense,  selfish :  trade,  not  being  infinite,  nay,  the  trade  of  a 
particular  place  or  district  being  possibly  very  limited, 
what  one  man  gains  another  loses.  In  the  hand  to  hand 
war  of  commerce,  as  in  the  conflicts  of  public  life,  whether 
at  the  bar,  in  Parliament,  in  medicine,  in  engineering  (I 
give  examples  only),  men  fight  on  without  much  thought 
of  others,  except  a  desire  to  excel  or  defeat  them.  Very 
lofty  minds  like  Sir  Philip  Sydney  with  his  cup  of  water, 
will  not  stoop  to  take  an  advantage,  if  they  think  another 
wants  it  more.  Our  age,  in  spite  of  high  authority  to  the 
contrary,  is  not  without  its  Sir  Philip  Sydneys;  but  these 
are  counsels  of  perfection  which  it  would  be  silly  indeed 
to  make  the  measure  of  the  rough  business  of  the  world 
as  pursued  by  ordinary  men  of  business."  Again^  "  the 
defendants  are  traders  with  enormous  sums  of  money 
embarked  in  their  adventures,  and  naturally  and  allowably 
desirous  to  reap  a  profit  from  their  trade.  They  have  a 
right  to  pursue  their  lawful  trade  by  all  lawful  means. 
They  have  a  right  to  endeavor  by  lawful  means  to  keep 
their  trade  in  their  own  hands,  and  by  the  same  means  to 
exclude  others  from  its  benefits,  if  they  can.  Amongst  law- 
ful means  is  certainly  included  the  inducing  by  profitable 

"  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  544,  121  N.  W.  395. 
1*  United  States  Chemical  Co.   v.    Provident  Chemical  Co.,   64  Fed. 
946,  950. 

74 


ESSENTIALS   OR   TEST   OF   MONOPOLIES  §  G9 

offers  customers  to  deal  with  them  rather  than  their  rivals. 
It  follows  that  they  may,  if  they  think  fit,  endeavor  to  in- 
duce customers  to  deal  with  them  exclusively  by  giving 
notice  that  only  to  exclusive  customers  will  they  give  the 
advantage  of  the  profitable  offers.  I  do  not  think  it  mat- 
ters that  the  withdrawal  of  the  advantages  is  out  of  all 
proportion  to  the  injury  inflicted  on  those  who  withdraw 
them  by  the  customers  who  decline  to  deal  exclusively 
with  them,  dealing  with  other  traders.  It  is  a  bargain 
which  persons  in  the  position  of  defendants  here  had  a 
right  to  make,  and  those  who  are  parties  to  the  bargain 
must  take  it  or  leave  it  as  a  whole."  ^^  The  New  York 
anti-monopoly  act  ^'^  treats  a  monopoly  and  restraint  of 
competition  as  two  distinct  things;  a  monopoly  usually,  if 
not  always  restrains  competition,  but  usually  is  the  result 
of  a  restraint  of  competition,  but  a  restraint  in  competi- 
tion may  not  extend  to  the  degree  of  creating  a  monopoly, 
and  to  vitiate  such  contracts  as  that  statute  condemns  it 
need  not  be  shown  that  the  arrangement  which  the  defend- 
ant made  in  fact  resulted  or  might  result  in  a  total  suppres- 
sion of  all  competition,  or  might  or  would  result  in  a  com- 
plete and  absolute  monopoly  excluding  all  competition, 
the  complete  control  of  the  production  and  sale  of  a  com- 
modity. It  is  only  essential  that  the  contract  restrains 
competition  and  tends  to  deprive  the  public  of  the  advan- 
tages which  flow  from  free  competition.^^ 

§  69.  Effect  of  Personal  Service  or  Occupation. 

At  common  law,  personal  ser\ace,  an  occupation,  could 
not  be  the  subject  of  a  monopoly.   Unless  there  is  property 

"  Mogul  Steamship  Co.  v.  McGregor,  21  Queens  B.  Div.  Law  Rep.  552, 
553.  Judgment  was  affirmed  by  a  divided  court  in  Law  Rep.  23  Queens 
B.  Div.  598,  affirmed  in  appeal  cases  (1892,  H.  L.),  25.  Opinion  quoted 
in  part  in  Citizens'  Light,  Heat  &  Power  Co.  v.  Montgomery  Light  it 
Water  Power  Co.  (U.  S.  C.  C),  171  Fed.  553,  559;  case  also  cited  and  con- 
sidered in  Helm  Bre\\ing  Co.  v.  Belinder,  97  Mo.  App.  64,  72,  71  S.  W.  691. 

^*  Consol.  Laws,  Chap.  20,  §§  340-346  (Gen.  Bus.  Law),  See  Birdseyes, 
dimming  &  Gilberts,  consol.  Laws,  N.  Y.,  pp.  1875-1879;  Laws  1909, 
chap.  25,  Art.  22. 

•^  People  V.  American  Ice  Co.,  120  N.  Y.  Supp.  443.  s.  c.  (upon  points 
as  to  pleading,  etc.),  120  N.  Y.  Supp.  41,  135  App.  Div.  ISO. 


§  70  ESSENTIALS   OR   TEST  OF   MONOPOLIES 

to  be  affected  with  a  public  interest  there  is  no  basis  laid 
for  the  fact  or  the  charge  of  a  monopoly.  ^^ 

§  70.  Monopoly  as  Essential  Feature  of  Charter  or 
Franchise — Whether  Such  Grant  Exclusive  in  Nature. ^"^ 

Monopoly  is  not  an  essential  feature  of  a  franchise;  and 
it  is  declared  in  a  New  York  case  that  a  corporation  with 
banking  powers  would  be  no  less  a  franchise  if  there  were 
no  law  restraining  private  banking,  which  alone  gives  to 
banking  corporations  the  character  of  monopolies.  ^^  So 
a  monopoly  cannot  be  implied  from  a  mere  grant  of  a  char- 
ter to  a  company  to  construct  a  work  of  public  improve- 
ment, and  to  take  the  profits;  there  must  be  an  express 
provision  in  the  charter  to  give  such  a  monopoly;  the  legis- 
lature must  restrain  itself  therein  from  granting  charters 
for  rival  and  competing  works.  Therefore,  where  a  com- 
pany was  granted  a  charter  to  construct  a  navigable  canal 
along  the  valley  of  a  stream,  and  to  take  the  profits  into 
consideration  of  the  work,  and  there  was  no  provision 
against  the  exercise  of  power  to  charter  other  and  rival 
companies,  it  was  determined  that  the  legislature  was  not 
restrained  from  chartering  a  company  to  construct  a  rail- 
road along  the  same  valley,  even  though  it  might  afford  the 
same  public  accommodation  as  the  canal  and  in  effect 
might  impair  or  annihilate  its  profits.  ^^ 

In  an  Ohio  case  the  court,  per  Hartley,  C.  J.,  basing  its 
conclusions  upon  the  language  of  Mr.  Burke,  in  a  speech 
upon  a  bill  to  repeal  the  charter  of  the  East  India  Com- 
pany, said:  ''The  true  nature  of  the  franchise  of  a  private 
corporation,  is  here  portrayed  in  clear  and  conprehensive 
language.  We  are  here  told  that  it  is  an  institution  to  es- 
tablish monopoly  and  to  create  power;  that  to  speak  of 

"  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  114  S.  W.  997,  relying 
upon  State  v.  Associated  Press,  159  Mo.  410,  456,  60  S,  W.  91,  104,  51 
L.  R.  A.  151,  81  Am.  St.  Rep.  368. 

"  See  §  46  herein. 

«  Milhau  V.  Sharp,  27  N.  Y.  611,  619,  84  Am.  Dec.  314,  per  Selden,  J., 
quoting  Bouvier. 

'» Tuckahoe  Canal  Co.  v.  Tuckahoe  &  James  River  Ry.  Co.,  11  Leigh 
(Va.),  42,  36  Am.  Dec.  374. 

76 


ESSENTIALS   OR   TEST   OF   MONOPOLIES  §  71 

such  charters  and  their  effects  in  terms  of  the  greatest 
possible  moderation,  they  do  at  least  suspend  the  natural 
rights  of  mankind  at  large;  and  in  their  very  frame  and 
constitution,  are  liable  to  fall  into  a  direct  violation  of 
them;  that  all  special  privileges  of  this  kind,  claimed  or 
exercised  in  exclusion  of  the  greater  part  of  the  community, 
being  wholly  artificial,  and  for  so  much  a  derogation  from 
the  natural  equality  of  mankind  at  large,  ought  to  be  some- 
way or  other  exercised  ultimately  for  their  benefit;  and 
that  they  are  not  original  self-derived  rights,  or  grants  for 
the  mere  and  sole  private  benefit  of  the  holders,  but  rights 
and  privileges,  which  in  the  strictest  sense  are  derivative 
trusts,  and  from  their  very  nature  accountable  to  the 
power  which  created  them."  ^° 

§  71.  Same  Subject — Rule  of  Construction  of  Grants 
Applicable. 

It  is  pertinent,  in  this  connection,  to  notice  the  rule  that 
grants  of  charters  or  franchises  should,  as  to  all  rights 
claimed  under  them,  be  strictly  construed  against  the 
grantee  and  most  favorably  to  the  sovereign  power  or 
State, — that  is,  strictly  against  the  corporation  and  liber- 
ally in  favor  of  the  public. ^^    Such  grants  of  franchises 

20  Bank  of  Toledo  v.  City  of  Toledo  (Toledo  Bank  v.  Bond),  1  Ohio  St. 
622,  635,  636. 

2'  United  States:  Water,  Light  &  Gas  Co.  of  Hutchinson  v.  Hutchinson, 
207  U.  S.  385,  28  Sup.  Ct.  135,  52  L.  Ed.  257,  case  affirms  144  Fed.  256; 
Cleveland  Electric  Ry.  Co.  v.  Cleveland,  204  U.  S.  116,  130,  citing  Blair 
V.  Chicago,  201  U.  S.  400,  471,  50  L.  ed.  801,  26  Sup.  Ct.  427;  PearsaU  v. 
Great  Northern  Ry.  Co.,  161  U.  S.  646,  40  L.  ed.  838,  16  Sup.  Ct.  705,  case 
reverses  73  Fed.  933;  Hamilton  Gas  Light  &  C.  Co.  v.  Hamilton,  146  U. 
S.  258,  13  Sup.  Ct.  90,  36  L.  ed.  963;  Oregon  Ry.  &  Nav.  Co.  v.  Oregon- 
ian  Ry.  Co.,  130  U.  S.  1,  32  L.  ed.  837,  9  Sup.  Cl.  409;  Hannibal  &  St. 
Joseph  Rd.  Co.  v.  Missouri  River  Packet  Co.,  125  U.  S.  260,  31  L.  ed. 
731,  8  Sup.  Ct.  874;  Omaha  Horse  Rd.  Co.  v.  Cable  Tramway  Co.,  30 
Fed.  324.  Rule  also  applied  to  franchises  giving  monopolies.  Georgia 
Rlacon  &  Western  Ry.  v.  Davis,  13  Ga.  68. 

Illinois:  Blocki  v.  People,  220  lU.  444,  77  N.  E.  172;  Mills  v.  County  of 
St.  Clair,  7  111.  197. 

Maryland:  Baltimore,  City  of  v.  Chesapeake  &  Potomac  Teleph.  Co., 
92  Md.  692,  48  Atl.  465. 

Minnesota:  State  v.  St.  Paul,  Minneapolis  &  Manitoba  Ry.  Co.,  98  Minn. 
380,  108  N.  W.  261. 

77 


§  71  ESSENTIALS   OR  TEST   OF  MONOPOLIES 

should  be  in  plain  language,  and  certain  and  definite  in 
their  nature,--  as  only  that  passes  which  is  granted  in  clear 
and  explicit  terms;  whatever  is  not  unequivocally  granted 
is  withheld,  and  nothing  passes  by  implication  except  what 
is  necessary  to  carry  into  effect  the  obvious  intent  of  the 
grant. -^  The  above  rule  as  to  strict  construction  is  held 
to  apply  so  that  grants  of  a  franchise  or  privilege  are  not 
ordinarily  to  be  taken  as  grants  of  an  exclusive  privilege. ^^ 

So  it  is  declared  that  "Exclusive  rights  to  public  fran- 
chises are  not  favored.  If  granted,  they  will  be  protected, 
but  they  will  never  be  presumed.  Every  statute  which 
takes  away  from  the  legislature  its  power  will  always  be 
construed  most  strongly  in  favor  of  the  State.  These  are 
elementary  principles."  -^ 

It  is  also  said  that  an  exclusive  privilege  cannot  legally 
exist  where  there  is  the  slightest  doubt  as  to  its  validity, 
and  that  a  special  franchise  to  be  exclusive  must  be  abso- 
lutely free  from  ambiguity.  ^^ 

Nebraska:  Lincoln  St.  R.  Co.  v.  City  of  Lincoln,  61  Neb.  109,  110,  84 
N.  W.  802. 

New  Jersey:  Millville  Gas  Light  Co.  v.  Vineland  Light  &  Power  Co. 
(N.  J.  Eq.  1906),  65  Atl.  504. 

New  York:  Trustees  of  Southampton  v.  Jessup,  162  N.  Y.  122,  127,  56 
N.  E.  538,  per  Vann,  J.,  case  reverses  10  App.  Div.  456. 

Ohio:  Bank  of  Toledo  v.  City  of  Toledo  (Toledo  Bank  v.  Bond),  1  Ohio 
St.  622,  636,  per  Bartley,  J. 

Pennsylvania:  Emerson  v.  Commonwealth,  108  Pa.  111. 

Tennessee:  Citizens'  St.  Ry.  Co.  v.  Africa,  100  Tenn.  26,  53,  42  S.  W. 
485,  878. 

"  Cleveland  Electric  Ry.  Co.  v.  Cleveland,  204  U.  S.  116,  130,  51  L.  ed. 
399,  27  Sup.  Ct.,  citing  Blair  v.  Chicago,  201  U.  S.  400,  471,  26  Sup.  Ct. 
427,  50  L.  ed.  801. 

"  Knoxville  Water  Co.  v.  KnoxviUe,  200  U.  S.  22,  26  Sup.  Ct.  224,  50 
L.  ed.  353;  Stein  v.  Bienville  Water  Supply  Co.,  141  U.  S.  67,  11  Sup.  Ct. 
892,  35  L.  ed.  622;  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U. 
S.)  420,  9  L.  ed.  773;  City  of  Helena  v.  Helena  Waterworks  Co.,  122  Fed. 
1,  59  C.  C.  A.  159;  People  ex  rel.  Woodhaven  Gas  Co.,  v.  Dcehan,  153  N.  Y. 
528,  47  N.  E.  787,  case  reverses  11  App.  Div.  175;  Syracuse  Water  Co.  v. 
City  of  Syracuse,  116  N.  Y.  167,  26  N.  Y.  St.  R.  364,  22  N.  E.  381;  Penn- 
sylvania Ry.  Co.  V.  Canal  Commissioners,  21  Pa.  9,  22,  per  Black,  C.  J. 

^*  Long  Island  Water  Supply  Co.  v.  Brooklyn,  166  U.  S.  685,  696,  41  L. 
ed.  1165,  17  Sup.  Ct.  718,  per  Brewer,  J.;  McLeod  v.  Burroughs,  9  Ga.  213. 

"  Wright  V.  Nagle,  101  U.  S.  791,  796,  25  L.  ed.  921,  per  Waite,  C.  J. 

^  West  Manayunk  Gas  Light  Co.  v.  New  Gas  Light  Co.,  21  Pa.  Co.  Ct. 
Rep.  379  (a  franchise  under  Pa.  Act.  1874). 

78 


ESSENTIALS   OR  TEST   OF   MONOPOLIES  §  71 

And  in  a  comparatively  late  case  in  the  United  States 
Supreme  Court  it  is  held  that  the  power  to  grant  an  exclu- 
sive privilege  must  be  expressly  given,  or,  if  inferred  from 
other  powers,  must  be  indispensable,  and  not  merely  con- 
venient to  them." 

So  under  a  New  York  decision,  grants  of  franchises  by 
the  same  State  are  to  be  so  strictly  construed  as  to  operate 
as  a  surrender  of  the  sovereignty  no  further  than  is  ex- 
pressly declared  by  the  terms  of  the  grant;  the  grantee 
takes  nothing  in  that  respect  by  inference,  except  so  far, 
therefore,  as,  by  the  terms  of  the  grant,  the  exercise  of  the 
franchise  rights  granted  is  made  exclusive,  the  legislative 
power  is  reserved  to  grant  and  permit  the  exercise  of  com- 
peting and  rival  powers  and  privileges,  however  injurious 
they  may  be  to  those  previously  granted.  ^^ 

In  the  construction  of  charters  and  statutes  granting  ex- 
clusive privileges  to  street-railways,  gas  or  water  com- 
panies authority  therefore  must  be  given  explicitly  by  the 
legislature  in  clearly  expressed  terms — the  right  will  not 
be  implied  from  the  use  of  general  language— and,  as  a 
rule,  municipalities  have  no  powTr  to  grant  such  exclusive 
rights  to  said  companies  except  upon  legislative  authori- 
zation subject  to  the  same  rules  of  construction  as  above 
stated.  ^^ 

Where  a  statute  grants  exclusive  rights  to  supply  light 
or  heat,  a  corporation  which  comes  within  the  terms  of  the 
statute  may  exercise  such  exclusive  privilege.  But  where 
the  statute  provides  for  the  incorporation  of  companies 
"for  the  supply  of  water  to  the  public,  or  for  the  manu- 
facture of  gas,  or  the  supply  of  light  or  heat  to  the  public, 
by  any  other  means,"  it  does  not  include  electric  lighting, 

"  Water,  Light  &  Gas  Co.  of  Hutchinson  v.  Hutchinson,  207  U.  S.  385, 
28  Sup.  Ct.  135,  case  affirms  144  Fed.  256. 

^Syracuse  Water  Co.  v.  City  of  Syracuse,  116  N.  Y.  167,  26  N.  Y.  St. 
R.,  364,  22  N.  E.  381. 

«  Detroit  Citizens'  St.  R.  Co.  v.  Detroit,  110  Mich.  384,  68  N.  W.  304, 
35  L.  R.  A.  859.  28  Chic.  L.  News.  409,  3  Det.  L.  N.  377,  5  Am.  Eng.  Cas. 
(N.  S.)  15,  affirmed  171  U.  S.  48,  18  Sup.  Ct.  732.  See  Morawetz  on  Priv. 
Corp.  (Ed.  1882)  431  Cooley  on  Const.  Lim.  (Ed.  1890)  pp.  231  vt  ,^cq  4 
Thomp  on  Corp.  (Ed.  1895)  §§  5348,  5398-5403. 

79 


§  72  ESSENTIALS   OR   TEST   OF   MONOPOLIES 

where  such  grant  is  relied  on  for  the  purpose  of  claiming  an 
exclusive  privilege,  especially  so  where  the  act  in  question 
gives  no  power  to  enter  upon  the  public  streets  for  the 
erection  of  poles  and  placing  of  wires,  the  privilege  of  so 
entering  being  confined  to  the  laying  of  pipes  only  and 
the  process  of  lighting  by  electricity  being  unknown  when 
the  statute  was  enacted. '^^ 

The  rule  was  also  relied  upon  in  this  case,  that  a  legisla- 
tive grant  to  a  corporation  of  exclusive  privileges  is  to  be 
construed  most  strictly,  that  every  intendment  not  obvi- 
ously in  favor  of  the  grant  must  be  construed  against  it, 
and  that  monopolies  are  not  to  be  favored." 

§  72.  When  Grants  of  Charters  or  Franchises  are  Ex- 
clusive. 

It  is  said  that  charters  or  franchises  "contain  an  implied 
covenant  on  the  part  of  the  government  not  to  invade 
the  rights  vested,  and  on  the  part  of  the  grantees  to  exe- 
cute the  conditions  and  duties  prescribed  in  the  grant. 
Some  of  these  charters  or  franchises  are  presumed  to  be 
founded  on  a  valuable  consideration,  and  to  involve  pub- 
lic duties,  and  to  be  made  for  public  accomodation,  and 
to  be  affected  with  jus  publicum,  and  they  are  necessarily 
exclusive  in  their  nature.  The  government  cannot  re- 
sume them  at  pleasure,  or  do  any  act  to  impair  the  grant, 
without  a  breach  of  contract."  •^-    It  is  further  declared 

"•  Scranton  Elect.  Light  &  Heat  Co.  v.  Scranton  Illuminating  Heat  & 
Power  Co.,  122  Pa.  1.54,  9  Am.  St.  Rep.  79,  15  Atl.  446,  3  Am.  Elec.  Cas. 
499;  Act  of  Pa.  1874,  §  34,  cl.  3,  contra,  except  as  to  exclusive  privilege; 
Wilkesbarre  Elec.  L.  Co.  v.  Wilkesbarre  L.  H.  &  M.  Co.  (C.  C.  Penn.  1886) 
4  Kulp.  47. 

^^  Citing  Emerson  v.  Commonwealth,  108  Pa.  111.  The  court  in  the 
principal  case  (122  Pa.  154,  cited  in  last  preceding  note),  per  Gordon, 
C.  J.,  said:  "Monopolies  are  favorites  neither  with  courts  nor  people. 
They  operate  in  restraint  of  competition,  and  are  hence,  as  a  rule,  detri- 
mental to  the  public  welfare;  nor  are  they  at  all  allowable  except  where  the 
resultant  advantage  is  in  favor  of  the  public,  as,  for  instance,  where  a 
water  or  gas  company  could  not  exist  except  as  a  monopoly." 

"Kent's  Comm.  (14th  ed.)  bottom  p.  723,  *  p.  458;  Horst,  Mayor,  etc., 
V.  Moses,  48  Ala.  146,  per  Peters,  J.,  dissenting  in  part;  Maestri  v.  Board 
of  Assessors,  110  La.  517,  526,  34  So.  658,  per  Blanchard,  J.;  State  v. 
Real  Estate  Bank,  5  Pike  (5  Ark.),  595,  599,  41  Am.  Dec.  509,  per  Lacy,  J, 

80 


ESSENTIALS   OR   TEST   OF   MONOPOLIES  §  73 

that  every  grant  of  a  franchise  is,  so  far  as  that  grant 
extends,  necessarily  exclusive,  and  cannot  be  resumed  or 
interfered  with;  it  is  a  contract  whose  obligation  cannot 
be  constitutionally  impaired. ^'^  So  certain  franchises  are 
founded  upon  a  valuable  consideration  and  are  necessarily 
exclusive  in  their  nature  and  cannot  be  resumed  at  pleas- 
ure or  the  grant  impaired  by  any  act  of  the  government 
without  a  breach  of  contract. ^^  Again,  a  legislative  grant 
of  an  exclusive  right  to  supply  gas  to  a  municipality  and  its 
inhabitants,  through  pipes  and  mains  laid  in  the  public 
streets,  and  upon  condition  of  the  performance  of  the 
service  by  the  grantee,  is  the  grant  of  a  franchise  vested 
in  the  state  in  consideration  of  the  performance  of  a  pub- 
he  service,  and,  after  performance  by  the  grantee,  is  a 
contract  protected  by  the  constitution  of  the  United  States 
against  state  legislation  to  impair  it.^^ 

§  73.  Same  Subject. 

Legislative  grants  of  charters  or  franchises  whether 
granted  by  special  charters  or  under  general  laws,  confer 
privileges  which  are  exclusive  in  their  nature  as  against  all 
persons  upon  whom  smiilar  rights  have  not  been  conferred, 
so  that  any  attempted  exercise  of  such  rights,  without 

"  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  604, 
618,  637,  638,  643,  645,  9  L.  ed.  773,  per  Story,  J.,  in  dissenting  opinion. 

See  the  following  cases: 

Illinois:  Mills  v.  County  of  St.  Clair,  7  111.  197. 

New  Jersey:  Millville  Gas  Light  Co.  v.  Vineland  Light  &  Power  Co., 
72  N.  J.  Eq.  305,  65  Atl.  504;  State  v.  Freeholders  of  Hudson,  23  N.  J.  L. 
206,  209,  per  Carpenter,  J. 

New  York:  Staten  Island  Midland  R.  Co.  v.  Staten  Island  Electric  R. 
Co.,  54  N.  Y.  Supp.  598,  34  App.  Div.  181. 

North  Dakota:  Patterson  v.  WoUman,  5  N.  Dak.  608,  33  L.  R.  A.  536, 
67  N.  W.  1040. 

Ohio:  Bank  of  Toledo  v.  City  of  Toledo  (Toledo  Bank  v.  Bond),  1  Ohio 
St.  622,  635,  636,  per  Bartley,  C.  J. 

Paimijlvania:  Raybum  Water  Co.  v.  Armstrong  Water  Co.,  9  Pa.  Dist. 
R.  24,  30  Pittsb.  L.  J.  N.  S.  239. 

Obligation  of  contracts.    See  Joyce  on  Franchises,  §§  301,  340. 

»  Dyer  v.  l^uskaloosa  Bridge  Co.,  2  Port.  (Ala.)  296,  303,  304,  27  Am. 
Dec.  655,  per  Hitchcock,  J. 

"  New  Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650,  6  Sup. 
Ct.  252,  29  L.  ed.  516. 

G  81 


§  74  ESSENTIALS   OR  TEST  OF  MONOPOLIES 

legislative  sanction,  is  not  only  an  unwarranted  usurpa- 
tion of  power,  but  operates  as  a  direct  invasion  of  the 
property  rights  of  those  upon  whom  the  franchises  have 
been  so  conferred.  ^^  The  grant  of  every  charter  or  fran- 
chise or  privilege  is  "an  exclusive  one,  in  the  sense  that  all 
others  are  excluded  from  the  enjoyment  of  that  particular 
franchise  or  privilege.  The  true  test  is  not,  are  all  others 
excluded  from  the  enjoyment  of  that  particular  grant? 
But  are  all  others  excluded  from  the  enjoyment  of  a  like 
grant?  The  fact  that  no  others  enjoy  a  like  immunity 
does  not  render  the  immunity  exclusive.  It  is  not  whether 
others  enjoy  a  similar  privilege,  immunity  or  franchise, 
but  are  others  prohibited  from  a  similar  enjoyment  by 
reason  of  the  enactment.""  So,  in  a  California  case,  it  is 
said  that  franchises  are  necessarily  exclusive  in  character, 
otherwise  their  value  would  be  liable  to  be  destroyed  or 
seriously  impaired;  and  that  even  though  the  grant  does 
not  declare  the  privilege  to  be  exclusive,  yet  that  is  nec- 
essarily implied  from  its  nature. ^^ 

§  74.  When  Grants  of  Charters  or  Franchises  are  not 
Exclusive. 

In  a  case  in  the  Federal  Supreme  Court  it  is  held  that 
there  are  privileges  which  may  exist  in  their  full  entirety  in 
more  than  one  person,  and  the  privilege  or  franchise  or 
right  to  supply  the  inhabitants  of  a  city  with  light  or  water 
is  of  this  kind;  and  that  a  grant  of  power  conferring  such 
a  privilege  is  not  necessarily  a  grant  making  that  privilege 
exclusive.  ^^  And  although  the  term  "franchise"  is  some- 
times used  to  mean  an  exclusive  right  held  by  grant  from 
the  sovereign  power,  such  in  its  nature  that  the  same  right 
or  privilege  cannot  be  subsequently  granted  to  another 

»6  Millville  Gaslight  Co.  v.  Viueland  Light  &  Power  Co.,  72  N.  J.  Eq. 
305,  65  Atl.  504. 

"  Wood  V.  Common  Council  of  City  of  Binghamton,  56  N.  Y.  Supp. 
105,  111,  26  Misc.  208,  per  Mattice,  J. 

38  California  State  Teleg.  Co.  v.  Alta  Teleg.  Co.,  22  Cal.  399,  422,  per 
Crocker,  J. 

"  Water,  Light  &  Gas  Co.  of  Hutchinson  v.  City  of  Hutchinson,  207 
D.  S.  385,  28  Sup.  Ct.  135,  52  L.  ed.  257,  case  affirms  14i  Fed.  256. 

82 


ESSENTIALS   OR  TEST   OF   MONOPOLIES  §  74 

without  the  grant  operating  as  an  invasion  of  the  fran- 
chise of  the  first  grantee  and  of  his  property  rights.  The 
strictly  legal  signification  of  the  term  is  not,  however,  al- 
ways confined  to  exclusive  right  and  the  word  is  used  in 
law  to  designate  powers  and  privileges  which  are  not  al- 
ways exclusive  in  their  nature.''"  Again,  a  franchise  may 
consist  solely  in  being  a  corporation  and  carrying  on  busi- 
ness solely  in  a  corporate  capacity  and  still  be  also  a  right 
which  any  person  or  persons  may  exercise  without  any 
grant  from  the  State,  and,  therefore,  such  a  right  would 
not  be  an  exclusive  one,  and  the  corporation  would  be  a 
private  one  as  distinguished  from  a  public  one  with  no 
public  functions  which  it  would  be  under  obligation  to 
perform."  It  is  also  asserted  that  a  grant  of  a  public 
Ferry  Franchise  carries  with  it  no  exclusive  privilege,  and 
that  such  franchise  is  subject  to  the  power  of  the  proper 
authorities  under  state  laws  to  establish  such  other  public 
ferries  over  the  same  waters  as  public  convenience  de- 
mands, and  that  any  injury  thereby  sustained  by  the  first 
grantee  is  damnum  absque  injuria."^'  And  if  a  State  grants 
no  exclusive  privileges  to  one  company  which  it  has  incor- 
porated, it  impairs  no  contract  by  incorporating  a  second 
one  which  itself  largely  manages  and  profits  by  to  the  in- 
jury of  the  first,  ^^ 

«  Chicago  &  Western  Indiana  Rd.  Co.  v.  Dunbar,  95  111.  571,  576,  per 
Dickey,  J. 

«  Twelfth  St.  Market  Co.  v.  Philadelphia  &  Reading  Term.  R.  Co., 
142  Pa.  580,  590,  21  Atl.  989. 

*^'  Hudspeth  v.  Hall,  111  Ga.  510,  36  S.  E.  770. 

«  Turnpike  Co.  v.  State,  3  Wall.  (70  U.  S.)  210,  18  L.  ed.  180.  See  also 
Rockland  Water  Co.  v.  Camden  &  Rockland  Water  Co.,  80  Me.  544,  1  L. 
R.  A.  388,  15  Atl.  785.  Examine  Skaneateles  Water  Works  Co.  v.  Skan- 
eateles,  184  U.  S.  354,  46  L.  ed.  585,  22  Sup.  Ct.  400,  affirming  161  N.  Y. 
154,  55  N.  E.  562,  affirming  54  N.  Y.  Supp.  1115,  33  App.  Div.  642. 


83 


§75 


TEST  UNDER  SHERMAN   ANTI-TRUST  ACT 


CHAPTER  VIII 

NATURE  ESSENTIALS  OR  TEST  UNDER  SHERMAN  ANTI-TRUST 

ACT 


75.  Sherman    Anti-Trust    Act — 

Unlawful  Restraints  and 
Monopolies — What  is  Em- 
braced— Generally. 

76.  Labor  Combinations   Within 

Prohibition  of  Sherman 
Anti-Trust  Act. 

77.  Regulation    or    Restraint    of 

Commerce,  Intrastate,  In- 
terstate or  Foreign. 

78.  Monopoly — Exclusive  Right. 

79.  Monopoly — Size    or    Magni- 

tude of  Business. 

80.  Direct  and  Necessary  Effect 

Upon  Competition  in  In- 
terstate or  Foreign  Com- 
merce. 


§  8L  Same  Subject. 

82.  Fair  Regulation  of  Business — 

Indirect  or  Incidental  Ef- 
fect Upon  Competition  in 
Interstate  or  Foreign  Com- 
merce. 

83.  Reasonable  and  Unreasonable 

Restraints. 
83a.  The  "  Rule  of  Reason  "  and 
"  Light  of  Reason  "  Deci- 
sions 

84.  Conspiracy — Test    or  Essen- 

tials of,  Under  Sherman 
Anti-Trust  Act  —  Gener- 
aUy. 

85.  Conspiracy — Test   or   Essen- 

tials of,  Under  Sherman 
Anti-Trust  Act — Overt  Acts. 


§  75.  Sherman  Anti-Trust  Act — Unlawful  Restraints 
and  Monopolies — What  Is  Embraced — Generally. 

The  following  propositions  may  be  stated  in  the  prem- 
ises: (1)  The  Sherman  Anti-Trust  Act  ^  was  leveled  at 
only  unlawful  restraints  and  monopolies:  (2) When  Con- 
gress declared  contracts,  combinations  and  conspiracies  in 
restraint  of  trade  or  commerce  to  be  illegal,  it  did  nothing 
more  than  apply  to  interstate  commerce  a  rule  that  had 
long  been  applied  by  the  several  states  when  dealing  with 
combinations  that  were  in  restraint  of  their  domestic 
commerce:  (3)  combinations  even  among  private  manu- 
facturers or  dealers  whereby  interstate  or  international 
commerce  are  restrained  are  equally  embraced  by  the 
act :  2  (4)  under  this  act,  every  contract,  combination,  and 

1  See  §§  13,  14  herein. 

2  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  24  Sup.  Ct. 
436,  454,  48  L.  ed.  679,  698. 

84 


I 


TEST   UNDER   SHERMAN    ANTI-TRUST   ACT     §§  70,  77 

conspiracy  in  restraint  of  trade  among  the  states  is  illegal. 
Every  person  who  engages  in  any  such  combination  vio- 
lates that  law,  and  a  corporation  is  a  person;  ^  and:  (5) 
Before  a  contract  can  be  declared  illegal  under  the  Federal 
Anti-Trust  Act  it  must  appear  that  the  contract  is  clearly 
within  the  provisions  of  that  statute.^ 

§  76.  Labor  Combinations  Within  Prohibition  of  Sher- 
man Anti-Trust  Act. 

The  prohibition:  "Every  contract  or  combination  in  the 
form  of  trust  or  otherwise  in  restraint  of  trade  or  com- 
merce among  the  several  states  or  with  foreign  nations, 
is  hereby  declared  to  be  illegal"  in  the  Sherman  Anti- 
Trust  Act  ^  includes  all  combinations  of  labor  as  well  as  of 
capital;  it  includes  combinations  which  are  composed  of 
laborers  acting  in  the  interest  of  laborers.^ 

§  77.  Regulation  or  Restraint  of  Commerce,  Intra- 
state, Interstate  or  Foreign. 
The  Sherman  Anti-Trust  Act  has  no  reference  to  the 

» Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454. 

Corporations  as  Persons  see  §  13  herein. 

*  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508, 
56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901,  citing  Northern 
Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679,  24  Sup.  Ct. 
436;  United  States  v.  Trans-Missouri  Freight  Assoc.  166  U.  S.  290,  41 
L.  ed.  1007,  17  Sup.  Ct.  540;  Slaughter  v.  Thacker  Coal  &  Coke  Co.,  55 
W.  Va.  642,  47  S.  E.  247. 

5  See  §§  13,  14  herein. 

«  United  States  v.  Workingraen's  Amalgamated  Council  of  N.  O.  (U.  S. 
C.  C.)  54  Fed.  994,  26  L.  R.  A.  158,  case  affirmed  (U.  S.  C.  C.  A.)  57  Fed. 
85.  (In  this  case  the  United  States  filed  a  bill  under  the  Sherman  Act  in 
the  Circuit  Court  averring  the  existence  of  "a  gigantic  and  wide  spread 
combination  of  the  members  of  a  multitude  of  separate  organizations  for 
the  purpose  of  restraining  the  commerce  among  the  several  States  and  with 
foreign  countries"  and  upon  the  contention  that  the  statute  did  not  refer 
to  labor  combinations  and  the  court  granting  the  injunction,  held  as  stated 
in  the  text.)  Cited  in  Loewe  v.  Lawlor,  208  U.  S.  274,  301,  52  L.  ed.  403, 
28  Sup.  Ct.  219;  United  States  v.  Cassidy  (U.  S.  D.  C),  67  Fed.  698, 
705;  Grand  Jury,  In  re  (U.  S.  D.  C.)  62  Fed.  840,  841;  Thomas  v.  Cincin- 
nati, N.  O.  &  T.  P.  Ry.  Co.  (U.  S.  C.  C),  62  Fed.  803,  821;  United  States 
V.  Elliott  (U.  S.  C.  C"),  62  Fed.  801,  S()3;  Farmers'  Ivoan  &  Trust  Co.  v. 
Northern  Pac.  R.  Co.  (U.  S.  C.  C),  60  Fed.  803,  815;  United  States  v. 
Trans-Missouri  Freight  Assoc.  (U.  S.  C.  C.  A.)  58  Fed.  58,  71. 

85 


§  77  TEST   UNDER   SHERMAN   ANTI-TRUST  ACT 

mere  manufacture  or  production  of  articles  or  commod- 
ities within  the  hmits  of  the  several  States :  ^  for,  even 
though  the  jurisdiction  of  Congress  over  commerce  among 
the  States  is  full  and  complete,  it  has  none  over  commerce 
which  is  wholly  within  a  State;  ^  but  whilst  every  instru- 
mentality of  domestic  commerce  is  subject  to  State  Con- 
trol, every  instrumentality  of  interstate  commerce  may  be 
reached  and  controlled  by  national  authority,  so  far  as  to 
compel  it  to  respect  the  rules  for  such  commerce  lawfully 
established  by  Congress.^  It  follows,  therefore,  that  Con- 
gress has  no  jurisdiction  over  combinations  or  agreements 
so  far  as  they  relate  to  a  restraint  of  commerce  which  is 
wholly  intrastate;  nor  does  it  acquire  any  jurisdiction  over 
that  part  of  a  combination  or  agreement  which  relates  to 
commerce  wholly  within  a  State,  by  reason  of  the  fact 
that  the  combination  also  covers  and  regulates  commerce 
which  is  interstate.  ^°  It  is  held  that  the  monopoly  and 
restraint  denounced  by  the  Sherman  Anti-Trust  Act  "to 
protect  trade  and  commerce  against  unlawful  restraints 
and  monopolies"  are  a  monopoly  in  interstate  and  inter- 
national trade  or  commerce  and  not  a  monopoly  in  the 
manufacture  of  a  necessity  of  life;  that  it  is  for  the  States 
to  regulate  production,  and  the  authority  of  Congress  is 
limited  to  commerce  among  the  States.  ^^    The  Knight  case 

^  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  24  Sup.  Ct. 
436,  454,  48  L.  ed.  679,  698. 

8  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96.    See  Joyce  on  Franchises,  §§  367,  369. 

Subject  to  the  restrictions  imposed  by  the  constitution  upon  the  exer- 
cise of  all  power,  the  power  of  Congress  over  interstate  and  international 
commerce  is  as  full  and  complete  as  is  the  power  of  any  State  over  its 
domestic  commerce.  Northern  Securities  Co.  v.  United  States,  193  U.  S. 
197,  24  Sup.  Ct.  436,  454,  48  L.  ed.  679,  698. 

9  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  24  Sup.  Ct. 
436,  454,  48  L.  ed.  679,  698. 

10  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96. 

"  United  States  v.  E.  C.  Knight  &  Co.,  156  U.  S.  1,  39  L.  ed.  325,  15 
Sup.  Ct.  249.  This  case  is  commented  on  in  Addyston  Pipe  &  Steel  Co. 
V.  United  States,  175  U.  S.  211,  240,  44  L.  ed.  136,  20  Sup.  Ct.  96,  as 
follows:  "The  case  was  decided  upon  the  principle  that  a  combination 
simply  to  control  manufacture  was  not  a  violation  of  the  act  of  Congress, 
because  such  a  contract  or  combination  did  not  directly  control  or  affect 

86 


TEST   UNDER   SHERMAN   ANTI-TRUST  ACT  §  78 

is  considered  at  some  length  and  commented  on  by  Taft, 
Cir.  J.,'^"  as  follows:  "It  seems  to  us  clear  that,  from  the 
beginning  to  the  end  of  the  opinion,  the  chief  justice  draws 
the  distinction  between  a  restraint  upon  the  business  of 
manufacturing  and  a  restraint  upon  the  trade  or  commerce 
between  the  States  in  an  article  after  manufacture,  with 
the  manifest  purpose  of  sho^ving  that  the  regulating  power 
of  Congress  under  the  constitution  could  affect  only  the 
latter,  while  the  former  was  not  under  Federal  control  and 
rested  wholly  with  the  States.  Among  the  subjects  of  com- 
mercial regulation  by  Congress,  he  expressly  mentions  'con- 
tracts to  buy,  sell,  or  exchange  goods  to  be  transported 
among  the  several  States,'  and  leaves  it  plainly  to  be  in- 
ferred that  the  statute  does  embrace  combinations  and 
conspiracies  which  have  for  their  object  to  restrain,  and 
which  necessarily  operate  in  restraint  of,  the  freedom  of 
such  contracts." 

§  78.  Monopoly — Exclusive  Right. 

The  thing  essential  to  the  existence  of  a  monopoly  is 
the  concentration  of  business  in  the  hands  of  a  few,^- 
and  in  order  to  constitute  the  offense  of  monopolizing  or 
attempting  to  monopolize  under  the  act  of  Congress, 
known  as  the  Sherman  Anti-Trust  Act,  it  is  necessary  to 
acquire,  or  attempt  to  acquire,  an  exclusive  right  in  such 
commerce  by  means  which  will  prevent  others  from  en- 
gaging therein.  ^^  In  an  early  Federal  case  the  court  in 
construing  this  Statute  said:  ''A  monopoly  of  trade  em- 
braces two  essential  elements:  (1)  The  acquisition  of  an 

interstate  commerce,  but  that  contracts  for  the  sale  and  transportation 
to  other  States  of  specific  articles  were  proper  subjects  for  regulation 
because  they  did  form  part  of  such  commerce."  The  principal  case  is 
also  distinguished  in  Swift  &  Co.  v.  United  States,  196  U.  S.  375,  397,  49 
L.  ed.  518,  25  Sup.  Ct.  276,  see  note  under  §  82  herein. 

»'«  In  United  States  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  296, 
297,  29  C.  C.  A.  141. 

^-  National  Fireproofing  Co.  v.  IVIason  Builders  Assoc.  (U.  S.  C.  C.  A.) 
169  Fed.  259,  94  C.  C.  A.  535. 

"United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed. 
455,  4.57;  act  .luly  2,  1890,  26  Stat.  209,  chap.  647;  U.  S.  Comp.  Stat.  1901, 
p.  3200,  per  Sheppard,  Dist.  J. 

87 


§  79  TEST   UNDER   SHERMAN   ANTI-TRUST   ACT 

exclusive  right  to,  or  the  exclusive  control  of,  that  trade; 
and  (2)  the  exclusion  of  all  others  from  that  right  and 
control."  ^^  Again,  in  another  Federal  case  it  is  declared 
that  a  monopoly  "involves  the  element  of  an  exclusive 
privilege  or  grant  which  restrained  others  from  the  exer- 
cise of  a  right  or  liberty  which  they  had  before  the  mo- 
nopoly was  secured.  In  commercial  law  it  is  the  abuse  of 
free  commerce,  by  which  one  or  more  individuals  have 
procured  the  advantage  of  selling  alone  or  exclusively  all 
of  a  particular  kind  of  merchandise  or  commodity  to  the 
detriment  of  the  public.  *  *  *  There  is  embraced  two 
leading  elements,  viz.,  an  exclusive  right  or  privilege,  on 
the  one  side,  and  a  restriction  or  restraint  on  the  other, 
which  will  operate  to  prevent  the  exercise  of  a  right  or 
liberty  open  to  the  public  before  the  monopoly  was  se- 
cured." ^^ 

§  79.  Monopoly — Size  or  Magnitude  of  Business. 

The  essence  of  a  monopoly  "is  found  not  so  much  in 
the  creating  of  a  very  extensive  business  in  the  hands  of  a 
single  control."  The  size  of  a  business  alone  is  not  neces- 
sarily illegal;  it  is  not  in  itself  a  violation  of  the  Federal 
Anti-Trust  Act  against  unlawful  restraints  and  monopolies 
and  of  conspiring  to  monopolize.  ^^  The  criminal  act  in  the 
Statute  is  the  certain  and  necessary  prevention  of  all 
other  persons  from  engaging  in  such  business,  and  therefore 
stifling  competition.  The  evil  consists  in  the  destruction 
of  the  trade  of  all  other  persons  in  the  same  cormnodity 
and  not  merely  the  enlargement  of  the  trade  of  one  person 
or  corporation.  The  law  is  violated  by  the  crushing  of 
competition  by  means  of  force,  threats,  intimidation,  fraud, 

"United  States  v.  Trans-Missouri  Freight  Assoc,  58  Fed.  58,  82,  7 
C.  C.  A.  15,  24  L.  R.  A.  73  (S.  C.  166  U.  S.  290,  41  L.  ed.  1007,  17  Sup. 
Ct.  540);  per  Sanborn,  Cir.  J.,  a  case,  under  the  act  of  July  2,  1890,  26 
Stat.  209,  chap.  647,  Rev.  Stat.  Supp.  762,  of  restraint  of  interstate  com- 
merce, construction  of  the  statute  and  monopoly. 

'^/n  re  Greene,  52  Fed.  104,  116,  per  Jackson,  Cir.  J.,  a  case  of  con- 
struction of  act  of  July  2,  1890,  and  the  words  "monopolize"  or  "attempt 
to  monopolize." 

'8  See  §  13  herein  for  statute. 


TEST   UNDER   SHERxMAN   ANTI-TRUST   ACT  §  80 

or  artful  and  deceitful  means  and  practices,  which  violates 
the  law.  The  monopoly  contemplated  is  the  power  ac- 
quired over  the  traffic,  sale,  and  purchase  of  a  commodity, 
in  the  course  of  interstate  or  foreign  commerce,  by  which 
the  free  flow  of  such  commerce  and  competition  in  such 
commodity  is  necessarily  crushed  and  stifled.  ^^  So  it  is 
declared  that :  "Magnitude  of  business  does  not,  alone,  con- 
stitute a  monopoly,  nor  effort  at  magnitude  an  attempt 
to  monopolize.  To  offend  the  act  the  monopoly  must 
have  been  secured  by  methods  contrary  to  the  public 
policy  as  expressed  in  the  statutes  or  in  the  common  law. 
The  wrongful  element  in  a  monopoly  under  the  act  is  not 
necessarily  the  violation  of  some  penal  Statute,  but  may 
consist  of  other  acts  or  conduct  which  the  law  condemns 
and  the  benefit  of  which,  if  sought  in  a  civil  court  of  justice, 
could  not  be  obtained."  ^^ 

§  80.  Direct  and  Necessary  Effect  Upon  Competition 
in  Interstate  or  Foreign  Commerce. 

The  test  of  the  legality  of  a  contract  or  combination 
under  the  Sherman  Anti-Trust  Act  ^^  is  its  direct  and  nec- 
essary effect  upon  competition  in  interstate  or  interna- 
tional commerce.  The  act  embraces  and  declares  to  be 
illegal  every  contract  combination  or  conspiracy  in  what- 
ever form,  of  whatever  nature  and  whoever  may  be  parties 
to  it,  which  directly  or  necessarily  operates  in  restraint 
of  trade  or  commerce  among  the  several  States  or  with 
foreign  nations.  If  the  necessary  effect  of  a  contract, 
combination  or  conspiracy  is  to  stifle,  or  directly  and 
substantially  to  restrict,  free  competition  in  interstate 
or  international  commerce  it  is  within  the  terms  of  that 

"  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed. 
455,  458. 

'« United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C.)  173  Fed.  177,  195, 
per  Hook,  Cir.  J.  Since  writing  the  above  text  this  case  has  been  modified 
and  affirmed.     See  "  Appendix  A  "  herein. 

"Size  is  not  made  the  test."  United  States  v.  American  Tobacco  Co. 
(U.  S.  C.  C),  164  Fed.  700,  701,  702,  per  Lacombe,  Cir.  J.  Case  reversed, 
etc.     See  "  Appendix  A  "  herein.     See  this  case  in  note  to  §  80  herein. 

"See  §§  13,  14  herein. 

89 


§  80  TEST   UNDER   SHERMAN   ANTI-TRUST  ACT 

enactment  and  violates  the  law.  The  natural  effect  of 
competition  is  to  increase  commerce,  and  an  agreement 
whose  direct  effect  is  to  prevent  this  play  of  competition 
restrains  instead  of  promotes  trade  and  commerce.^"    So 

™  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed. 
679,  698,  24  Sup.  Ct.  436,  454;  Addyston  Pipe  &  Steel  Co.  v.  United 
States,  175  U.  S.  211,  44  L.  ed.  136,  20  Sup.  Ct.  96;  Anderson  v.  United 
States,  171  U.  S.  604,  43  L.  ed.  300,  19  Sup.  Ct.  50,  quoted  from  in  United 
States  V.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  476,  per  Buffington, 
Cir.  J.;  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177,  178, 
quoted  from  in  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427, 
426,  per  Buffington,  Cir.  J.  See  also  State  v.  Duluth  Board  of  Trade, 
107  Minn.  506,  544,  121  N.  W.  395. 

"The  contract  condemned  by  the  statute  is  one  whose  direct  and  im- 
mediate effect  is  a  restraint  upon  that  kind  of  trade  or  commerce  which 
is  interstate."  Hopkins  v.  United  States,  171  U.  S.  578,  592,  43  L.  ed. 
290,  19  Sup.  Ct.  40,  per  Mr.  Justice  Peckham;  opinion  quoted  from  in 
United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  476,  per  Buffing- 
ton, Cir.  J. 

The  shutting  off  of  the  operation  of  the  general  law  of  competition  is  at 
the  basis  of  the  statutory  prohibition  in  relation  to  contracts  in  restraint 
of  trade  or  commerce.  See  United  States  v.  Joint  Traffic  Assoc,  171 
U.  S.  505,  19  Sup.  Ct.  25,  43  L.  ed.  259.  Opinion  in  case  is  quoted  from  in 
United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  476,  per  Buffing- 
ton, J. 

The  test  of  an  "unlawful  combination"  under  the  Federal  anti-trust 
act,  is  its  necessary  effect  upon  free  competition  in  commerce  among  the 
States  or  with  foreign  nations.  A  combination,  the  necessary  effect  of 
which  is  to  stifle,  or  directly  and  substantially  to  restrict  such  competition 
is  unlawful  under  that  act.  Union  Pacific  Coal  Co.  v.  United  States  (U.  S. 
C.  C.  A.),  173  Fed.  737. 

The  Sherman  Anti-Trust  Act  looks  solely  to  competition,  and  to  the 
giving  of  competition  full  play,  by  making  illegal  any  effort  at  restriction 
upon  competition.  Whatever  combination  has  the  direct  and  necessary 
effect  of  restricting  competition,  is  witliin  the  meaning  of  said  statute,  a 
restraint  of  trade.  United  States  v.  Swift  &  Co.  (U.  S.  C.  C),  122  Fed. 
529.  Decree  in  case  modified  and  affirmed  in  Swift  &  Co.  v.  United  States, 
196  U.  S.  375,  25  Sup.  Ct.  276,  49  L.  ed.  518. 

"Disregarding  various  dicta  and  following  the  several  propositions 
which  have  been  approved  by  the  successive  majorities  of  the  Supreme 
Court,  this  language,  'every  contract,  combination  in  the  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce  among  the 
several  states,  or  with  foreign  nations'  is  to  be  construed  as  prohibiting 
any  contract  or  combination  whose  direct  effect  is  to  prevent  the  free 
play  of  competition,  and  thus  tend  to  deprive  the  country  of  the  services 
of  any  number  of  independent  dealers  however  small.  *  *  *  Every  ag- 
gregation of  individuals  or  corporations,  formerly  independent,  immedi- 
ately upon  its  formation  terminates  an  existing  competition,  whether  or 
not  some  other  competition  may  subsequently  arise.    The  act  as  above 

90 


TEST   UNDER   SHERMAN   ANTI-TRUST   ACT  §  SO 

it  is  declared  in  a  case  in  the  Circuit  Court  that  the  real 
question  in  every  case  which  arises  under  the  Anti-Trust 
Act  is  whether  or  not  the  contract,  combination  or  con- 
spiracy challenged  is  in  restraint  of  trade  among  the 
States.  ''It  has  now  been  settled  by  repeated  decisions  of 
the  Supreme  court  that  this  question  must  be  tried,  not 
by  the  intent  \vith  which  the  combination  was  made, 
nor  by  its  effect  upon  traders,  producers  or  consumers, 
but  by  the  necessary  effect  which  it  has  in  defeating  the 
purpose  of  the  law.  That  purpose  was  to  prevent  the  stifl- 
ing, or  substantial  restriction  of  competition,  and  the  test 
of  the  legality  which  was  inspired  by  this  purpose  is  its 
direct  and  necessary  effect  upon  competition  in  conmierce 
among  the  States.  If  its  necessary  effect  is  to  stifle  or  to 
directly  and  substantially  restrict  free  competition,  it  is 
a  contract,  combination,  or  conspiracy  in  restraint  of  trade, 
and  it  falls  under  the  ban  of  the  law."  ^^  Again,  in  order  to 
vitiate  a  combination,  such  as  the  act  of  Congress  con- 
demns, it  need  not  be  shown  that  the  combination  in  fact, 
results  or  will  result  in  a  total  suppression  of  trade  or  in  a 
complete  monopoly,  but  it  is  only  essential  to  show  that  by 

construed  prohibits  every  contract  or  combination  in  restraint  of  com- 
petition. Size  is  not  made  the  test."  United  States  v.  American  Tobacco 
Co.  (U.  S.  C.  C),  164  Fed.  700,  701,  702,  per  Lacombe,  Cir.  J.  Case  re- 
versed, etc.     See  "  Appendix  A  "  herein. 

"  Whitwell  V.  Continental  Tobacco  Co.  (U.  S.  C.  C),  125  Fed.  454,  457, 
458,  per  Sanborn,  Cir.  J.,  citing  the  following  cases:  Addyston  Pipe  & 
Steel  Co.  V.  United  States,  175  U.  S.  211,  234,  20  Sup.  Ct.  96,  44  L.  ed. 
136;  United  States  v.  Joint  Traffic  Assoc,  171  U.  S.  505,  576,  577,  19  Sup. 
Ct.  25,  43  L.  ed.  259;  United  States  v.  Trans-Missouri  Freight  Assoc,  166 
U.  S.  290,  339,  340,  342,  17  Sup.  Ct.  540,  41  L.  ed.  1007;  United  States  v. 
Northern  Securities  Co.  (U.  S.  C.  C),  120  Fed.  721,  725;  (Northern  Se- 
curities Co.  v.  United  States,  193  U.  S.  197,  328,  48  L.  ed.  679,  24  Sup.  Ct. 
436);  Gibbs  v.  McxMeeley,  118  Fed.  120,  55  C.  C.  A.  70,  60  L.  R.  A.  152; 
Chesapeake  &  Ohio  Fuel  Co.  v.  United  States,  115  Fed.  610,  619,  53  C.  C. 
A.  256,  265;  Lowry  v.  Tile  Mantel  &  Grate  Assoc.  (U.  S.  C.  C.)  98  Fed. 
817,  826,  Id.  (U.  S.  C.  c!),  106  Fed.  40,  45;  United  States  v.  Addyston 
Pipe  &  Steel  Co.,  85  Fed.  271,  294,  29  C.  C.  A.  141,  163,  46  L.  R.  A.  122; 
United  States  v.  Coal  Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252;  United 
States  V.  Jellico  Mountain  Coal  &  Coke  Co.  (U.  S.  C.  C),  46  Fed.  432, 
12  L.  R.  A.  753;  Brown  v.  Jacobs  Pharmacy  Co.,  115  Ga.  429,  41  S.  E.  553, 
57  L.  R.  A.  547;  Arnot  v.  Pittston  &  Elmira  Coal  Co.,  68  N.  Y.  558,  23 
Am.  Rep.  190;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  173,  8 
Am.  Rep.  159. 

91 


§  81  TEST   UNDER   SHERMAN   ANTI-TRUST  ACT 

its  necessary  operation  it  tends  to  restrain  interstate  or 
international  trade  or  commerce  or  tends  to  create  a  mo- 
nopoly in  such  trade  or  commerce  and  to  deprive  the  pub- 
lic of  the  advantages  that  flow  from  free  competition.  ^^ 
So  in  order  to  maintain  a  bill  for  an  injunction,  under  the 
Sherman  Anti-Trust  Act,  the  government  is  not  obliged 
to  show  that  the  agreement  in  question  was  entered  into 
for  the  purpose  of  restraining  trade  or  commerce  if  such 
restraint  is  its  necessary  effect.  ^^ 

§81.  Same  Subject.' 

Any  agreement  or  combination  which  directly  operates, 
not  alone  upon  the  manufacture,  but  upon  the  sale,  trans- 
portation and  delivery  of  an  article  of  interstate  commerce, 
by  preventing  or  restricting  its  sale,  thereby  regulates 
commerce  to  that  extent,  and  thus  trenches  upon  the 
power  of  the  national  legislature,  and  violates  the  statute. 
Thus  where  certain  contracts  relate  to  the  sale  or  trans- 
portation to  other  States  of  specific  articles  as  a  direct  and 
immediate  result  of  the  combination  entered  into,  and  they 
restrain  the  manufacturing,  purchase,  sale  or  exchange  of 
the  manufactured  article  among  the  several  States,  and 
enhance  their  value  they  come  within  the  provisions  of  the 
Federal  statute.  And  when  the  direct,  immediate  and 
intended  effect  of  a  contract  or  combination  among  dealers 
in  a  commodity  is  the  enhancement  of  its  price,  it  amounts 
to  a  restraint  of  trade  in  the  commodity,  even  though 
contracts  to  buy  it  at  the  enhanced  price  are  being  made.-* 
Every  combination  or  conspiracy,  therefore,  which  would 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  24  Sup.  Ct. 
436,  454,  48  L.  ed.  679,  698. 

Does  the  contract  or  combination  have  the  necessary  effect  to  restrain  inter- 
state commerce?  This  constitutes  the  question  in  each  case.  Chesapeake 
&  Ohio  Fuel  Co.  v.  United  States,  115  Fed.  610,  619,  53  C.  C.  A.  256,  265, 
per  Day,  Cir.  J. 

"  United  States  v.  Trans-Missouri  Freight  Assoc,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540. 

As  to  allegation  of  purpose  in  indictment  see  United  States  v.  Patterson 
(U.  S.  C.  C),  55  Fed.  605,  639,  640. 

"  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96.  Opinion  in  case  is  quoted  from  in  United  States  y. 
Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  476,  per  Buffington,  Cir.  J. 

92 


TEST   UNDER   SHERMAN    ANTI-TRUST  ACT  §  82 

f 

extinguish  competition  between  otherwise  competing  rail- 
roads engaged  in  interstate  trade  or  commerce,  and  which 
would  in  that  way  restrain  such  trade  or  commerce,  is 
made  illegal  by  the  Anti-Trust  Act.  Thus  the  consolida- 
tion of  parallel  and  competing  interstate  railroad  lines,  for 
the  purpose  of  holding  the  shares  of  stock  of  the  constitu- 
ent companies,  the  stockholders,  in  lieu  of  the  stock  of 
said  consolidating  companies,  to  receive  shares  in  the 
holding  company,  destroys  competition  between  the  origi- 
nal companies;  and  although  no  individual  investment 
is  involved,  still  where  there  is  a  combination  by  sev- 
eral individuals  separately  owning  stock  in  two  compet- 
ing railroad  companies,  engaged  in  interstate  commerce, 
to  place  the  control  of  both  in  a  single  corporation,  which 
is  organized  for  that  purpose  expressly  and  as  a  mere 
instrumentality  by  which  the  competing  railroads  can  be 
combined,  the  resulting  combination  is  a  direct  restraint 
of  trade  by  destroying  competition.  It  is  illegal  and  a 
"trust"  within  the  meaning  of  said  Anti-Trust  Act,  but 
if  not,  it  is  a  combination  in  restraint  of  interstate  or  inter- 
national commerce  so  as  to  come  within  the  condemnation 
of  that  enactment. ^^  So  the  natural,  direct  and  immediate 
effect  of  competition  in  the  case  of  railroad  rates  affecting 
interstate  commerce,  would  be  to  lower  rates  and  so  in- 
crease the  demand  for  commodities,  the  supplying  of 
which  increases  commerce  and  the  fact  that  the  creation  of 
an  association  to  fix  rates  and  fares  on  competitive  inter- 
state traffic  prevented  any  real  competition  between  the 
railway  systems  involved,  operates  to  restrain  the  trade  or 
commerce  carried  on  by  them.^^ 

§  82.  Fair  Regulation  of  Business — Indirect  or  Inci- 
dental Effect  Upon  Competition  in  Interstate  or  Foreign 
Commerce. 

We  have  seen  that,  in  order  to  come  within  the  provi- 

»  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  4S  L.  ed. 
679,  24  Sup.  Ct.  436. 

^  United  States  v.  Joint  Traffic  Assoc,  171  U.  S.  505,  577,  19  Sup.  Ct. 
25,  43  L.  ed.  259.  Opinion  in  case  is  quoted  from  in  United  States  v. 
Reading  Co.  (U.  S.  C),  183  Fed.  427.  476,  per  Buffington,  Cir.  J. 

93 


§  82  TEST   UNDER   SHERMAN   ANTI-TRUST   ACT 

sions  of  the  Sherman  Anti-Trust  Act,^^  the  du'ect,  immedi- 
ate or  necessary  effect  of  an  agreement  or  combination 
must  be  in  restraint  of  that  trade  or  commerce  which  is 
among  the  several  States,  or  with  foreign  nations.  ^^  But 
where  the  subject-matter  of  the  agreement  does  not  di- 
rectly relate  to  and  act  upon  and  embrace  interstate  or 
foreign  commerce  and  where  the  undisputed  facts  clearly 
show  that  the  purpose  of  an  agreement  was  not  to  regulate, 
obstruct  or  restrain  that  commerce,  but  that  it  was  entered 
into  with  the  object  of  properly  and  fairly  regulating  the 
transaction  of  the  business  in  which  the  parties  to  the  agree- 
ment were  engaged  such  agreement  will  be  upheld  as  not 
within  the  statute,  where  it  can  be  seen  that  the  character 
and  terms  of  the  agreement  were  well  calculated  to  attain 
the  purpose  for  which  it  was  formed,  and  where  the  effect  of 
its  formation  and  enforcement  upon  interstate  trade  or 
commerce  is  in  any  event  but  indirect  and  incidental,  and 
not  its  purpose  or  object. ^^  So  an  agreement  entered  into 
for  the  purpose  of  promoting  the  legitimate  business  of  an 
individual  or  corporation,  with  no  purpose  to  thereby 
affect  or  restrain  interstate  commerce  would  not  seem  to 
be  covered  by  the  act,  although  the  agreement  might  in- 
directly and  remotely  affect  commerce.  ^°  If  a  combina- 
tion under  said  Anti-Trust  Act  ^^  promotes  or  but  inciden- 
tally or  indirectly  restricts  competition,  while  its  main 
purpose  and  chief  effect  are  to  foster  the  trade  and  to  in- 
crease the  business  of  those  who  make  and  operate  it,  then 
it  is  not  a  contract,  combination  or  conspiracy  in  restraint 
of  trade,  within  the  true  interpretation  of  said  act,  and  it 


»  See  §§  13,  14  herein. 

28  See  §§  80,  81,  herein. 

29  Anderson  v.  United  States,  171  U.  S.  604,  43  L.  ed.  300,  19  Sup.  Ct. 
50.  (Suit  to  dissolve  a  voluntary  unincorporated  association  called  the 
Traders'  Live  Stock  Exchange.)  See  also  Hopkins  v.  United  States,  171 
U.  S.  578,  592,  43  L.  ed.  290,  19  Sup.  Ct.  40. 

30  United  States  v.  Joint  Traffic  Assoc,  171  U.  S.  505,  568,  19 
Sup.  Ct.  25,  43  L.  ed.  259,  quoted  in  Chesapeake  &  Ohio  Fuel  Co. 
V.  United  States,  115  Fed.  610,  619,  622,  53  C.  C.  A.  256,  265,  268, 
per  Day,  Cir.  J. 

*i  See  §  13  herein. 

94 


TEST   UNDER   SHERMAN   ANTI-TRUST   ACT  §  82 

is  not  subject  to  its  denunciation.^^  So  even  though  it  be 
conceded  that  a  monopoly  is  created  in  the  production 
within  a  State  of  a  necessity  of  life  still  it  may  bear  no 
such  direct  relation  to  commerce  between  the  States  or 
with  foreign  countries  as  to  come  within  the  provisions 
of  the  Sherman  Anti-Trust  Act.^^  The  court  in  this  case 
said :  "Doubtless  the  power  to  control  the  manufacture  of  a 
given  thing  involves  in  a  certain  sense  the  control  of  its 
disposition,  but  this  is  a  secondary  and  not  the  primary 
sense;  and  although  the  exercise  of  that  power  may  result 
in  bringing  the  operation  of  commerce  into  play,  it  does 
not  control  it,  and  afTects  it  only  incidentally  and  indirect- 
ly. Commerce  succeeds  to  manufacture,  and  is  not  a  part 
of  it.  *  *  *  Contracts,  combinations,  or  conspiracies  to 

"  Whitwell  V.  Continental  Tobacco  Co.  (U.  S.  C.  C),  125  Fed.  454, 
citing  the  following  cases: 

United  States:  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S. 
211,  245,  20  Sup.  Ct.  96,  44  L.  ed.  136;  Anderson  v.  United  States,  171 
U.  S.  604,  616,  19  Sup.  Ct.  50,  43  L.  ed.  300;  Hopkins  v.  United  States,  171 
U.  S.  578,  592,  19  Sup.  Ct.  40,  43  L.  ed.  290;  United  States  v.  Joint  Traffic 
Association,  171  U.  S.  505,  568,  19  Sup.  Ct.  25,  31,  43  L.  ed.  259;  Allgeyer 
V.  Louisiana,  165  U.  S.  578,  589,  7  Sup.  Ct.  427,  41  L.  ed.  832;  Butchers' 
Union  Slaughter  House  &  Live  Stock  Landing  Co.  v.  Crescent  City  Live 
Stock  Landing  &  Slaughter  House  Co.,  Ill  U.  S.  746,  755,  4  Sup.  Ct.  652, 
28  L.  ed.  585;  Grice,  In  re  (U.  S.  C.  C.)  79  Fed.  627,  644;  United  States 
Chemical  Co.  v.  Provident  Chemical  Co.  (U.  S.  C.  C.)  64  Fed.  946;  Greene, 
In  re  (U.  S.  C.  C.)  52  Fed.  104,  115,  116,  117. 

California:  Schwalm  v.  Holmes,  49  Cal.  665;  California  Steam  Naviga- 
tion Co.  V.  Wright,  6  Cal.  258,  65  Am.  Dec.  511. 

Illinois:  Brown  v.  Rounsavel,  78  III.  589. 

Iowa:  Sraalley  v.  Greene,  52  Iowa,  241,  3  N.  W.  78,  35  Am.  Rep.  267. 

Kentucky:  Commonwealth  v.  Grinstead,  111  Ky.  223,  63  S.  W.  427. 

New  York:  People  v.  Gillson,  109  N.  Y.  389,  398,  17  N.  E.  343,  4  Am. 
St.  Rep.  465;  Walsh  v.  Dwight,  58  N.  Y.  Supp.  91,  93. 

Texas:  Welch  v.  Phelps  ct  Bigelow  Windmill  Co.,  89  Tex.  653,  36  S.  W. 
71. 

West  Virginia:  State  v.  Goodwill,  33  W.  Va.  179,  10  S.  E.  285,  286,  6 
L.  R.  A.  621,  25  Am.  St.  Rep.  863. 

If  the  necessary  effect  of  a  combination  is  but  incidentally  and  indirectly 
to  restrict  competition,  while  its  chief  result  is  to  foster  the  trade  and 
increase  the  business  of  those  who  make  and  operate  it,  it  does  not  fail 
under  the  ban  of  the  law.  LTnion  Pacific  Coal  Co.  v.  United  States  (U.  S. 
C.  C.  A.),  173  Fed.  737;  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C), 
173  Fed.  177.  See  also  State  v.  Duluth  Board  of  Trade,  107  Minn.  506 
544,  121  N.  W.  395. 

'*  See  §  13  herein  for  statute. 

95 


§  S3  TEST   UNDER   SHERMAN   ANTI-TRUST  ACT 

control  domestic  enterprise  in  manufacture  *  *  *,  pro- 
duction in  all  its  forms  *  *  *  ^  might  unquestionably  tend 
to  restrain  external  as  well  as  domestic  trade,  but  the  re- 
straint would  be  an  indirect  result,  however  inevitable  and 
whatever  its  extent,  and  such  result  would  not  necessarily 
determine  the  object  of  the  contract,  combination  or  con- 
spiracy." ^^  The  Sherman  Anti-Trust  Act  has  no  applica- 
tion where  the  contract  sought  to  be  declared  illegal  con- 
cerns a  legitimate  business  transaction  and  the  unlawful 
restraint  complained  of  is  only  incidental  or  collateral, 
or  has  only  a  remote  and  indirect  bearing  upon  interstate 
commerce.  ^^ 

§  83.  Reasonable  and  Unreasonable  Restraints. 

The  Sherman  Anti-Trust  Act  ^^^  is  not  limited  to  re- 
straints of  interstate  and  international  trade  or  commerce 
that  are  unreasonable  in  their  nature  but  embraces  all  di- 
rect restraints,  reasonable  or  unreasonable,  imposed  by  any 
combination,  conspiracy  or  monopoly  upon  such  trade  or 
commerce.  ^^    At  the  common  law  contracts  were  invalid 

"  United  States  v.  E.  C.  Knight  &  Co.,  156  U.  S.  1,  12,  16,  39  L.  ed.  325, 
15  Sup.  Ct.  249.  This  case  is  distinguished  in  Swift  &  Co.  v.  United 
States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct.  276,  in  that  the  effect  of 
the  combination  in  the  Swift  case  upon  interstate  commerce  was  direct 
and  not  accidental,  secondary  or  remote  as  in  the  Knight  case;  and  that 
it  does  not  matter  if  a  combination  embraces  restraint  and  monopoly  of 
trade  within  a  single  state  if  it  also  embraces  and  is  directed  against  com- 
merce among  the  States.  It  was  also  held,  in  the  Swift  case,  that  even 
if  the  separate  elements  of  a  scheme  or  combination  are  lawful,  when  they 
are  bound  together  by  a  common  intent  as  parts  of  an  unlawful  scheme 
to  monopolize  interstate  commerce,  the  plan  may  make  the  parts  unlawful. 
See  also  comment  on  the  Knight  case  in  Addyston  Pipe  &  Steel  Co.  v. 
United  States,  175  U.  S.  211,  240,  44  L.  ed.  136,  20  Sup.  Ct.  96.  See  note 
under  §  77  herein. 

"  Harbison- Walker  Refractories  Co.  v.  Stanton,  227  Pa.  St.  55,  75  Atl. 
988. 

"<*  See  §  13  herein. 

'«  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

The  prohibitory  provisions  of  the  Sherman  Anti-Trust  Act  apply  to  all 
contracts  in  restraint  of  interstate  or  foreign  trade  or  commerce  without 
exception  or  limitation;  and  are  not  confined  to  those  in  which  the  re- 
straint is  unreasonable.    United  States  v.  Trans-Missouri  Freight  Assoc, 

96 


TEST   UNDER   SHERMAN   ANTI-TRUST   ACT  §  83 

when  in  unreasonable  restraint  of  trade,  and  were  not 
enforced  by  the  courts.  But,  in  the  exercise  of  its  right 
to  regulate  interstate  and  foreign  commerce  and  to  pro- 
hibit individuals  by  contract  or  otherwise  from  impeding 
the  free  and  untrammelled  flow  of  such  trade,  Congress 
has  prohibited  all  contracts  in  restraint  of  trade,  irrespec- 
tive of  the  determination  by  the  courts  of  the  question 
whether  such  restraint  is  reasonable  or  unreasonable,  or 
whether  the  contract  would  have  been  illegal  at  the  com- 
mon law  or  not.    The  Federal  xVnti-Trust  Act  leaves  for 


166  U.  S.  290,  17  Sup.  Ct.  540,  41  L.  ed.  1007  (cited  in  United  States  v. 
Swift  &  Co.  [U.  S.  C.  C],  122  Fed.  529,  534).  See  also  United  States  v. 
Joint  Traffic  Assoc,  171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25,  where 
the  court  considered  that  it  was  no  defense  that  the  rates  established  or 
to  be  established  were  reasonable,  and  that  so  far  as  the  rates  and  fares 
were  concerned  there  was  no  substantial  difference  between  the  agree- 
ment in  this  case  and  the  one  set  forth  in  the  case  of  United  States  v. 
Trans-Missouri  Freight  Assoc. 

"When  the  Anti-Trust  Act  was  passed  the  rule  had  become  firmly  es- 
tablished in  jurisprudence  of  England  and  the  United  States  that  the 
validity  of  contracts  restricting  competition  was  to  be  determined  by  the 
reasonableness  of  the  restriction.  If  the  main  purpose  or  natural  and  in- 
evitable effect  of  a  contract  was  to  suppress  competition  or  create  a  mo- 
nopoly it  was  illegal.  If  a  contract  imposed  a  restriction  that  was  unrea- 
sonably injurious  to  the  public  interests,  or  a  restriction  that  was  greater 
than  the  interest  of  the  party  in  whose  favor  it  was  imposed  demanded, 
it  was  illegal.  But  contracts  made  for  a  lawful  purpose,  which  were  not 
unreasonably  injurious  to  the  public  welfare,  and  which  imposed  no 
heavier  restraint  upon  trade  than  the  interest  of  the  favored  party  re- 
quired, had  been  uniformly  sustained,  notwithstanding  their  tendency  to 
some  extent  to  check  competition.  The  public  welfare  was  first  consid- 
ered, and  the  reasonableness  of  the  restriction  determined  under  these 
rules  in  the  light  of  all  the  facts  and  circumstances  of  each  particular 
case."  United  States  v.  Trans-Missouri  Freight  Assoc,  58  Fed.  58,  72, 
7  C.  C.  A.  15,  24  L.  R.  A.  73  (s.  c.  166  U.  S.  290),  per  Sanborn,  Cir.  J. 

"And  it  has  been  decided  that  not  only  unreasonable  but  all  direct 
restraints  of  trade  are  prohibited,  the  law  being  thereby  distinguished 
from  the  common  law."  Shawnee  Compress  Co.  v.  Anderson,  209  U.  S. 
423,  434,  28  Sup.  Ct.  572,  52  L.  ed.  865,  per  Mr.  Justice  McKenna,  quoted 
in  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700,  717, 
which  was  reversed.     See  "  Appendix  A  "  herein. 

Restraint  of  trade  is  not  dependent  upon  any  consideration  of  reason- 
ableness or  unreasonableness  in  the  combination  averred.  United  States 
v.  Swift  &  Co.  (U.  S.  C.  C.)  122  Fed.  529,  decree  in  case  modified  and 
affirmed  in  Swift  &  Co.  v.  United  States,  196  U.  S.  375,  49  L.  Ed.  518, 
25  Sup.  Ct.  276. 

7  97 


§  83a  TEST  UNDER  SHERMAN  ANTI-TRUST  ACT 

consideration  by  judicial  authority  no  question  of  this 
character,  but  all  contracts  and  combinations  are  de- 
clared illegal  if  in  restraint  of  trade  or  commerce  among 
the  States.  The  question  is,  in  each  case,  does  the  con- 
tract or  combination  have  the  necessary  effect  to  restrain 
interstate  commerce?  ^^  Does  a  contract  or  combination, 
alleged  to  be  in  violation  of  the  Sherman  Anti-Trust  Act,^* 
constitute  any  restraint  whatever  upon  trade  or  com- 
merce ?  If  it  does  it  is  within  the  prohibition  of  the  stat- 
ute and  it  is  immaterial  that  in  view  of  all  the  circum- 
stances and  conditions  the  restraint  is  a  fair  and  reasonable 
one;  '^  it  is  also  immaterial  that  the  price  of  the  commodity 
has  actually  been  increased  thereby.  So  whether  the  re- 
straint of  trade  imposed  by  the  combination  is  reasonable 
or  unreasonable  is  immaterial  in  an  action  to  recover  treble 
damages  under  the  Federal  Anti-Trust  Act.'*'' 

§  83a.  The  "  Rule  of  Reason  "  and  "  Light  of  Reason  " 
Decisions. 

Since  the  preceding  and  other  sections — hereinafter  ap- 
pearing and  covering  substantially  like  doctrines  of  the 
Federal  courts  as  set  forth  in  their  decisions — were  written, 
the  Standard  Oil  Case  ^^  has  been  decided  enunciating 
the  "rule  of  reason"  or  "light  of  reason"  doctrine,  concern- 
ing which  Mr.  Chief  Justice  White  says:  "If  the  criterion 
by  which  it  is  to  be  determined  in  all  cases  whether  every 
contract,  combination,  etc.,  is  a  restraint  of  trade  within 
the  intendment  of  the  law,  is  the  direct  or  indirect  effect 
of  the  acts  involved,  then  of  course  the  rule  of  reason  be- 
comes the  guide,  and  the  construction  which  we  have  given 

"  Chesapeake  &  Ohio  Fuel  Co.  v.  United  States,  115  Fed.  610,  619,  53 
C.  C.  A.  256,  265,  per  Day,  Cir.  J. 

^  See  §§  13,  14  herein. 

»  United  States  v.  Coal  Dealers'  Assoc.  (U.  S.  C.  C),  85  Fed.  252. 

«  Thomsen  v.  Union  Castle  Mail  S.  S.  Co.  (U.  S.  C.  C.  A.),  166  Fed. 
251,  92  C.  C.  A.  315,  revising  149  Fed.  433. 

^"^  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed.  — ,  31  Sup. 
Ct.  502  modifying  and  affirming  173  Fed.  177,  followed  in  United  States 
V.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed.  — ,  31  Sup.  Ct.  632  re- 
versing 164  Fed.  700.    See  "Appendix  A"  herein, 

98 


t 


TEST   UNDER   SHERMAN   ANTI-TRUST   ACT  §  83a 

the  statute,  instead  of  being  refuted  by  the  cages;  reUed 
upon,  is  by  these  cases  demonstrated  to  be  correct.-  This 
is  true,  because  as  the  construction  which  we  have. de- 
duced from  the  history  of  the  act  and  the.s^ialysis  of  ii-s 
text  is  simply  that  in  every  case  where  it  is  ciaimed  that  aa 
act  or  acts  are  in  violation  of  the  statute  the  ru]e  of  reason, 
in  the  light  of  the  principles  of  la\y  and.-  ths  pub-lin  poUcy 
which  the  act  embodies,  must  be. applied.  FiKi-m  this -it 
follows,  since  that  rule  and  thp  result  of  the  test  as  to  di-. 
rect  or  indirect,  come  to  one  and  the  same  thing,  thatr  the 
difference  between  the  two  is  iherefone'Only  that  which 
obtains  between  things  which  do  not  differ  f^,tr all.  *  ■*.  ^' 
The  construction  which  we  now  give  the  statute  does  not 
in  the  slightest  degree  conflict  with  a  single  previous  case 
decided  concerning  the  Anti-Trust  law  aside  from  the  con- 
tention as  to  the  Freight  Association  and  Joint  Trajffic 
Cases  ^^  and  because  every  one  of  those  cases  applied  the 
rule  of  reason  for  the  purpose  of  determining  whether  the 
subject  before  the  court  was  within  the  statute." 

These  two  cases  were  limited  and  qualified  by  the  court 
in  so  far  as  they  conflict  with  the  construction  above  given 
to  the  Anti-Trust  Act.  It  was  also  held  that  in  prior  cases 
where  general  language  has  been  used,  to  the  effect  that 
reason  could  not  be  resorted  to  in  determining  whether  a 
particular  case  was  within  the  prohibitions  of  the  Anti- 
Trust  Act,  the  unreasonableness  of  the  acts  under  con- 
sideration was  pointed  out  and  those  cases  are  only  author- 
itative by  the  certitude  that  the  rule  of  reason  was  applied. 
Mr.  Justice  Harlan,  in  his  concurring  and  dissenting  opin- 
ion, reviews  at  some  length  the  Trans-Missouri  Freight 
Case  and  the  Joint  Traffic  Case  (above  given)  and  after 
considering  extended  extracts  from  the  opinions  therein 
says:  "These  utterances  *  *  *  show  so  clearly  and  af- 
firmatively as  to  admit  of  no  doubt  that  this  court,  many 
years  ago,  upon  the  fullest  consideration,  interpreted  the 
Anti-Trust  Act  as  prohibiting  and  making  illegal  not  only 

*"*  United  States  v.  Trans-Missouri  Freight  Association,  166  U.  S.  290, 
41  L.  ed.  1007,  17  Sup.  Ct.  540;  United  States  v.  Joint  Traffic  Association, 
171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25. 

99 


§  83a         TEST   UNDER   SHERMAN   ANTI-TRUST   ACT 

every  cm  tract  or  combination  in  whatever  form  which  was 
in  restraint  of  interstate  conmierce,  without  regard  to  its 
reasonableness  or  unreasonableness,  but  all  monopolies  or 
attempts  to  monopolize  'any  part'  of  such  trade  or  com- 
raerce." 

He  al!?o  refers  to  and  considers  a  number  of  other  cases, 
criticises  the  statement  in  the  opinion  of  the  court  that 
"the  previous  cases  above  cited,  'camiot  by  any  possible 
cor-ception  be  treated  as  authoritative  without  the  certi- 
tude that  reason  was  resorted  to  for  the  purpose  of  decid- 
ing'them,'"  and  cbje'jts  to'the  "intimations  that  the  court 
pj-oceeded  ir*  those  cases,  as  far  as  the  present  question  is 
concerned,  without  being  guided  by  the  'rule  of  reason,'  or 
the  'light  of  reason,'  "  and  he  adds:  "It  is  more  than  in- 
timated, if  not  suggested,  that  if  the  Anti-Trust  Act  is 
to  be  construed  as  prohibiting  every  contract  or  combina- 
tion of  whatever  nature,  which  is  in  fact  in  restraint  of 
commerce,  regardless  of  the  reasonableness  of  such  re- 
straint, that  fact  would  show  that  the  court  had  not  pro- 
ceeded, in  its  decision,  according  to  the  'light  of  reason,' 
but  had  disregarded  the  'rule  of  reason.'  If  the  court  in 
those  cases  was  wrong  in  the  construction  of  the  act,  it  is 
certain  that  it  fully  apprehended  the  views  advanced  by 
learned  counsel  in  previous  cases  and  pronounced  them  to 
be  untenable.  The  published  reports  place  this  beyond  all 
question.  The  opinion  of  the  court  was  delivered  by  a 
Justice  of  wide  experience  as  a  judicial  officer,  and  the 
court  had  before  it  the  Attorney  General  of  the  United 
States  and  lawyers  who  were  recognized,  on  all  sides,  as 
great  leaders  in  their  profession.  *  *  *  Is  it  to  be  sup- 
posed that  any  point  escaped  notice  in  those  cases  when 
we  think  of  the  sagacity  of  the  Justice  who  expressed  the 
views  of  the  court,  or  of  the  ability  of  the  profound  astute 
lawyers,  who  sought  such  an  interpretation  of  the  Act  as 
would  compel  the  court  to  insert  words  in  the  statute 
which  Congress  had  not  put  there,  and  the  insertion  of 
which  words  would  amount  to  '  Judicial  legislation '?  Now 
this  court  *  *  *  has  now  done  what  it  then  said  it  could 
not  constitutionally  do."  The  justice  then  excepts  to 
100 


TEST   UNDER   SHERMAN    ANTI-TRUST  ACT  §  83a 

what  he  considers  a  serious  departure  from  the  settled  usages 
of  the  court  in  regard  to  the  exclusion  of  the  discussion  of 
questions  already  settled  by  previous  decisions  and  then  dis- 
cusses what  he  considers  *'the  most  important  aspect  of 
the  case"  which  "concerns  the  usurpation  by  the  judicial 
branch  of  the  government  of  the  functions  of  the  legislative 
department"  and  concludes  that  he  dissents  from  that  part 
of  the  opinion  "  which  directs  a  modification  of  the  decree 
of  the  Circuit  Court,  as  well  as  from  those  parts  of  the 
opinion  which,  in  effect,  assert  authority,  in  this  court,  to 
insert  words  in  the  Anti-Trust  Act  which  Congress  did 
not  put  there,  and  which,  being  inserted,  Congress  is 
made  to  declare,  as  part  of  the  public  policy  of  the  country, 
what  it  has  not  chosen  to  declare." 

Although  this  epoch-marking  opinion  is  given  in  full  at 
the  end  of  this  treatise  we  have  placed  the  above  extracts 
in  juxtaposition  here  in  order  more  readily  and  clearly  to 
compare  the  opposing  views  and  reasoning  in  the  case. 
The  sections  which  precede  this,  as  well  as  those  elsewhere 
herein  considered,  present  the  law  fully  as  it  existed  up  to 
the  time  of  rendering  the  "rule  of  reason"  and  "light  of 
reason"  decision.  The  questions  now  remain:  Does  that 
decision  conflict  with  and  overrule  the  prior  decisions  in- 
terpreting the  Sherman  Anti-Trust  Act,  or  is  it  reconcil- 
able therewith?  Does  it  interpolate  new  words  in  the 
Anti-Trust  Act,  encroach  upon  legislative  prerogatives 
and  so  in  effect  so  judicially  legislate  as  to  nullify  the  stat- 
ute and  the  intention  of  Congress  in  enacting  it?  We  are 
strongly  inclined  to  the  opinion  that  it  does  overrule  the 
prior  decisions,  that  it  is  at  least  a  step  toward  "judicial 
legislation,"  that  it  does  in  effect  nullify  the  statute  and  the 
intention  of  Congress  in  enacting  it,  and  we  also  think  that 
the  dissenting  opinion  is  more  in  consonance  with  the  law 
as  declared  under  prior  decisions  and  that  these  latter  had 
rightly  and  properly  interpreted  this  Act  of  Congress, 
especially  so,  in  view  of  the  fact  that  Congress  could, 
by  amending  the  statute,  have  expressed  its  disagree- 
ment with  such  prior  interpretation  by  the  Supreme 
Court. 

101 


§§  84,  85    TEST   UNDER   SHERMAN   ANTI-TRUST  ACT 

§  84.  Conspiracy — Test  or  Essentials  of,  Under  Sher- 
man Anti-Trust  Act  Generally. 

The  elements  of  a  conspiracy  to  be  considered  under 
this  act  are  that  it  must  depend  upon  the  concerted  action 
of  two  or  more  persons  to  accomplish  an  unlawful  result 
by  any  means  or  a  lawful  result  by  unlawful  means.  ^^  A 
conspiracy  in  restraint  of  trade  may  have  continuance 
in  time  and  this  applies  to  a  criminal  conspiracy  under  the 
Sherman  Anti-Trust  Act.''^ 

§  85.  Conspiracy — Test  or  Essentials  of,  Under  Sher- 
man Anti-Trust  Act — Overt  Acts. 

It  is  held  that  under  the  Sherman  Anti-Trust  Act  ^^  no 
overt  act  is  necessary  to  the  commission  of  the  offense  of 
conspiracy.  That  enactment  provides  that  every  person 
who  engages  in  a  conspiracy  in  restraint  of  trade  or  com- 
merce, or  to  monopolize  trade  is  guilty  of  the  offense.*^ 
Upon  writ  of  error  however,  by  the  United  States  to 
reverse  the  judgment  of  the  Circuit  Court  sustaining  pleas 
in  bar  pleaded  to  an  indictment  by  the  defendants  in  error, 
the  judgment  was  reversed.  Certain  overt  acts  were  al- 
leged to  have  been  done  in  pursuance  of  the  plan  and  as 
coming  down  to  within  three  years  of  the  indictment.  But 
all  that  was  decided  in  the  reversing  case,  as  we  have 
stated  elsewhere,  was  that  a  conspiracy  may  have  con- 
tinuance in  time,  and  that  where,  as  in  that  case,  the  in- 
dictment, consistently  with  the  other  facts,  alleged  that  it 
did  so  continue  to  the  date  of  filing,  that  allegation  must  be 
denied  under  the  general  issue  and  not  by  a  special  plea.^^ 
But  a  conspiracy  in  this  country  to  do  acts  in  another 

"  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 
823,  831,  per  Hough,  Dist.  J.,  citing  Pettibone  v.  United  States,  148  U.  S. 
197,  13  Sup.  Ct.  542,  37  L.  ed.  419. 

«  United  States  v.  Kissel,  218  U.  S.  601,  31  Sup.  Ct.  124,  54  L.  ed.  1168, 
revising  173  Fed.  823.    See  this  case  under  §  57  herein  as  to  distinctions. 

"  Act  July  2,  1890,  chap.  647,  20  Stat.  209;  U.  S.  Comp.  Stat.  1901, 
p.  3200,  given  under  §§  13,  14,  herein. 

"  United  States  v.  Kissel  (U.  S.  C.  C),  173  Fed.  823,  825. 

«'  United  States  v.  Kissel,  218  U.  S.  601,  54  L.  ed.  1168,  31  Sup. 
Ct.  124. 

102 


TEST   UNDER   SHERMAN   ANTI-TRUST  ACT  §  85 

jurisdiction  does  not  draw  to  itself  those  acts  and  make 
them  unlawful  if  they  are  permitted  by  the  local  law.'"' 

"  American  Banana  Co.  v.  United  Fruit  Co.,  213  U.  S.  347,  53  L.  ed. 
826,  29  Sup.  Ct.  511  (holding  also  that  the  prohibitions  of  the  Sherman 
Anti-Trust  I^w  do  not  extend  to  acts  done  in  foreign  countries  even  though 
done  by  citizens  of  the  United  States  and  injuriously  affecting  other  citi- 
zens of  the  United  States).  Compare  Dealy  v.  United  States,  152  U.  S. 
539,  38  L.  ed.  545,  14  Sup.  Ct.  680.    Considered  in  note  under  this  section. 


103 


CHAPTER  IX 

NATURE    ESSENTIALS  OR  TEST — CONTRACTS   IN   RESTRAINT 

OF   TRADE 


§    86.  Public  Policy  as  Test 
erally. 

87.  PubUc  Policy  as  Test— De- 

gree of  Injury  to  Public. 

88.  Public  Policy  as  Test— Gen- 

eral and  Partial  Restraint 
of  Trade. 

89.  Public  Policy  as  Test— Con- 

tracts in  Restraint  of 
Trade — Contracts  Tend- 
ing to  Create  Monopolies 
— Useful  Commodities. 

90.  Public  Policy  as  Test— Con- 

tracts Affecting  Articles  of 
Prime  Necessity. 

91.  What  Contracts  Not  Void  as 

Against  Public  Policy. 

92.  Public   Policy   Test— Public 

Service  Corporations. 

93.  Same  Subject. 

94.  Effect    of    Changed    Condi- 

tions as  to  Trade,  Com- 
merce, etc. — Pubhc  Policy 
— English  Courts. 

95.  Same     Subject  —   Federal 

Courts. 

96.  Same  Subject — State  Courts. 

97.  Extent  of  Illegality  of  Con- 

tract in  Restraint  of  Trade 
— New  Rule. 


99. 


Gen-  §  98.  Effect  of  State  Statute  Upon 
IllegaUty  of  Such  Con- 
tract. 
Monopolies  —  Degree  of  Re- 
straint of  Trade  —  Com- 
petition. 

100.  Same  Subject. 

101.  What    Degree   of   Competi- 
tion Permissible. 

Circumstances  Are  to  Be 
Considered  in  Determining 
Legahty  of  Restraint. 

Whether  Contract  Is  in  Re- 
straint of  Trade  is  Ques- 
tion for  Court. 
104.  Consideration  of  Contract  in 
Restraint  of  Trade. 

Motive. 

Reasonable  and  Unreason- 
able Restraints  Generally. 

Where  Contract  in  Restraint 
of  Trade  Is  One  of  a  Sys- 
tem of  Contracts — Reason- 
able and  Unreasonable  Re- 
straints. 

Reasonableness  or  as  to  Ter- 
ritory or  Area  Covered. 
109.  Test     of     Reasonableness — 
Fair  Protection  to  Cove- 
nanter. 


102. 


103. 


105. 
106. 

107. 


108. 


§  86.  Public  Policy  as  Test — Generally. 

All  the  cases  when  they  come  to  be  examined,  seem  to 

establish  this  principle,  that  all  restraints  upon  trade  are 

bad  as  being  in  violation  of  public  policy,  unless  they  are 

natural,  and  not  unreasonable  for  the  protection  of  the 

104 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  86 

parties  in  dealing  legally  with  some  subject-matter  of  the 
contract.  ^ 

''The  true  view  at  the  present  time,  I  think,  is  this:  The 
public  have  an  interest  in  every  person  carrying  on  his  trade 

'  Leather  Cloth  Co.  v.  Lorsont,  Law  Rep.  9  Eq.  Ca.s.  345,  353,  354,  and 
it  was  held  in  this  case  that  the  restriction  in  question  was  not  greater 
having  regard  to  the  subject-matter  of  the  contract  than  was  necessary 
for  the  protection  of  the  purchasers,  and  was  capable  of  enforcement 
against  the  vendors. 

Public  Policy  Defined.    See  the  following  cases: 

United  Slates:  Hartford  Fire  Ins.  Co.  v.  Chicago,  Milwaukee  &  St.  Paul 
Ry.  Co.,  175  U.  S.  91,  lOG,  44  L.  ed.  84,  20  Sup.  Ct.  33,  per  Mr.  Justice 
Gray;  Vidal  v.  Girard's  Executors,  2  How.  (43  U.  S.),  127,  197,  198,  11 
L.  ed.  205,  per  Mr.  Justice  Story;  Walker  v.  Lawrence,  177  Fed.  363,  366, 
101  C.  C.  A.  417,  per  Brawloy,  Dist.  J.;  United  States  v.  Musgrave  (U. 
S.  D.  C),  100  Fed.  700;  Hartford  Fire  Ins.  Co.  v.  Chicago,  Milwaukee 
&  St.  Paul  Ry.  Co.,  70  Fed.  201,  202,  17  C.  C.  A.  62,  30  L.  R.  A.  193  (public 
policy  of  a  State  or  nation  determined  by  its  constitution,  laws  and  judicial 
decisions,  per  Sanborn,  Cir.  J.),  s.  c.  (U.  S.  C.  C.)  62  Fed.  904,  906,  per 
Shiras,  Dist.  J.;  United  States  v.  Trans-Missouri  Freight  Assoc,  58  Fed. 
58,  59,  7  C.  C.  A.  15,  24  L.  R.  A.  73  (public  policy  determined  by  consti- 
tution, laws  and  judicial  decisions);  Swann  v.  Swann  (U.  S.  C.  C),  21 
Fed.  299,  301  (pubhc  policy  determined  by  constitution,  laws  and  judicial 
decisions). 

Arkansas:  Jacoway  v.  Denton,  25  Ark.  625,  634,  per  Gragg,  J. 

California:  Smith  v.  San  Francisco  &  North.  Pac.  Ry.  Co.,  115  Cal.  584, 
600,  47  Pac.  582,  35  L.  R.  A.  309,  56  Am.  St.  Rep.  119,  per  Harrison,  J.; 
People  v.  Collins,  9  Cal.  App.  622,  624,  99  Pac.  1109  (as  to  the  term  public 
policy  no  reason  exists  why  a  distinction  should  be  drawn  between  matters 
which  the  statute  forbids  to  be  done  by  reason  of  pubhc  policy  without 
expressly  so  stating  and  those  particular  matters  as  to  which  the  reason 
is  declared  by  statute). 

Colorado:  Russell  v.  Courier  Printing  &  Pub.  Co.,  43  Colo.  321,  95  Pac. 
936;  Pueblo  &  Arkansas  Valley  Rd.  Co.  v.  Taylor,  6  Colo.  1,  8,  45  Am. 
Rep.  512,  per  Stone,  J.;  Fearnley  v.  DeMainville,  5  Colo.  App.  441,  446, 
39  Pac.  73,  per  Reed,  J. 

Florida:  Atlantic  Coast  Line  Rd.  Co.  v.  Beazley,  54  Fla.  311,  45  So.  761. 

Georgia:  Smith  v.  DuBosc,  78  Ga.  413,  435,  3  S.  E.  300,  6  Am.  St.  Rep. 
260,  per  Hall,  J. 

Idaho:  Pike  v.  State  Board  of  Land  Coramrs.  (Idaho,  1911),  113  Pac. 
447. 

Illinois:  People  ex  rel.  Hcaly  v.  Shedd,  241  111.  155,  89  N.  E.  332  (pubhc 
policy  determined  by  constitution,  legislation,  judicial  decision  and  prac- 
tice of  executive  department;  courts  cannot  change  it);  Wakefield  v.  Van 
Tassell,  202  111.  41,  44,  66  N.  E.  830,  65  L.  R.  A.  511,  95  Am.  St.  Rep.  207, 
per  Ricks,  J.;  People  ex  rel  Peabody  v.  Chicago  Gas  Trust  Co.,  130  III. 
268,  294,  22  N.  E.  798,  8  L.  R.  A.  497,  17  Am.  St.  Rep.  319,  per  Magruder, 
J. 

105 


§  86  NATURE    ESSENTIALS   OR  TEST — 

freely ;  so  has  the  individual.  All  interference  with  individ- 
ual Hberty  of  action  in  trading,  and  all  restraints  of  trade 
of  themselves,  if  there  is  nothing  more,  are  contrary  to 
pubhc  policy,  and  therefore  void.  That  is  the  general  rule. 

Indiana:  McCIanahan  v.  Breeding,  172  Ind.  457,  463,  88  N.  E.  695,  per 
Meyers,  J. 

Iowa:  Disbrow  v.  Cass  County  Suprs.,  119  Iowa,  538,  541,  93  N.  W.  585, 
per  Sherwin,  J.;  Griswold  v.  IlUnois  Cent.  R.  Co.,  90  Iowa,  265,  268,  269, 
57  N.  W.  843,  24  L.  R.  A.  647,  per  Given,  J. 

Maryland:  Boston  &  Albany  Rd.  Co.  v.  Mercantile  Trust  &  Deposit 
Co.  (Md.  1896),  34  Atl.  778,  785,  38  L.  R.  A.  97,  per  McSherry,  C.  J. 

Michigan:  McNamara  v.  Gargett,  68  Mich.  454,  460,  36  N.  W.  218,  13 
Am.  St.  Rep.  355,  per  Long,  J. 

Minnesota:  Holland  v.  Sheehan,  108  Minn.  362,  365,  122  N.  W.  1,  per 
Brown,  J. 

Missouri:  Kitchen  v.  Greenabaum,  61  Mo.  110,  115,  per  Sherwood,  J. 

Montana:  Lawson  v.  Cobban,  38  Mont.  138,  139,  99  Pac.  128,  per 
Smith,  J. 

New  Jersey:  Trenton  Pass  R.  Co.  v.  Guarantor's  Liability  Indemnity 
Co.,  60  N.  J.  L.  246,  37  Atl.  609,  610,  44  L.  R.  A.  213,  per  Magie,  C.  J.; 
Bigelow  V.  Old  Dominion  Copper  Mining  &  Smelting  Co.,  74  N.  J.  Eq. 
457,  71  Atl.  153,  174  (public  pohcy  not  a  creature  of  the  courts  but  of 
the  legislature). 

New  York:  People  v.  Hawkins,  157  N.  Y.  1,  12,  51  N.  E.  257,  68  Am. 
St.  Rep.  736,  42  L.  R.  A.  490,  per  O'Brien,  J.;  Warren  v.  Bouvier,  124  N. 
Y.  Supp.  641;  Lampson's  Will,  In  re,  53  N.  Y.  Supp.  531,  532,  33  App. 
Div.  49,  per  Adams,  J.;  Dean  v.  Clark,  30  N.  Y.  Supp.  45,  48,  80  Hun  (N. 
Y.),  80,  per  Putnam,  J. 

Oklahoma:  Union  Central  Life  Ins.  Co.  v.  ChampUn,  11  Okl.  184,  187, 
188,  65  Pac.  836,  55  L.  R.  A.  109,  per  Hainer,  J.;  People's  Bank  v.  Dalton, 
2  Okl.  476,  480,  37  Pac.  807,  per  Brierer,  J. 

Oregon:  Robson  v.  Hamilton,  41  Ore.  239,  245,  69  Pac.  651,  per  Moore, 
C.  J. 

Pennsylvania:  Enders  v.  Enders,  164  Pa.  St.  266,  271,  30  Atl.  129,  44  Am. 
St.  Rep.  598,  27  L.  R.  A.  56  (public  poUcy  in  the  administration  of  law 
by  the  courts  is  essentially  different  from  what  may  be  the  public  policy 
in  the  view  of  the  legislature,  etc.,  per  Dean,  J. 

Vermont:  Tarbell  v.  Rutland  Rd.  Co.,  73  Vt.  347,  349,  51  Atl.  6,  56 
L.  R.  A.  6.56,  56  Am.  St.  Rep.  119,  per  Tyler,  J. 

Public  Policy  as  Test — Underlying  Principle. 

"The  principle  is  this:  public  policy  requires  that  every  man  shall  be  at 
liberty  to  work  for  himself,  and  shall  not  be  at  liberty  to  deprive  himself  or 
the  State  of  his  labor,  skill,  or  talent,  by  any  contract  that  he  enters  into. 
On  the  other  hand,  public  pohcy  requires  that  when  a  man  has  by  skill  or 
by  any  other  means  obtained  something  which  he  wants  to  sell,  he  should 
be  at  hberty  to  sell  it  in  the  most  advantageous  way  in  the  market;  and 
in  order  to  enable  him  to  sell  it  advantageously  in  the  market,  it  is  neces- 
sary that  he  should  be  able  to  preclude  hirnsflf  from  entering  into  com- 

106 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  86 

But  there  are  exceptions:  restraints  of  trade  and  inter- 
ference with  individual  hberty  of  action  may  be  justified 
by  the  particular  circumstances  of  a  particular  case.  It 
is  a  sufficient  justification,  and  indeed  the  only  justifica- 
tion, if  the  restriction  is  reasonable — reasonable,  that  is,  in 
reference  to  the  interests  of  the  public,  so  framed  and  so 
guarded  as  to  afford  adequate  protection  to  the  party  in 
whose  favor  it  is  imposed,  while  at  the  same  time  it  is  no 
way  injurious  to  the  pubhc."  -  So  an  agreement  which  is 
founded  on  a  good  consideration  and  is  limited  to  time, 
place  and  commodity  and  which  indicates  no  intention  to 
oppress  or  to  create  a  monopoly  or  to  prevent  competition 

petition  with  the  purchaser.  In  such  a  case  the  same  public  poUcy  that 
enables  him  to  do  that  does  not  restrain  him  from  alienating  that  which 
he  wants  to  alienate,  and  therefore  enables  him  to  enter  into  any  stipula- 
tion, however  restrictive  it  is,  provided  that  restriction,  in  the  judgment 
of  the  court,  is  not  unreasonable,  having  regard  to  the  subject  matter  of 
the  contract.  Leather  Cloth  Co.  v.  Lorsont,  Law.  Rep.  9  Eq.  Cas.  345, 
354.  Approved  in  Bloom  v.  Home  Ins.  Co.,  91  Ark.  367,  372,  121  S.  W. 
293;  Up  River  Ice  Co.  v.  Denier,  114  Mich.  296,  303,  72  N.  W.  157. 

*  Nordenfelt  v.  Maxim  Nordenfelt  Guns  &  Ammunition  Co.,  Law  Rep. 
[1894]  App.  Cas.  565,  per  Lord  Macnaghten,  quoted  mth  approval  in  Un- 
derwood &  Son,  Ltd.,  v.  Barker,  Law  Rep.  [1899]  1  Ch.  D.  300,  304,  68  L.  J. 
Ch.  201,  80  L.  T.  306,  47  W.  R.  347,  per  Lindley,  M.  R. 

It  was  said  by  Judge  Taft  in  a  Federal  case  that:  "From  early  tunes  it 
was  the  policy  of  Enghshmen  to  encourage  trade  in  England,  and  to  dis- 
courage those  voluntary  restraints  which  tradesmen  were  often  induced 
to  impose  upon  themselves  by  contract.  Courts  recognize  this  public 
poUcy  by  refusing  to  enforce  stipulations  of  this  character.  The  objections 
to  such  restraints  were  mainly  two.  One  was  that  by  such  contracts  a 
man  disabled  himself  from  earning  a  livelihood  with  the  risk  of  becoming 
a  pubhc  charge,  and  deprived  the  community  of  the  benefit  of  his  labor. 
The  other  was  that  such  restraints  tended  to  give  the  covenantee,  the 
beneficiary  of  such  restraints,  a  monopoly  of  the  trade,  from  which  he  had 
thus  excluded  one  competitor,  and  by  the  same  means  might  exclude 
others.  *  *  *  The  changed  conditions  under  which  men  have  ceased  to 
be  so  entirely  dependent  for  a  hvelihood  on  pursuing  one  trade,"  render 
the  first  condition  less  important,  but  as  a  disposition  exists  to  use  every 
means  to  reduce  competition,  and  to  restrain  monopolies,  as  Ls  evidenced 
by  the  Sherman  Anti-Trust  Act,  and  similar  State  legislation,  the  second 
reason  above  given  has  not  lost  in  importance  at  the  present  day.  United 
States  V.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  279,  280,  29  C.  C.  A. 
141,  per  Taft,  Cir.  J.  (in  considering  effect  of  and  in  construing  Sherman 
Anti-Trust  Act  of  July  2,  1890);  citing  and  quoting  from  Alger  v.  Thacher, 
19  Pick.  (36  Mass.)  51,  54;  Mitchel  v.  Reynolds,  1  P.  Wms.  181,  190,  per 
Chief  Justice  Parker. 

107 


§  86  NATUEE  ESSENTIALS  OR   TEST — 

as  to  the  particular  product  is  not  void  as  against  public 
policy;  ^  that  is,  in  general  it  is  enforceable  where  the  con- 
tract possesses  the  other  essentials  as  to  reasonableness;  as 
to  being  limited;  as  to  protection  to  the  covenantee;  and 
as  to  consideration.^    But  where  the  business  to  which  the 

'  Marshalltown  Stone  Co.  v.  Des  Moines  Brick  Mfg.  Co.,  114  Iowa, 
574,  87  N.  W.  496. 

♦  United  States:  Walker  v.  Lawrence,  177  Fed.  363,  368,  101  C.  C.  A.  417 
(is  not  against  public  policy  when  does  not  appear  that  contract  was  not 
a  reasonable  protection);  Fisheries  Co.  v.  Lennen  (U.  S.  C.  C),  116  Fed. 
217,  affirmed  in  130  Fed.  533,  65  C.  C.  A.  79. 

Iowa:  Swigert  &  Howard  v.  Tilden,  121  Iowa,  650,  97  N.  W.  82,  100 
Aoi.  St.  Rep.  374,  63  L.  R.  A.  608. 

Michigan:  Hubbard  v.  Miller,  27  Mich.  15  (when  not  especially  in- 
jurious to  public  valid  where  otherwise  valid). 

Missouri:  Gordon  v.  Mansfield,  84  Mo.  App.  367  (valid  when  not  in- 
jurious to  public  interests  and  not  greater  than  protection  requires.) 

Nebraska:  Engles  v.  Morgenstern,  85  Neb.  51,  122  N.  W.  688  (valid 
when  not  unreasonable  or  against  public  policy);  Downing  v.  Lewis,  59 
Neb.  38,  80  N.  W.  261  (not  against  public  policy  not  void). 

New  York:  Hackett  &  A.  L.  &  J.  J.  Reynolds  Co.,  62  N.  Y.  Supp.  1076, 
30  Misc.  733  (valid  when  reasonable  and  not  against  public  policy). 

Pennsylvania:  Harbison-Walker  Refractories  Co.  v.  Stanton,  227  Pa. 
St.  55,  75  Atl.  988. 

Tennessee:  Jackson  v.  Byrnes,  103  Tenn.  698,  54  S.  W.  984  (not  against 
public  policy,  held  valid). 

Texas:  Queen  Ins.  Co.  v.  State,  86  Tex.  250,  263,  268,  24  S.  W.  397,  22 
L.  R.  A.  483  (not  enforceable  when  against  public  policy);  Wolff  v.  Hirsch- 
feld  (Tex.  Civ.  App.),  57  S.  W.  572  (held  not  void  as  against  public  policy); 
Tobler  v.  Austin,  22  Tex.  Civ.  App.  99,  53  S.  W.  706  (not  against  public 
policy  and  not  unreasonable;  held  valid). 

Virginia:  Merriman  v.  Cover,  Drayton  &  Leonard,  104  Va.  428,  51  S. 
E.  817  (vaUd  if  reasonable;  limited;  based  on  consideration,  and  not 
against  public  policy). 

England:  EUiman  v.  Carrington,  L.  R.  [1901]  2  Ch.  275,  70  L.  J.  Ch.  577, 
84  Law  T.  858,  49  Wkly.  Rep.  532. 

"The  policy  of  the  law  Umits  the  right  to  enter  into  such  contracts  of 
sale  only  to  the  extent  that  they  are  held  to  injure  the  publjc  by  restraining 
trade."  Cowan  v.  Fairbrother,  118  N.  C.  406,  411,  412,  24  S.  E.  212,  per 
Avery,  J. 

Not  every  contract  in  restraint  of  trade  or  every  exclusive  privilege 
granted  by  a  corporation  is  against  public  policy.  The  test  of  its  vaUdity 
is  whether  the  restrictive  provision  is  unreasonable  or  will  operate  to  the 
injury  of  the  pubhc.  Central  New  York  Teleph.  &  Tcleg.  Co.  v.  Averill, 
129  App.  Div.  752,  judgment  modified  in  199  N.  Y.  128,  92  N.  E.  206. 

The  test  is  whether  the  contract  is  inimical  to  the  pubUc  interests. 
Over  V.  Byram  Foundry  Co.,  37  Ind.  App.  4.52,  77  N.  E.  302,  citing  Con- 
sumers' Oil  Co.  V.  Nunnemaker,  142  Ind.  560,  564,  51  Am.  St.  Rep.  193, 
41  N.  E.  1048. 

108 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  87 

contract  relates  is  of  such  a  character  that  it  cannot  be 
subjected  even  to  the  partial  restraint  which  is  contem- 
plated without  injury  to  the  public  interest,  then  such 
partial  restraint  cannot  be  tolerated.'^ 

§  87.  Public  Policy  as  Test— Degree  of  Injury  to 
Public. 

At  common  law  the  test  in  every  case  is  whether  the 
agreement  claimed  to  be  in  restraint  of  trade  is  injurious 
to  the  pubhc  interests.  Courts  will  not  stop  to  inquire  as 
to  the  degree  of  injury  inflicted.  It  is  enough  to  know  that 
the  inevitable  tendency  of  such  contracts  is  injurious.  All 
contracts  which  have  a  tendency  to  stifle  competition  are 
void  as  against  public  policy.^ 

The  validity  or  invalidity  of  an  agreement  that  in  opera- 
tion tends  to  restrain  trade  or  to  monopoly  is  in  general 
determined  by  the  element  of  whether  it  is  or  is  not  inju- 
rious to  the  public.  If  injurious  in  any  perceptible  degree 
to  any  considerable  portion  of  the  public  the  agreement 
is  contrary  to  pubhc  policy  and  will  not  be  enforced.  If 
not  so  injurious  it  may  be  enforced  if  otherwise  legal  and 
binding.'^ 

6  Central  New  York  Teleph.  &  Teleg.  Co.  v.  AveriU,  199  N.  Y.  128, 
92  N.  E.  206,  citing  West  Virginia  Transp.  Co.  v.  Ohio  RiverlPipe  Line  Co., 
22  W.  Va.  600. 

That  such  contracts  are  void  wlien  opposed  to  public  policy,  see  also  the 
following  cases: 

California:  Pacific  Factor  Tea  Co.  v.  Adler,  90  Cal.  110,  27  Pac.  36. 

Illinois:  Union  Strawboard  Co.  v.  Bonfield,  193  111.  420,  61  N.  E.  1038, 
86  Am.  St.  Rep.  346,  affirming  93  111.  App.  413;  Lanzit  v.  J.  W.  Safton 
Mfg.  Co.,  194  111.  326,  56  N.  E.  393,  75  Am.  St.  Rep.  171,  reversing,  83 
111.  App.  168;  Hursen  v.  Gavin,  162  111.  377,  44  N.  E.  735;  Linn  v.  Sigsbee, 
67  lU.  75. 

Michigan:  Clark  v.  Needham,  125  Mich.  84,  7  Det.  Log.  N.  395,  51  L. 
R.  A.  785,  83  N.  W.  1027;  Western  Wooden  Ware  Assoc,  v.  Starkey,  84 
Mich.  76,  85,  47  N.  W.  604,  11  L.  R.  A.  503,  22  Am.  St.  Rep.  686. 

New  York:  Coverly  v.  Terminal  Warehouse  Co.,  75  N.  Y.  Supp.  145, 
70  App.  Div.  82. 

Wiscon.sin:  Tecktonius  v.  Scott,  110  Wis.  441,  86  N.  W.  672. 

«  Knight  &  Jillson  Co.  v.  Millor,  172  Ind.  27,  87  N.  E.  823,  828;  Central 
Ohio  Salt  Co.  v.  Guthrie,  35  Ohio  St.  666. 

^Stewart  &  Bro.  v.  Sterns  &  Culvert  Lumber  Co.,  56  Fla.  570,  593,  48 
So.  19,  citing  the  following  cases: 

109 


§88  NATURE    ESSENTIALS   OR    TEST — 

§  88.  Public  Policy  as  Test— General  and  Partial  Re- 
straint of  Trade. 

The  rule  is  well  settled  that  contracts  in  general  or  total 
restraint  of  trade  are  void  as  against  public  policy  and 
unenforceable.^  A  contract  not  to  engage  in  a  business 
if  unlimited  in  respect  to  time  and  place  is  void  as  against 

United  States:  United  States  v.  E.  C.  Knight  &  Co.,  156  U.  S.  1,  15  Sup. 
Ct.  249,  39  L.  ed.  325;  Oregon  Steam  Navigation  Co.  v.  Winsor,  20  Wall. 
(87  U.  S.)  64,  22  L.  ed.  315;  United  States  v.  Addyston  Pipe  &  Steel  Co., 
85  Fed.  271,  29  C.  C.  A.  141. 

Alabama:  Fullington  v.  Kyle  Lumber  Co.,  139  Ala.  242,  35  So.  852; 
Tuscaloosa  Ice  Mfg.  Co.  v.  Williams,  127  Ala.  110,  28  So.  669,  50  L.  R.  A. 
175,  85  Am.  St.  Rep.  125. 

Florida:  Hoeker  v.  Western  Union  Teleg.  Co.,  45  Fla.  363,  34  So.  901; 
Jones  V.  Clifford's  Exec,  5  Fla.  510. 

Illinois:  Harding  v.  American  Glucose  Co.,  182  111.  551,  55  N.  E.  577, 
74  Am.  St.  Rep.  189,  and  notes. 

Kansas:  Keene  Syndicate  v.  Wichita  Gas,  Electric  Light  &  Power  Co., 
69  Kan.  284,  76  Pac.  834. 

Louisiana:  Webb  Press  Co.  v.  Bierce,  116  La.  Ann.  905,  41  So.  203. 

Michigan:  Clark  v.  Needham,  125  Mich.  84,  83  N.  W.  1027,  84  Am.  St. 
Rep.  559. 

Ohio:  Central  Ohio  Salt  Co.  v.  Guthrie,  35  Ohio  St.  666;  Crawford  v. 
Wick,  18  Ohio  St.  190,  98  Am.  Dec.  103. 

Oklahoma:  Anderson  v.  Shawnee  Compress  Co.,  17  Okla.  231,  87  Pac. 
815. 

Pennsylvania:  Nester  v.  Continental  Brewing  Co.,  161  Pa.  St.  473,  29 
Atl.  102,  24  L.  R.  A.  247. 

Virginia:  Merriman  v.  Cover,  104  Va.  428,  51  S.  E.  817. 

West  Virginia:  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co., 
60  W.  Va.  508,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268;  Slaughter  v.  Thacker 
Coal  &  Coke  Co.,  55  W.  Va.  642,  47  S.  E.  247. 

England:  Homer  v.  Graves,  7  Bing.  735,  20  Eng.  C.  L.  310. 

"The  interests  of  the  parties  alone  are  not  the  sole  consideration  in- 
volved here.  It  is  the  duty  of  the  court  to  see  that  the  public  interests  are 
not  in  any  manner  jeopardized.  The  State  has  the  welfare  of  its  citizens 
in  keeping,  and  the  public  interest  is  the  pole-star  to  all  judicial  inquiries." 
Western  Wooden  Ware  Assoc,  v.  Starkey,  84  Mich.  76,  83,  47  N.  W,  604, 
11  L.  R.  A.  503,  22  Am.  St.  Rep.  686,  per  Long,  J. 

8  Seavy  v.  Spratling,  133  Ga.  27,  65  S.  E.  137;  Lanzet  v.  J.  W.  Sefton  Mfg. 
Co.,  184  111.  326,  56  N.  E.  393,  75  Am.  St.  Rep.  171,  case  reverses  83  111. 
App.  168;  Union  Strawboard  Co.  v.  Bonfield,  193  111.  420,  61  N.  E.  1038,  86 
Am.  St.  Rep,  346,  affirming  96  111.  App.  413;  Trenton  Potteries  Co.  v.  OU- 
phant,  56  N.  J.  Eq.  680,  39  Atl.  923,  case  modified  in  58  N.  J.  Eq.  507,  43 
Atl.  723,  46  L.  R.  A.  255,  78  Am.  St.  Rep.  612;  Lufkin  Rule  Co.  v.  FringeU, 
57  Ohio  St.  596,  39  Ohio  L.  J.  253,  49  N.  E.  1030,  63  Am.  St.  Rep.  736,  41 
L.  R.  A.  185. 

110 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  88 

public  policy.^  But  while  a  contract  in  general  restraint 
of  trade  is  illegal  and  void,  the  law  permits  contracts  in 
partial  restraint  of  trade,  under  some  circumstances, 
where  they  are  not  unreasonable  and  are  supported  by 
sufl5cient  consideration.^"    In  recent  case  in  Louisiana  it 

•  Von  Bremen  v.  MacMonnies,  122  N.  Y.  Supp.  1087,  138  App.  Div.  319, 
motion  for  reargument  of  case  denied;  motion  to  appeal  to  court  of  errors 
granted,  139  App.  Div.  905. 

See  Taylor  v.  Saurman,  110  Pa.  3,  1  Atl.  40. 

"The  law  is  well  settled  that  contracts  in  total  restraint  of  trade  are  void 
for  the  reason  that  they  arc  injurious  to  the  public,  depriving  it  of  the  in- 
dustry of  the  party  restrained,  and  also  because  of  the  injury  to  the  party 
himself  by  being  deprived  of  the  opportunity  to  pursue  his  avocation  for 
the  support  of  himself  and  family;  but  a  contract  which  is  only  in  partial 
restraint  of  trade  and  is  reasonable  in  its  provisions  as  to  time  and  place, 
and  supported  by  a  sufficient  consideration,  is  valid,  and  the  restraint  is 
held  to  be  reasonable  whenever  it  is  such,  only,  as  affords  a  fair  protection 
to  the  interests  of  the  one  in  whose  favor  it  is  made."  Andrews  v.  Kings- 
bury, 212  111.  97,  101,  72  N.  E.  11  (case  affirms  112  111.  App.  518)  citing 
Union  Strawboard  Co.  v.  Bonfield,  193  111.  420,  61  N.  E.  1038;  Hursen  v. 
Gavin,  162  111.  377,  44  N.  E.  735;  Consolidated  Coal  Co.  v.  Schmisseur,  135 
111.  371,  25  N.  E.  795. 

10  Central  New  York  Teleph.  &  Teleg.  Co.  v.  Averill,  199  N.  Y.  128, 
92  N.  E.  206;  (citing  Oregon  Steam  Nav.  Co.  v.  Winsor,  20  Wall.  (87  U.  S.) 
64,  22  L.  ed.  315;  Wood  v.  Whitehead  Bros.  Co.,  165  N.  Y.  545,  59  N.  E. 
357;  LesUe  v.  Lorillard,  110  N.  Y.  519,  18  N.  E.  363;  Diamond  Match  Co. 
V.  Roeber,  106  N.  Y.  473,  13  N.  E.  419).  See  Ferris  v.  American  Brewing 
Co.,  159  Ind.  539,  58  N.  E.  731,  52  L.  R.  A.  305. 

"A  contract  in  restraint  of  trade,  to  be  valid,  must  show  that  the  re- 
straint imposed  is  partial,  reasonable  and  founded  upon  a  consideration 
capable  of  enforcing  the  agreement."  Hursen  v.  Gavin,  162  111.  377,  380,  44 
N.  E.  735,  aff'g  59  III.  App.  66. 

Contracts  of  this  nature  will  be  enforced  where  the  restraint  is  only  par- 
tial and  where  reasonable  grounds  exist  for  the  restraint  and  where  it  is 
founded  on  a  good  consideration.  Up  River  Ice  Co.  v.  Denier,  114  Mich. 
296,  302,  72  N.  W.  157. 

"Whilst  it  is  true  that  contracts  in  restraint  of  trade  are  to  be  carefully 
scrutinized  and  looked  upon  with  disfavor,  all  contracts  in  restraint  of 
trade  are  not  illegal.  The  restraint  here  is  but  partial — very  inconsider- 
able." Stovall  V.  McCutchen,  107  Ky.  577,  580,  21  Ky.  L.  Rep.  1317,  54 
S.  W.  969,  47  L.  R.  A.  287,  92  Am.  St.  Rep.  373,  per  White,  J.,  the  contract 
was  held  valid  and  binding. 

It  is  said  in  a  case  in  the  Federal  Supreme  Court  that :  "  It  is  a  well  settled 
rule  that  an  agreement  in  general  restraint  of  trade  is  illegal  and  void;  but 
an  agreement  which  operates  merely  in  partial  restraint  is  good,  provided  it 
be  not  unreasonable  and  there  be  a  consideration  to  support  it.  In  order 
that  it  may  not  be  unreasonable,  the  restraint  must  not  be  larger  than  is  re- 
quired for  the  necessary  protection  of  the  party  with  whom  the  contract  is 

111 


§  88  NATURE  ESSENTIALS  OR  TEST — 

is  declared  that  the  law  will  not  permit  a  man  to  bind 
himself  by  contract,  not  to  pursue,  at  any  time  or  place, 
the  calling  whereby  he  earns  his  livelihood,  because  being 
so  bound,  he  may  become  a  charge  upon  the  community, 

made.  *  ♦  *  The  application  of  the  rule  is  more  difficult  than  a  clear 
understanding  of  it.  *  *  *  Cases  must  be  judged  according  to  their  cir- 
cumstances and  can  only  be  rightly  judged  when  the  reason  and  grounds 
of  the  rule  are  carefully  considered.  There  are  two  principal  grounds  on 
which  the  doctrine  is  founded,  that  a  contract  in  restraint  of  trade  is  void 
as  against  public  pohcy.  One  is,  the  injury  to  the  public  by  being  deprived 
of  the  restricted  party's  industry;  the  other  is  the  injury  to  the  party  him- 
self by  being  precluded  from  pursuing  his  occupation  and  thus  being 
prevented  from  supporting  himself  and  his  family.  It  is  evident  that  both 
these  evils  occur  when  the  contract  is  general,  not  to  pursue  one's  trade  at  all, 
or  not  to  pursue  it  in  the  entire  realm  or  country.  The  country  suffers 
the  loss  in  both  cases;  and  the  party  is  deprived  of  his  occupation,  or  is 
obliged  to  expatriate  himself  in  order  to  follow  it.  A  contract  that  is  open  to 
such  grave  objection  is  clearly  against  pubhc  policy.  But  if  neither  of  these 
evils  ensue,  and  if  the  contract  is  founded  on  a  valid  consideration  and  a 
reasonable  ground  of  benefit  to  the  other  party,  it  is  free  from  objection, 
and  may  be  enforced."  Oregon  Steam  Navigation  Co.  v.  Winsor,  20  Wall. 
(87  U.  S.)  64,  66,  68,  22  L.  ed.  315,  per  Mr.  Justice  Bradley.  The  contract 
in  this  case  was  held  not  void  as  in  restraint  of  trade  or  as  against  public 
pohcy. 

In  a  late  Iowa  case  the  court  says:  "The  right  of  a  person  engaged  in  a 
business  in  a  particular  locality  to  sell  out  such  business  and  agree  not  to 
engage  in  it  for  at  least  a  limited  period  is  too  well  estabhshed  by  our  cases 
to  justify  an  elaboration  of  the  question."  Sauser  v.  Kearney,  147  Iowa, 
335,  339,  126  N.  W.  322,  324,  per  McClain,  J.,  citing  Swigert  &  Howard  v. 
Tilden,  121  Iowa  650,  97  N.  W.  82,  63  L.  R.  A.  108,  100  Am.  St.  Rep.  374; 
Marshalltown  Stone  Co.  v.  Des  Moines  Brick  Mfg.  Co.,  114  Iowa,  574,  87 
N.  W.  496. 

In  another  case  in  the  same  State  it  is  said:  "The  doctrine  that  contracts 
in  general  restraint  of  trade  are  held  void  as  against  public  policy  found 
root  early  in  the  development  of  our  system  of  law,  and  recognition  of  such 
doctrine  has  continued  down  to  the  present  time,  but  with  more  or  less 
modification  as  different  courts  have  been  called  upon  to  make  practical 
application  thereof.  Fonnerly,  in  the  enforcement  of  this  doctrine,  the 
rights  of  the  immediate  parties  to  a  contract  as  between  themselves,  were 
put  entirely  out  of  view  until  it  had  been  determined  that  the  contract  was 
not  one,  the  enforcement  of  which  would  operate  as  an  encroachment 
upon  the  interests  of  the  general  public.  The  reason  of  the  rule  is  said  to  be 
two-fold — that  such  restraints  work  injury  to  the  public  by  depriving  it  of 
the  industry  of  the  restricted  party  in  the  vocation  for  which  he  is  best 
adapted,  as  well  as  by  the  tendency  thereof  to  throw  the  person  so  re- 
strained upon  the  public  for  support,  or  compel  him  to  expatriate  himself  and 
transfer  his  re.sidencc  and  allegiance  to  some  other  State  or  country  in  or- 
der to  pursue  his  occupation;  also  that  the  tendency  of  such  restraint  is  to 

112 


CONTRACTS  IN   RESTRAINT  OP  TRADE  §  88 

but  contracts  whereby  men  bind  themselves  never  there- 
after to  pursue  a  particular  calling,  within  reasonable 
geographical  limits,  or  not  to  pursue  such  calling  at  all 
within  a  reasonable  time  are  generally  upheld." 

foster  monopolies,  prevent  competition,  enhance  prices,  and  might  ulti- 
mately enable  organized  capital  to  silence  all  competition,  become  the  sole 
producer  and  place  the  public  at  its  mercy."  Swigert  &  Howard  v.  Tilden, 
121  Iowa  650,  654,  97  N.  VV.  82,  63  L.  R.  A.  108,  100  Am.  St.  Rep.  374,  per 
Bishop,  C.  J.,  citing  Wright  v.  Ryder,  36  Cal.  342,  95  Am.  Dec.  186;  Alger 
V.  Thacher,  19  Pick.  (36  Mass.)  51,  31  Am.  Dec.  19;  Western  Wooden-Ware 
Assoc.  V.  Starkey,  84  Mich.  76,  47  N.  W.  604,  11  L.  R.  A.  503,  22  Am.  St. 
Rep.  686. 

In  a  Kentucky  case  it  is  declared  that:  "It  was  one  of  the  most  ancient 
rules  of  the  common  law  that  all  contracts  in  restraint  of  trade  were  void. 
We  learn  from  the  year  books  that  this  was  considered  the  settled  law  of 
England  as  early  as  the  year  1415;  and  its  courts  would  not  then  tolerate 
the  least  infraction  of  this  rule.  It  was  enforced  with  much  judicial  severity 
and  doubtless  grew  out  of  the  law  of  apprenticeship  under  which  no  one  in 
that  country  could  earn  a  livelihood  at  any  trade  until  after  long  service, 
and  then  he  must  continue  in  the  one  adopted  by  him  or  have  none.  For 
two  hundred  years  the  rule  existed,  without  exception,  that  all  contracts  in 
restraint  of  trade  were  void.  It  was  qualified,  however,  as  the  law  of  ap- 
prenticeship broadened;  and  a  distinction  was  then  drawn  by  the  cases  of 
Broad  v.  Jollyfe,  Cro.  Jac.  596,  and  Mitchell  v.  Reynolds,  1  P.  Wms.  181 
between  a  general  and  limited  restraint  of  trade.  Other  decisions  followed 
until  it  became  the  settled  English  rule,  that  while  a  contract  not  to  do 
business  anywhere  is  void,  yet  one  stipulating  not  to  do  so  in  a  particular 
place,  or  within  certain  limits,  is  valid.  This  has  always  been  the  rule  in 
this  country.  The  wisdom  of  the  rule  as  qualified  cannot  be  doubted.  It  is 
eminently  suited  to  the  genius  of  our  institutions.  It  prevents  the  building 
up  of  monopolies  and  the  creation  of  exclusive  privileges.  Contracts  in 
general  restraint  of  trade  produce  them,  they  tend  to  destroy  industry  and 
competition  in  a  country,  thus  enhancing  prices  and  diminishing  the  prod- 
ucts of  skill  and  energy;  they  impair  the  means  of  Hvelihood  and  injure 
the  public  by  depriving  it  of  the  services  of  men  in  useful  employments. 
The  law  therefore  guards  against  these  evils  by  declaring  such  contracts 
void.  Pike  f.  Thomas,  4  Bibb  (7  Ky.),  486,  7  Am.  Dec.  74.  This  reaaoning, 
however,  does  not  apply  to  such  as  impose  but  a  special  restraint ,  as  not  to 
to  carry  on  trade  at  a  particular  place  or  with  certain  persons,  or  for  a 
limited  reasonable  time. 

"  The  party  contracting  is  then  left  free  to  exercise  his  trade  or  transact 
business  at  other  places,  other  times,  and  with  other  persons.  Indeed,  a 
particular  trade  may  be  promoted  by  being  limited  for  a  short  period  to  a 
few  persons,  and  the  public  benefited  by  preventing  too  many  from  en- 
gaging in  the  same  calling  at  the  same  place.  If  therefore  the  limitation  be 
a  reasonable  one  it  will  be  upheld."  Sutton  v.  Head,  86  Ky.  156,  157,  158, 
5  S.  W.  410,  per  Holt,  J. 

"  Moorman  &  Givena  v.  Parkerson  (La.,  1911),  54  So.  47,  citing  Oregon 

8  113 


§  89  NATURE    ESSENTIALS   OR  TEST — 

§  89.  Public  Policy  as  Test — Contracts  in  Restraint  of 
Trade — Contracts  Tending  To  Create  Monopolies — 
Useful  Commodities.  ^2 

At  common  law  any  contract  or  agreement  that  in  its 

Steam  Navigation  Co.  v.  Winsor,  20  Wall.  (87  U.  S.)  64,  22  L.  ed.  315; 
Fleckenstein  Bros.  v.  Fleckenstein,  76  N.  J.  L.  613,  71  Atl.  295,  24  L.  R.  A. 
(N.  S.)  913. 

In  a  Massachusetts  case  the  court  says:  "Among  the  most  ancient  rules 
of  the  common  law,  we  find  it  laid  down,  that  bonds  in  restraint  of  trade  are 
void.  As  early  as  the  second  year  of  Henry  V  (a.  d.  1415)  we  find  by  the 
Year  Books,  that  this  was  considered  to  be  old  and  settled  law.  Through 
a  succession  of  decisions,  it  has  been  handed  down  to  us  unquestioned  till 
the  present  time.  It  is  true,  the  general  rule  has,  from  time  to  time,  been 
modified  and  qualified,  but  the  principle  has  always  been  regarded  as  im- 
portant and  salutary.  For  two  hundred  years,  the  rule  continued  un- 
changed and  without  exceptions.  Then  an  attempt  was  made  to  qualify 
it  by  setting  up  a  distinction  between  sealed  instruments  and  simple  con- 
tracts. But  this  could  not  be  sustained  upon  any  sound  principle.  A  dif- 
ferent distinction  was  then  started,  between  a  general  and  a  limited  re- 
straint of  trade,  which  has  been  adhered  to  down  to  the  present  day.  This 
qualification  of  the  general  rule  may  be  found  as  early  as  the  eighteenth 
year  of  James  I,  a.  d.  1621.  Broad  v.  JolyflFe,  Cro.  Jac.  596.  When  it  was 
held,  that  a  contract  not  to  use  a  certain  trade  in  a  particular  place,  was  an 
exception  to  the  general  rule  and  not  void.  And  in  the  great  and  leading 
case  on  this  subject,  Mitchell  v.  Reynolds,  reported  in  Lucas,  27,  85,  130, 
Fortescue,  296,  and  1  P.  Wms.  181,  the  distinction  between  contracts  under 
seal,  and  not  under  seal,  was  finally  exploded  and  the  distinction  between 
limited  and  general  restraints  fully  established.  Ever  since  that  decision, 
contracts  in  restraint  of  trade  generally,  have  been  held  to  be  void;  while 
those  limited  as  to  time  or  place  or  persons,  have  been  regarded  as  vahd 
and  duly  enforced. 

"  Whether  these  exceptions  to  the  general  rule  were  wise  and  have  really 
improved  it,  some  may  doubt;  but  it  has  been  too  long  settled  to  be  called 
in  question  by  a  lawyer.  This  doctrine  extends  to  all  branches  of  trade  and 
all  kinds  of  business.  The  efforts  of  the  plaintiff's  counsel  to  limit  it  to 
handicraft  trades,  or  to  found  it  on  the  English  system  of  apprenticeship, 
though  enriched  by  deep  learning  and  indefatigable  research,  have  proved 
unavailing.  In  England,  the  law  of  apprenticeship  and  the  law  against 
the  restraint  of  trade,  may  have  a  connection.  But  we  think  it  very  clear 
that  they  do  not,  in  any  measure,  depend  upon  each  other."  Alger  v. 
Thacher,  19  Pick.  (36  Mass.),  51,  52,  31  Am.  Dec.  119,  per  Morton,  J. 

In  an  early  case  in  Washington  Territory  it  was  declared  that:  "Contracts 
in  restraint  of  trade  are  of  two  kinds:  1,  Those  in  general  or  total  restraint  of 
trade.    2,  Those  in  partial  or  limited  restraint  of  trade.    Those  of  the  first 

''As  to  distinction  between  (1)  contracts  jjer  se  in  restraint  of  trade 
whereby  one  contracts  himself  out  of  a  trade;  and  (2)  contracts  which  tend 
to  destroy  competition  and  create  monopolies,  see  State  v.  Duluth  Board  of 
Trade,  107  Minn.  506,  526,  121  N.  W.  395. 

114 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  89 

operation  has  or  may  have  a  tendency  to  restrain  trade, 
monopoly,  or  to  unnaturally  control  the  supply  of  or  to 
stifle  competition  in  trade,  to  create  or  maintain  a  mo- 
nopoly, or  to  unnaturally  control  the  supply  of  or  to  in- 
crease the  price  of  or  to  curtail  the  opportunity  of  ob- 
taining useful  commodities,  to  the  injury  of  the  public  or 
any  considerable  portion  of  the  population  of  any  locality, 
is  regarded  as  contrary  to  just  governmental  principles 
and  inimical  to  the  public  welfare  and  therefore  against 
public  policy.  And  contracts  or  agreements  that  violate 
the  principles  designed  for  the  public  welfare  are  illegal 
and  will  not  in  general  be  enforced  by  the  courts." 

class  are  void  upon  their  face,  and  have  been  uniformly  so  held  to  be  by 
English  and  American  courts.    For  near  two  centuries  all  contracts  in  re- 
straint of  trade  were  included  in  this  class  and  were  therefore  declared  void. 
But  as  commerce  and  general  business  increased,  and  artizans  of  all  kinds 
multiplied,  this  rule  was  felt  to  be  unnecessarily  rigorous.    The  first  limita- 
tion of  its  general  operation  was  made  by  the  establishment  of  the  distinc- 
tion between  contracts  under  seal  and  parol  contracts.     The  courts  for  a 
time  enforced  the  former  but  refused  to  enforce  the  latter.    In  other  words 
the  rule  was  virtually  changed  into  a  law  of  evidence.    But  this  distinction, 
having  no  sure  foundation  in  reason  or  policy  was  soon  overthrown.    Then 
came  the  present  distinction  between  contracts  in  total  restraint  of  trade, 
and  those  only  in  partial  restraint,  which  is  now  firmly  settled  both  by 
the  adjudications  in  England  and  in  this  country.    The  first  we  have  seen 
were  uniformly  held  void.  *  *  *    Another  method  by  which  monopolies 
were  sought  to  be  obtained  was  by  private  contracts,  by  which  one  of  the 
parties  bound  himself  not  to  engage  in,  nor  carry  on  some  particular  trade 
or  business,  without  any  Umitation  of  time  or  place.    The  restraint  was 
usually  sought  to  be  effected  by  means  of  a  bond  with  a  heavy  sum  fixed 
by  the  obUgor  as  liquidated  damages.    Thus  persons  and  corporations  at- 
tempted to  hedge  themselves  around— to  deprive  the  pubUc  of  the  benefits 
of  competition  to  secure  a  continuance  of  their  monopoly."    Oregon  Steam 
Navigation  Co.  v.  Hale,  1  Wash.  Ty.  283,  284,  285,  per  Jacobs,  Ch.  J. 
"  Stewart  &  Bro.  v.  Sterns  &  Culvert  Lumber  Co.,  56  Fla.  570,  48  So.  19. 
"The  unreasonableness  of  contracts  in  restraint  of  trade  and  business  is 
very  apparent  from  several  obvious  considerations.     (1)  Such  contracts 
injure  the  parties  making  them  because  they  diminish  their  means  of  pro- 
curing UveUhoods  and  a  competency  for  their  families.    They  tempt  im- 
pro\ident  persons  for  the  sake  of  present  gain,  to  deprive  themselves  of  the 
power  to  make  future  acquisitions.    And  they  expose  such  person  to  im- 
position and  oppression.    (2)  They  tend  to  deprive  the  public  of  the  services 
of  men  in  the  employments  and  capacities  in  which  they  may  be  most  useful 
to  the  community  as  well  as  themselves.     (3)  They  discourage  industry 
and  enterprise  and  diminish  the  products  of  ingenuity  and  skill.    (4)  They 
prevent  competition  and  enhance  prices.    (5)  They  expose  the  public  to  all 

115 


I  89  NATURE   ESSENTIALS  OR  TEST — 

Contracts  among  independent  and  unconnected  manu- 
facturers looking  to  the  control  of  the  prices  of  their  manu- 
facture by  limitation  of  the  production,  by  restriction  on 
distribution,  or  by  express  agreement  are  opposed  to 
public  interest  and  unenforceable  as  tending  to  create  a 
monopoly;  especially  so,  if  it  be  assumed  that  the  article 
covenanted  about  has  become  a  commodity  of  great  im- 
portance to  public  health  and  comfort."  So  a  contract, 
combination  or  trust  among  various  producers  and  sellers 
of  a  commodity,  the  direct  and  necessary  or  natural  effect 
of  which  is  to  restrain  competition  and  control  the  prices 
of  such  commodity,  is  in  unreasonable  restraint  of  trade, 
and  void   at   common   law  because   contrary  to  public 

the  evils  of  monopoly.  And  this  especially  is  applicable  to  wealthy  com- 
panies and  large  corporations,  who  have  the  means,  unless  restrained  by  law, 
to  exclude  rivalry,  monopolize  business  and  engross  the  market.  Against 
evils  like  these,  wise  laws  protect  individuals  and  the  pubUc,  by  declaring 
all  such  contracts  void."  Alger  f.  Thacher,  19  Pick.  (36  Mass.)  51,  54,  31 
Am.  Dec.  119,  per  Morton,  J. 

"All  grants  of  this  kind  (monopohes)  relating  to  any  known  trade  are 
made  void  by  the  common  law,  as  being  against  the  freedom  of  trade,  dis- 
couraging labor  and  industry,  restraining  persons  from  getting  an  honest 
livehhood  by  a  lawful  employment,  and  putting  it  in  the  power  of  particular 
persons  to  set  what  prices  they  please  on  a  commodity;  all  of  which  are 
manifest  inconveniences  to  the  public."  Bacon's  Abridg.  (Bouvier's  Ed., 
1860)  "Monopoly." 

"All  grants  of  this  kind  are  void  at  common  law,  because  they  destroy 
the  freedom  of  trade,  discourage  labor  and  industry,  restrain  persons  from 
getting  an  honest  livelihood,  and  put  it  in  the  power  of  the  grantees  to  en- 
hance the  price  of  commodities.  They  are  void  because  they  interfere  with 
the  liberty  of  the  individual  to  pursue  a  lawful  trade  or  employment." 
Butchers'  Union  Slaughter  House  &  Live-Stock  Landing  Co.  v.  Crescent 
City  Live-Stock  Landing  &  Slaughter-House  Co.,  Ill  U.  S.  746,  755,  4  Sup. 
Ct.  652,  28  L.  cd.  585,  per  Mr.  Justice  P^ield  (case  of  grant  of  exclusive  priv- 
iliges  for  stock-landing  and  slaughter-houses;  bill  for  injunction;  constitu- 
tional law).  Quoted  in  Marshall,  Bruce  &  Co.  v.  City  of  Nashville,  109 
Tenn.  495,  509,  71  S.  W.  815,  per  Wilkes,  J.  (case  of  invaUdity  of  ordinance 
requiring  union  label  on  city  printing). 

Public  policy  favors  competition  in  trade  and  opposes  monopolies  and 
restraints  upon  trade  in  useful  commodities  where  the  public  welfare  is  in- 
juriously affected.  Stewart  &  Bro.  v.  Stems  &  Culver  Lumber  Co.,  56 
¥l&.  570,  48  So.  19. 

"  Trenton  Potteries  Co.  v.  Oliphant,  58  N.  J.  Eq.  507,  43  Atl.  723,  46 
L.  R.  A.  255,  78  Am.  St.  Rep.  612,  case  modifies  56  N.  J.  Eq.  680,  39  Atl. 
923. 

116 


CONTRACTS   IN    RESTRAINT  OF  TRADE  §89 

policy.^''  But  it  is  declared  that  a  corporation  organized 
for  the  purpose  of  controlling  the  manufacture  and  sale 
of  matches,  and  by  means  of  which  scheme  all  competi- 
tion is  stifled  and  opposition  crushed,  and  the  whole  busi- 
ness of  the  country  in  that  line  engrossed  by  the  said  cor- 
poration is  a  menace  to  the  public;  its  object  and  direct 
tendency  being  to  prevent  free  and  fair  competition,  and 
control  prices  throughout  the  national  domain.  It  is  no 
answer  to  say  that  such  a  monopoly  has  in  fact  reduced 
the  price  of  friction  matches.  Such  a  policy  may  have 
been  necessary  to  crush  competition.  The  fact  exists  that 
it  rests  in  the  discretion  of  the  corporation  at  any  time 
to  raise  the  price  to  an  exorbitant  degree.  Such  combina- 
tions have  frequently  been  condemned  by  the  courts  as 
unlawful,  and  against  public  policy.^®  It  is  held,  however, 
that  restraint  of  trade  is  not  to  be  tested  by  the  prices  that 
result  from  the  combination,  since  a  combination  that 
leads  directly  to  lower  prices  to  the  consumer  may  as 
against  him  be  in  restraint  of  trade,  while  a  combination 
that  leads  directly  to  higher  prices  may  as  against  the 
producer  be  restraint  of  trade." 

"  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508,  56 
S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901. 

Manufacturing  corporations  cannot  combine  under  a  contract  to  raise 
prices  for  a  period  of  years  against  the  interests  of  the  public  and  in  re- 
straint of  trade.    Wimston  v.  Whitelegg,  2  B.  D.,  8  R.  R.  «&  Corp.  L.  J.  153. 

Contracts  in  general  restraint  of  trade,  or  contracts  between  individuals, 
to  prevent  competition  and  keep  up  the  price  of  articles  of  utility,  were 
among  the  contracts  illegal  under  the  common  law,  because  opposed  to 
public  policy.  Santa  Clara  Mill  Lumber  Co.  v.  Hayes,  76  Cal.  387,  18  Pac. 
391,  9  Am.  St.  Rep.  211. 

As  to  monopoly:  "It  is  said  that  it  has  three  inseparable  consequences — 
the  increase  of  the  price,  the  badness  of  the  wares,  the  impoverishment  of 
others.  Hence  it  naturally  follows  that  monopolies  are  odious  to  the  law." 
City  of  Seattle  v.  Dencker  (Wash.,  1910),  108  Pac.  1086,  1090,  per  Dun- 
bar, J. 

It  was  a  crime  at  common  law  to  buy  up  such  large  quantities  of  an  article 
as  to  obtain  a  monopoly  of  it  for  the  purpose  of  selling  it  at  an  unreasonable 
price.    State  v.  Eastern  Coal  Co.,  R.  I.  1908,  70  Atl.  1,  4. 

"  Richardson  v.  Buhl,  77  Mich.  632,  43  N.  W.  1102,  6  L.  R.  A.  457. 
"  United  States  v.  Swift  &  Co.  (U.  S.  C.  C),  122  Fe<i.  529.    Decree  in 
case  modified  and  attirmod  in  Swift  &  Co.  v.  United  States,  196  U.  S.  375, 
25  Sup.  Ct.  276,  49  L.  ed.  518. 

117 


§  90  NATURE    ESSENTIALS   OR   TEST — 

§  90.  Public  Policy  as  Test — Contracts  Aflfecting  Arti- 
cles of  Prime  Necessity. 

It  is  held  that  in  determining  whether  or  not  a  contract 
or  combination  is  in  unreasonable  restraint  of  trade,  it  is 
immaterial  whether  or  not  the  commodity  which  is  the 
subject  matter  of  the  contract  or  combination  is  of  prime 
necessity,  if  the  commodity  is  an  article  of  legitimate 
trade  or  commerce.  ^^  But  it  is  also  decided  that  an  agree- 
ment, the  purpose  or  effect  of  which  is  to  create  a  monop- 
oly, is  unlawful,  if  it  relate  to  some  staple  commodity,  or 
thing  of  general  requirement  and  use,  or  of  necessity,  and 
not  something  of  mere  luxury  or  convenience.^^  A  con- 
tract to  combine  may  however,  be  void  as  in  restraint  of 
trade  where  the  combination  is  to  create  a  monopoly  in 
price  and  the  control  of  a  product  even  though  it  be  not 
one  of  prime  necessity.  ^° 

18  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508,  56 
S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901. 

»  Herriman  v.  Menzies,  115  Cal.  16,  46  Pac.  730,  35  L.  R.  A.  318,  56  A.  S. 
R.  81,  association  of  stevedores;  held  not  a  monopoly  or  contract  in  re- 
straint of  trade. 

"  We  take  it  as  being  well  settled,  that  all  combinations  among  dealers  in 
provisions  or  other  articles  of  prime  necessity  are  deemed  in  law  contrary 
to  pubUc  policy  and  contracts  to  effect  or  carry  out  such  combinations  are 
held  void.  *  *  *  Combinations  of  this  character  are  commonly  called 
monopolies,  but  they  are  not  the  technical  monopolies  known  to  the  com- 
mon law."  Queen  Ins.  Co.  v.  The  State,  86  Tex.  250,  269,  24  S.  W.  397,  22 
L.  R.  A.  483,  per  Gaines,  Assoc,  J.,  a  case  of  alleged  combination  of  insur- 
ance companies  to  fix  rates  and  construction  of  State  statute. 

Contract  which  prevents  competition  and  promotes  a  monopoly  in  a 
necessity  of  life  is  void  as  against  public  policy.  Tuscaloosa  Ice  Mfg.  Co. 
v.  Williams,  127  Ala.  110,  28  So.  669,  50  L.  R.  A.  175. 

Where  the  object  or  purpose  is  to  control  the  supply  and  enhance  the 
price  of  an  article  of  actual  necessity,  a  contract  to  restrain  competition  is 
void  as  against  public  policy.  Pacific  Factor  Co.  v.  Adler,  90  Cal.  110,  27 
Pac.  36. 

A  combination  to  stifle  competition  and  trade  in  a  necessity  of  life  is 
contrary  to  public  policy.    Culp  v.  Love,  127  N.  C.  457,  37  S.  E.  476. 

A  conspiracy  to  creat  a  monopoly  in  commodities  which  constitute  the 
necessities  of  life,  or  to  enhance  the  market  price  thereof,  to  the  prejudice 
of  the  consumer,  was  and  is  a  criminal  offense  at  common  law.  State  v. 
Duluth  Board  of  Trade,  107  xMinn.  506,  530,  121  N.  W.  395,  per  Elliott,  J. 

20  Cummins  v.  Union  Bluestone  Co.,  44  N.  Y.  Supp.  787,  affirmed  in  164 
N.  Y.  401,  58  X.  E.  525,  52  L.  R.  A.  262. 

118 


CONTRACTS    IN    RESTRAINT   OF   TRADE      §§91,  92 

§  91.  What  Contracts  Not  Void  as  Against  Public 
Policy. 

A  contract  is  not  against  public  policy  when  it  relates 
to  a  matter  wherein  no  duty  is  owed  to  the  public.-'  And 
where  manufacturing  or  trading  corporations  under 
broad  legislative  grants  are  empowered  to  acquire  prop- 
erty and  the  control  of  other  corporations  who  are  com- 
petitors, contracts  for  such  permitted  purchases  are  not 
repugnant  to  public  policy  or  invalid  even  though  they 
tend  to  produce,  and  may  temporarily  produce,  a  monop- 
oly of  the  commodity;  nor  are  contracts,  which  are  inci- 
dental to  such  permitted  purchases  and  necessary  to  the 
protection  of  the  purchaser  in  the  enjoyment  of  the  busi- 
ness purchased,  invalid  in  such  case,  as  against  public 
poHcy.22 

§  92.  Public  Policy  Test— Public  Service  Corpora- 
tions. 

The  rule  that  agreements  in  general  restraint  of  trade 
are  void  while  those  in  partial  restraint  when  reasonable 
and  founded  upon  a  valid  consideration  are  valid  is  de- 
clared to  be  not  applicable  to  corporations  engaged  in  a 
public  business.  ^^  And  a  combination  between  public 
service  corporations  to  stifle  competition  is  illegal  and 
void  as  against  public  policy.-^  There  are  two  classes  of 
contracts,  that  will  in  no  event  be  enforced  because  con- 
trary to  public  policy,  and  these  constitute  exceptions  to 
the  general  rule  governing  sales  of  the  right  of  competi- 
tion: 1.  A  quasi-public  corporation  cannot  disable  itself 
by  contract  from  performing  the  public  duties  which  it 
has  undertaken  to  discharge  in  consideration  of  the  pri\a- 
leges  granted  to  it.^^    2.  Any  agreement  in  contravention 

"  Wittenberg  v.  Mollyneaux,  60  Neb.  583,  83  N.  W.  842. 

"  Trenton  Potteries  Co.  v.  Oliphant,  58  N.  J.  Eq.  507,  43  Atl.  723,  78 
Am.  St.  Rep.  612,  46  L.  R.  A.  255,  modifying  56  N.  J.  Eq.  680,  39  Atl.  923. 

»  Southern  Fire  Brick  &  Clay  Co.  v.  Garden  City  Sand  Co.,  223  111.  616, 
622,  79  N.  E.  313. 

"  Cleveland,  Columbus,  Cincinnati  &  Indianapolis  R.  Co.  v.  Closser,  126 
Ind.  348,  26  N.  E.  159,  9  L.  R.  A.  754,  45  Am.  «&  Eng.  R.  Cas.  275,  9  Ry.  & 
Corp  L.  J.  165,  45  Alb.  L.  J.  209,  3  Inter.  Com.  Rep.  387. 

"  Cowan  V.  Fairbrother,  118  N.  C.  406,  414,  24  S.  E.  212,  per  Avery,  J., 

119 


§  92  NATURE   ESSENTIALS    OR  TEST — 

of  the  common  or  statute  law  generally,  or  any  combina- 
tion among  those  engaged  in  a  business  impressed  with 
a  public  or  quasi  public  character,  which  is  manifestly 
prejudicial  to  the  pubHc  interest,  is  void  as  against  public 
policy,  and  upon  the  same  principle  no  agreement  tending 
to  create  a  monopoly  or  designed  to  utterly  destroy  fair 
competition  amongst  public  carriers  will  be  enforced. ^^ 
So  the  ordinary  rule  that  contracts  in  partial  restraint  of 
trade  are  not  invalid  does  not  apply  to  corporations  en- 
gaged in  a  public  business  and  in  furnishing  that  which  is 
a  matter  of  public  concern.  Therefore,  since  telegraph 
and  telephone  companies  are  to  be  deemed  public  service 
corporations,  affected  by  a  public  interest,  contracts  tend- 
ing to  restrict  the  free  and  general  use  of  their  lines  are 
invalid.  2^  So  a  contract  giving  an  exclusive  right  for  a 
term  of  years  by  and  between  a  telephone  and  telegraph 
company  is  held  void  as  against  public  policy.  ^^  It  is 
declared  however  that:  "Briefly,  contracts  in  restraint 
of  trade  are  void  if  they  are  so  unreasonable  as  unduly  to 
interfere  with  the  rights  of  the  public.  The  test  is  not 
whether  the  corporation  has  the  right  of  eminent  domain, 
or  whether  its  property  is  impressed  with  a  semi-public 
use,  but  whether  or  not  such  rights  are  unduly  affected."  ^^ 

citing  Gibbs  v.  Consolidated  Gas  Co.  of  Bait.,  130  U.  S.  396,  410,  32  L.  ed. 
979,  9  Sup.  Ct.  553;  Logan  v.  North  Carolina  Rd.  Co.,  116  N.  C.  940,  21 
S.  E.  959.  See  also  Joyce  on  Franchises,  §§  63,  97,  111,  and  heading  "Alien- 
ation" in  Index  to  same. 

»  Cowan  V.  Fairbrother,  118  N.  C.  406,  414,  24  S.  E.  212,  per  Avery,  J., 
citing  State  v.  Standard  Oil  Co.,  49  Ohio  St.  137,  34  Am.  St.  Rep.  541,  30 
N.  E.  279;  Emery  v.  Ohio  Candle  Co.,  47  Ohio  St.  320,  24  N.  E.  660,  21 
Am.  St.  Rep.  819  and  note;  Hooker  v.  Vandewater,  4  Denio  (N.  Y.),  349, 
47  Am.  Dec.  258. 

="  Central  New  York  Teleph.  &  Teleg.  Co.  v.  Averill,  199  N.  Y.  128,  92 
N.  E.  206,  modifying  129  App.  Div.  752,  which  reversed  110  N.  Y.  Supp. 
273,  58  Misc.  59,  citing  Chicago  Gas  Light  &  Coke  Co.  v.  People's  Gas 
Light  &  Coke  Co.,  121  111.  530,  545,  13  N.  E.  169;  Western  Union  Teleg. 
Co.  V.  American  Union  Teleg.  Co.,  65  Ga.  160;  St.  Louis  &  Cairo  Rd.  Co. 
v.  Postal  Teleg.  Co.,  173  111.  508,  537,  51  N.  E.  382;  Western  Union  Teleg. 
Co.  V.  Chicago  &  Paducah  Rd.  Co.,  86  111.  246. 

^  State,  ex  rel.,  Postal  Teleg.  Cable  Co.  v.  Delaware  &  Atlantic  Teleg. 
&  Teleph.  Co.  (U.  S.  C.  C),  47  Fed.  633,  10  Ry.  &  Corp.  L.  J.  123. 

»  Whitaker  v.  Kilby,  106  N.  Y.  Supp.  511,  517,  55  Misc.  337,  per  An- 
drews, J. 

120 


CONTRACTS   IN   RESTRAINT   OF  TRADE      §§  93,  94 

§  93.  Same  Subject. 

A  contract  or  agreement  between  public  service  corpora- 
tions may  be  such  as  to  be  essential  to  the  existence  of  a 
certain  system  such  as  a  contract  entered  into  for  the  pur- 
pose of  establishing  a  competitive  long  distance  telephone 
system,  so  that  the  main  purpose  of  the  combination  is, 
therefore,  not  to  restrain  trade  but  to  extend  it,  the  re- 
straint in  efifect  being  only  incidental  and  minor;  and 
where  the  public  would  not  be  injuriously  affected  by 
such  an  agreement,  its  only  interest  being  in  the  character 
of  the  service  and  not  in  the  lines  or  routes  over  which 
such  service  is  rendered,  the  contract  so  far  at  least  as  it 
does  not  affect  the  public,  and  so  far  at  least,  as  it  is  fair 
and  ^dthin  the  power  of  the  contracting  corporations  to 
make  it,  will  be  enforced.^"  Railroad  companies  may 
combine  to  prevent  destructive  competition  where  the 
public  is  not  injured  by  increase  of  rates  beyond  a  fair 
competitive  standard  or  by  a  \dolation  of  any  public  duty 
owed  by  such  corporations.^^  And  a  railroad  company 
may  validly  give  an  exclusive  right  to  maintain  a  tele- 
graph line  along  its  road  and  such  contract  is  not  void  as 
in  restraint  of  trade  or  as  contrary  to  public  policy.  ^'^ 

§  94.  Effect  of  Changed  Conditions  as  to  Trade,  Com- 
merce, etc. — Public  Policy — English  Courts. 

The  law  as  to  contracts  in  restraint  of  trade  was  ori- 
ginally founded  on  public  policy  according  to  the  ideas, 
and  having  regard  to  the  business  organization  of  the 
time.  The  whole  business  organization  of  society  has 
been  revolutionized  by  the  use  of  railways,  the  post-office, 
and  the  telegraph,  so  that  a  single  firm  may  have  a 
business  extending  over  a  vastly  larger  portion  of  the 
earth's  surface  than  would  have  been  dreamt  of  in  the 
days  when  questions  similar  to  that  raised  in  this  action 

^  Home  Telephone  Co.  v.  North  Manchester  Teleph.  Co.  (Ind.  App., 
1910),  92  N.  E.  558. 

"  Manchester  &  L.  R.  Co.  v.  Concord  R.  Co.,  66  N.  H.  100,  20  At  I. 
383,  9  L.  R.  A.  689,  8  R.  R.  &  Corp.  L.  J.  443,  3  Inters.  Com.  Rep.  319. 

"  Canudiiin  Pac.  R.  Co.  v.  Western  Union  Teleg.  Co.,  17  Can.  S.  C.  151. 

121 


§  94  NATURE   ESSENTIALS   OR   TEST — 

were  dealt  with.  In  addition  to  this,  it  has  been  clearly- 
recognized  in  recent  times  that  public  policy  is  at  least 
as  much  concerned  in  holding  persons  to  their  contracts 
as  in  prohibiting  contracts  in  restraint  of  trade.  ^^ 

In  this  connection  and  for  the  purpose  of  determining 
what  constitute  the  essentials  or  test  of  contracts  or  com- 
binations in  restraint  of  trade  and  whether  the  restraint 
is  reasonable  or  unreasonable,  against  public  policy,  legal 
or  illegal,  what  has  been  determined  or  declared  by  the 
courts  in  certain  important  cases  is  pertinent,  ^^'^  Thus 
it  is  declared  that:  "In  considering  the  apphcation  of  the 
rule,"  as  to  the  distinction  between  general  and  particular 
restraints  and  their  validity,  ''and  the  limitations,  if  any, 
to  be  placed  on  it,  I  think  that  regard  must  be  had  to  the 
changed  conditions  of  commerce  and  the  means  of  com- 
munication which  have  been  developed  in  recent  years. 
To  disregard  these  would  be  to  miss  the  substance  of  the 
rule  in  a  blind  adherence  to  its  letter.  *  *  *  Competition 
has  assumed  altogether  different  proportions  in  these 
altered  circumstances,  and  that  which  would  have  been 
once  merely  a  burden  on  the  covenantor  may  now  be 
essential  if  there  is  to  be  a  reasonable  protection  to  the 
covenantee.  *  *  *  Whether  the  cases  in  which  a  general 
covenant  can  now  be  supported  are  to  be  regarded  as 
exceptions  from  the  rule  which  I  think  was  long  recognized 
as  established,  or  whether  the  rule  is  itself  to  be  treated 
as  inapplicable  to  the  altered  conditions  which  now  pre- 
vail, is  probably  a  matter  of  words  rather  than  of  sub- 
stance. The  latter  is  perhaps  the  sounder  view.  When 
once  it  is  admitted  that  whether  the  covenant  be  general 
or  particular  the  question  of  its  validity  is  alike  deter- 
mined by  the  consideration  whether  it  exceeds  what  is 
necessary  for  the  protection  of  the  covenantee,  the  distinc- 
tion between  general  and  particular  restraints  ceases  to  be 
a  distinction  in  point  of  law."  And  it  was  held  that  the 
covenant  in  the  case  then  under  discussion,  though  un- 

»» Underwood  &  Son,  Ltd.,  v.  Barker,  Law  Rep.  [1899],  1  Ch.  D.  300, 
308,  68  L.  J.  Ch.  201,  80  L.  T.  306,  47  W.  R.  347,  per  Rigby,  L.  J. 
"«  See  notes  to  §§  88,  89  herein. 

122 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  9.5 

restricted  as  to  space  was  not,  having  regard  to  the  nature 
of  the  business  and  the  limited  number  of  customers — 
namely  certain  governments — wider  than  was  necessary 
for  the  protection  of  the  covenantee,  nor  injurious  to  the 
public  interests  of  the  country;  that  it  was,  therefore, 
valid  and  enforceable.^^ 

§  95.  Same  Subject — Federal  Courts. 

Inasmuch  as  the  Federal  and  State  Anti-Trust  Statutes 
must  be  considered  the  following  is  important:  "In  con- 
struing statutes  the  courts  should  not  close  their  eyes  to 
what  they  know  of  the  history  of  the  country  and  of  the 
law,  of  the  condition  of  the  law  at  a  particular  time,  of 
the  public  necessities  felt,  and  other  kindred  things,  for  the 
reason  that  regard  must  be  had  to  the  words  in  which 
the  statute  is  expressed  as  applied  to  the  facts  existing  at 
the  time  of  its  enactment."  ^^ 

But  in  another  Federal  case  the  court  says:  "Much  has 
been  said  in  regard  to  the  relaxing  of  the  original  strict- 
ness of  the  common  law  in  declaring  contracts  in  restraint 
of  trade  void  as  conditions  of  civilization  and  public  poUcy 
have  changed,  and  the  argimient  drawn  therefrom  is 
that  the  law  now  recognizes  that  competition  may  be  so 
ruinous  as  to  injure  the  public,  and,  therefore,  that  con- 
tracts made  with  a  view  to  check  such  ruinous  competition 
and  regulate  prices  though  in  restraint  of  trade,  and  having 
no  other  purpose  will  be  upheld.    We  think  this  conclusion 

"  Nordenfelt  v.  Maxim  Nordenfelt  Guns  &  Ammunition  Co.,  Law  Rep. 
App.  Cas.  [1894]  535,  547,  548,  per  Lord  Herschell,  L.  C,  considering  Mit- 
chell V.  Reynolds,  1  P.  Wms.  181;  Master,  etc.,  of  Gunmakera  v.  Fell, 
Willes,  388;  Horner  v.  Graves,  7  Bing.  735,  743;  Hinde  v.  Gray,  1  Man.  & 
G.  195;  Ward  v.  Byrne,  5  M.  &  W.  548;  WTiittaker  v.  Howe,  3  Beav.  383, 
394;  Davis  v.  Mason,  5  T.  Rep.  118;  Leather  Cloth  Co.  v.  Lorsant,  Law 
Rep.  9  Eq.  345;  Rousillon  v.  Rouissillon,  14  Ch.  D.  351, 

The  principles  laid  down  in  the  Nordenfelt  case  above  are  applied  in 
Underwood  v.  Barker,  L.  R.  [1899]  1  Ch.  D.  300,  68  L.  J.  Ch.  201,  80  Law. 
T.  306,  47  W.  R.  347. 

»  Mannington  v.  Hocking  Valley  Ry.  Co.  (U.  S.  C.  C),  183  Fed.  133, 
155,  per  Sater,  Dist.  J.,  citing  State  v.  Vanderbiit,  37  Ohio  St.  643;  State  v. 
Schlatterbeck,  39  Ohio  St.  268,  271;  Hathaways  Will,  In  re,  4  Ohio  St.  385; 
Cooley's  Const.  Lim.  (6th  ed.)  69-74,  24  Am.  &  Eng.  Ency.  Law,  597,  605, 
611,  616,  618. 

123 


§  96  NATURE   ESSENTIALS   OR  TEST — 

is  unwarranted  by  the  authorities  when  all  of  them  are 
considered."  ^^ 

§  96.  Same  Subject — State  Courts. 

The  doctrine,  which  avoids  a  contract  for  being  one  in 
restraint  of  trade  is  founded  upon  a  public  policy.  It 
had  its  origin  at  a  time  when  the  field  of  human  enterprise 
was  limited,  and  when  each  man's  industrial  activity  was, 
more  or  less,  necessary  to  the  material  well  being  and 
welfare  of  his  community  and  of  the  state.  The  condi- 
tions which  made  so  rigid  a  doctrine  reasonable,  no  longer 
exist.  In  the  present  practically  unlimited  field  of  human 
enterprise,  there  is  no  good  reason  for  restricting  the 
freedom  to  contract,  or  for  fearing  injury  to  the  public 
from  contracts  which  prevent  a  person  from  carrying  on 
a  particular  business.  Interference  would  only  be  justi- 
fiable when  it  was  demonstrable  that,  in  some  way,  the 
public  interests  were  endangered." 

In  a  West  Virginia  case  the  court  says:  ''We  approach 
the  determination  of  this  question  reaHzing  the  great 
change  that  has  taken  place  in  industrial  conditions  and 
in  business  methods  from  those  prevailing  in  the  early 
history  of  the  common  law,  and  that  the  courts  are  con- 
stantly called  upon  to  apply  the  principles  of  that  law  to 
such  new  conditions,  in  view  of  many  decisions  diverse 
and  ofttimes  conflicting,  and  amid  an  evolution  of  the 
application  of  old  principles  rather  than  the  announce- 
ment of  new  principles,  and  to  reach  conclusions  guided 
by  what  they  deem  the  best  considered  cases  and  au- 
thorities on  the  subject."  ^^ 

In  a  Minnesota  case  it  is  declared  that:  "The  common- 

»  United  States  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  283,  29 
C.  C.  A.  141,  per  Taft,  Cir.  J.,  in  considering  effect  of,  and  in  construing 
Sherman  Anti-Trust  Act  of  July  2,  1890,  see  §§  13,  14,  herein. 

"  Wood  V.  Whitehead  Bros.  Co.,  165  N.  Y.  545,  551,  59  N.  E.  357,  per 
Gray,  J.,  quoted  in  Swigert  &  Howard  v.  Tilden,  121  Iowa,  650,  657,  97 
N.  W.  82,  63  L.  R.  A.  108,  100  Am.  St.  Rep.  374,  per  Bishop,  C.  J. 

M  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508, 
520,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901,  per  Cox, 
J.  See  also  Trenton  Potteries  Co.  v.  Oliphant,  58  N.  J.  Eq.  507,  514,  43 
Atl.  723,  46  L.  R.  A.  255,  per  Magie,  C.  J. 

124 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  96 

law  rules  were  sufficient  under  ordinary  conditions  to 
protect  the  public  and  yet  leave  ample  freedom  for  legiti- 
mate business  transactions.  But  the  astonishing  material 
development  of  this  country,  with  its  opportunities  for 
exploitation  and  the  acquisition  of  great  wealth,  produced 
conditions  which  the  common  law  with  its  inadequate 
remedies,  seemed  unable  to  control.  Competition  was 
rapidly  being  eliminated  from  the  business  situation,  with 
the  result  that  the  prices  of  most  of  the  articles  of  every- 
day use  were  determined  arbitrarily  by  men  who  con- 
trolled their  production  and  distribution,  instead  of  by 
the  laws  which  are  supposed  to  operate  when  trade  and 
commerce  are  free  from  artificial  restraints.  These  abuses 
led  to  the  enactment  of  a  series  of  statutes  which  are 
popularly  known  as  'anti-trust  statutes'."  ^^ 

In  an  Iowa  case  the  court  says:  "In  view,  however,  of 
the  ever-changing  conditions  of  trade,  commerce,  the 
mechanics,  arts,  etc.,  and  the  diversity  of  interests  which 
obtain  in  the  various  States  and  countries,  it  must  be 
manifest  that  there  can  be  no  single  standard  respecting 
pubhc  pohcy.  This  is  true  to  the  extent  that  it  frequently 
happens  that  in  certain  respects  the  poUcy  of  one  State  is 
found  to  be  the  exact  opposite  of  that  maintained  by  an- 
other; and,  even  where  there  is  no  essential  difference  in 
the  matter  of  abstract  definition,  it  may  be  certain  that 
self-interest  viewed  from  the  standpoint  of  locahty  more 
or  less  immediate,  will  enter  into  and  dominate  the  side 
of  practical  application.  Now,  in  this  country  we  have 
no  such  conditions  as  existed  when  the  doctrine,"  that 
contracts  in  general  restraint  of  trade  are  void  as  against 
public  policy  *'was  first  promulgated.  *  *  *  To  anyone 
familiar  with  present  day  conditions,  it  requires  no  argu- 
ment to  demonstrate  that  pubhc  policy  requires  that  in 
trade  matters  there  shall  be  no  restraints  imposed,  save 
in  those  instances  where  it  is  clearly  made  to  appear  that 
the  public  welfare  would  be  otherwise  seriously  endan- 
gered.   And  an  all-important  factor  in  business  life  is  the 

»  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  530,  531,  121  N.  W. 
395,  per  Elliott,  C.  J. 

125 


§  97  NATURE   ESSENTIALS   OR   TEST — 

right  of  individual  contract — the  right  to  buy  and  sell, 
to  bargain  and  convey  at  will.  The  demand  for  recogni- 
tion of  this,  coming  up  from  the  world  of  business,  has 
been  heard,  and  countenance  given  thereto,  by  legislatures 
and  courts  everywhere.  So,  too,  note  has  been  taken  of 
the  baneful  results  which  will  follow,  seemingly  with 
inevitable  certainty,  from  giving  sanction  even  negatively, 
to  acts  or  conduct  involving  fraud  or  bad  faith.  Certainly 
it  is  not  going  too  far  to  say  that  there  can  be  no  sound 
public  policy  which  operates  to  give  countenance  to  the 
open  disregard  and  violation  of  personal  contracts  entered 
into  in  good  faith  and  upon  good  consideration.  In  a 
recent  case  it  has  been  well  said :  '  Public  policy  is  a  vari- 
able test.  In  the  days  of  the  early  English  cases,  one  who 
could  not  work  at  his  trade  could  hardly  work  at  all.  The 
avenuQS  to  occupation  were  not  as  open  or  as  numerous 
as  now,  and  one  rarely  got  out  of  the  path  he  started  on. 
Contracting  not  to  follow  one's  trade  was  about  the  same 
as  contracting  to  be  idle  or  to  go  abroad  for  employment. 
But  this  is  not  so  now.  It  is  an  every  day  occurrence  to 
see  men  busy  and  prosperous  in  other  pursuits  than  those 
to  which  they  were  trained  in  youth,  as  well  as  to  see  them 
change  places  and  occupations  without  depriving  them- 
selves of  the  means  of  livelihood,  or  the  State  of  the  benefit 
of  their  industry.  It  would  therefore  be  absurd  in  the 
light  of  this  common  experience,  now  to  say  that  a  man 
shuts  himself  up  to  idleness  or  to  expatriation,  and  thus 
injures  the  public,  when  he  agrees  for  a  sufficient  con- 
sideration, not  to  follow  some  one  calfing  within  the  limits 
of  some  particular  State.  There  is  no  expatriation  in 
moving  from  one  State  to  another,  and  from  such  removal 
a  State  would  be  likely  to  gain  as  much  as  it  would  lose.' "  *° 

§  97.  Extent  of  Illegality  of  Contract  in  Restraint  of 
Trade— New  Rule. 

At  common  law  contracts  in  restraint  of  trade  were  not 

*°  Swigert  &  Howard  v.  Tilden,  121  Iowa  650,  656,  97  N.  W.  82,  63  L. 
R.  A.  108,  100  Am.  St.  Rep.  374,  per  Bishop,  C.  J.,  citing  Herreshoff  v. 
Boutineau,  17  R.  I.  3,  19  Atl.  712,  8  L.  R.  A.  469,  33  Am.  St.  Rep.  850. 

126 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  97 

unlawful  in  the  sense  of  being  criminal,  nor  did  their 
breach  give  rise  to  a  civil  action  for  damages  in  favor  of 
one  prejudicially  affected  thereby.  They  were  simply 
void  and  were  not  enforced  by  the  courts,  nor  could  mo- 
nopolies be  legally  enjoyed."*^ 

In  an  early  Michigan  case  the  court  said:  "It  has  some- 
times been  said  by  text  writers,  and  even  by  courts,  that 
all  contracts  in  restraint  of  trade,  whether  general  or 
limited,  are  prima  facie  void,  or  that  they  are  to  be  pre- 
sumed void,  until  it  be  shown,  not  only  that  there  was 

*'  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  530,  121  N.  W.  395, 
per  Elliott,  J.;  United  States  v.  Addyaton  Pipe  &  Steel  Co.,  85  Fed.  271, 
279,  29  C.  C.  A.  141,  per  Taft,  Cir.  J.  (in  construing  the  Sherman  Anti- 
Trust  Act  of  1890,  see  §§  13,  14,  herein),  citing  Mogul  Steamship  Co.  v. 
McGregor,  Gow  &  Co.,  [1892]  App.  Cas.  25;  Hornby  v.  Close,  Law  Rep. 
2  Q.  B.  153;  Lord  Campbell,  C.  J.,  in  Hilton  v.  Eckersley,  6  El.  &  Bl.  47, 
66;  Hannen,  J.,  in  Farren  v.  Close,  Law  Rep.  4,  Q.  B.  602,  612.  Examine 
definition  of  "engrossing,"  §  5,  herein. 

"It  has  long  been  settled  that  contracts  or  combinations  of  the  pro- 
ducers or  dealers  in  staple  commodities  of  prime  necessity  to  the  people, 
to  restrict  or  monopolize  their  supply  or  enhance  their  price,  pooling  con- 
tracts, or  combinations  between  such  producers  or  dealers  to  divide  their 
profits  in  certain  fixed  proportions,  and  pooling  contracts  or  combina- 
tions between  competing  common  carriers,  are  illegal  restraints  of  trade 
and  void."  United  States  v.  Trans-Missouri  Freight  Assoc,  58  Fed.  58, 
69,  7  C.  C.  A.  15,  24  L.  R.  A.  73  (166  U.  S.  290),  per  Sanborn,  Cir.  J.,  a 
case  under  the  Sherman  Act  (see  §  13,  herein),  construction  of  the  statute 
and  monopoly;  restraint  of  interstate  commerce. 

"Contracts  in  undue  restraint  of  trade  are  loosely  spoken  of  in  the 
books  as  'illegal  contracts.'  It  is  more  accurate  to  style  them  'unenforce- 
able contracts.'  It  is  not  against  the  law  to  make  such  a  contract,  or  il- 
legal to  perform  it,  as  was  said  by  Pollock,  C.  B.,  in  Green  v.  Price,  13 
Mees  &  W.  695:  'It  is  merely  a  covenant  which  the  law  will  not  enforce, 
but  the  party  may  perform  it  if  he  choose.'  "  Rosenbaum  v.  United 
States  Credit  System  Co.,  65  N.  J.  L.  255,  48  Atl.  237,  239,  53  L.  R.  A. 
449,  per  Collins,  J.,  quoted  down  to  and  including  the  words  "unenforce- 
able contracts,"  by  Andrews,  J.,  in  Central  New  York  Teleph.  &  Teleg. 
Co.  v.  Averill,  110  N.  Y.  Siipp.  273,  278,  58  Misc.  59  (rev'd  in  129  App. 
Div.  752,  which  was  modiliod  in  199  N.  Y.  128,  92  N.  E.  206),  and  the 
court  adds:  "And  similar  statements  have  been  made  in  English  cases. 
Yet,  as  is  said  by  Judge  Allen  in  Bishop  v.  Palmer,  146  Mass.  469,  16  N. 
E.  299,  4  Am.  St.  Rep.  339,  *  *  *  A  contract  in  restraint  of  trade  is  held 
to  be  void  because  it  tends  to  the  prejudice  of  the  public.  It  is  therefore 
deemed  by  the  law  to  be  not  merely  an  insufficient  or  invalid  considera- 
tion, but  a  vicious  one.  Being  so  it  rests  on  the  same  ground  as  if  such 
contracts  were  forbidden  bj*  positive  statute.  They  are  forbidden  by  the 
common  law,  and  are  held  to  be  illegal." 

127 


§  98  NATURE   ESSENTIALS   OR   TEST — 

an  adequate  consideration,  but  that  the  circumstances 
under  which  the  contract  was  made  were  such  as  to  render 
the  restraint  unreasonable.  But  the  rule  to  be  drawn  from 
a  careful  analysis  of  the  adjudged  cases  and  the  reasons 
upon  which  they  are  founded,  does  not  seem  to  us  to 
involve  any  such  presumption  in  the  accurate  or  legal 
sense  of  the  term,  and  may  be  more  correctly  stated  to 
be  that  all  contracts  in  restraint  of  trade  are  void,  if  con- 
sidered only  in  the  abstract  and  without  reference  to  the 
situation  or  objects  of  the  parties  or  other  circumstances 
under  or  with  reference  to  which  they  were  made;  and 
this  though  the  pecuniary  consideration  paid  may  have 
been  sufficient  to  support  the  contract  in  any  other  as- 
pect, or  an  ordinary  contract  for  a  legal  purpose;  or  even 
though  it  may  be  sufficient  in  value  to  compensate  the 
restraint  imposed."  ^^  Again,  to  be  unlawful  a  restraint 
of  trade  or  monopoly  need  not  be  complete  and  need  not 
amount  to  a  criminal  offense.  The  test  is  whether  the 
restraint  or  monopoly  is  injurious  to  the  public. ^^ 

§  98.  Effect  of  State  Statute  Upon  Illegality  of  Such 
Contract. 

Whether  a  combination  or  contract  in  restraint  of  trade 
is  or  is  not  illegal  at  common  law  is  immaterial  under  a 
state  statute  which  does  not  infringe  the  Fourteenth 
amendment.''''  The  Anti-Trust  Statute  of  Texas  ^^  ma- 
terially enlarged  the  doctrine  of  the  common  law  as  to  mo- 
nopolies and  combines;  and  the  effect,  under  that  statute, 
of  an  agreement  which  is  against  pubUc  policy  is  not  essen- 
tial, the  tendency  is  enough  to  bring  it  within  the  con- 
demnation of  the  law.     It  is  the  settled  policy  of  that 

«  Hubbard  v.  Miller,  27  Mich.  15,  19,  per  Christiancy,  Ch.  J. 

«  Stewart  &  Bro.  v.  Stems  &  Culvert  Lumber  Co.,  56  Fla.  570,  48  So.  19. 

"  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct._  535, 
54  L.  ed.  826  (code  Miss.,  1096,  chap.  145,  §  5002  [Laws  1900,  Chap'.  88], 
compare  Laws  Miss.  1908,  p.  124,  chap.  119).  (Writ  of  error  to  review 
decree  dissolving  a  voluntary  association  of  retail  lumber  dealers  as  a 
combination  in  restraint  of  trade  under  State  Statute.)  Case  affirms 
RetaU  Lumber  Dealers'  Assoc,  v.  State,  95  Miss.  337,  1909,  48  So.  1021. 

«5  Laws,  1903,  chap.  94,  pp.  119-121. 

128 


CONTRACTS   IN    RESTRAINT   OF   TRADE     §§99,   100 

state,  under  its  anti-trust  statutes  and  decisions,  to 
prevent  restrictions  in  trade,  to  prohibit  them  entirely 
without  regard  to  their  immediate  effect  on  trade,  it  was 
not  merely  intended  to  regulate  thera.^® 

§  99.  Restraint  of  Trade— Monopolies — Degree  of 
Competition. 

One  purpose  of  the  law  in  prohibiting  contracts  in 
restraint  of  trade  is  to  encourage  competition,  and  thereby 
lower  the  prices  and  commodities  to  the  pubUc.^^  And 
as  the  natural  effect  of  competition  is  to  increase  trade 
and  commerce,  so  the  termination  of  an  existing  compe- 
tition by  an  aggregation  or  combination  of  individuals 
will,  in  some  degree  at  least,  affect  such  trade  and  com- 
merce and  deprive  the  community  or  country  of  the 
services  of  those  independent  dealers  or  corporations  who 
have  combined. 

The  restriction  upon  competition  may  be  slight  and  be 
such  only  as  is  necessary  to  constitute  a  fair  open  and 
healthy  regulation.  Every  contract  or  combination, 
therefore,  does  not  necessarily  operate  in  restraint  of 
trade  or  commerce  or  constitute  a  monopoly.*^  To  the 
extent  that  a  contract  prevents  the  vendor  from  carrying 
on  the  particular  trade  it  deprives  the  community  of  any 
benefit  it  might  derive  from  his  entering  into  competi- 
tion. But  where  the  business  is  open  to  all  others  there  is 
Uttle  danger  that  the  public  will  suffer  harm  from  lack  of 
persons  to  engage  in  a  profitable  industry.  Such  contracts 
do  not  create  monopohes.  They  confer  no  special  or 
exclusive  privilege.  ^^ 

§  100.  Same  Subject. 

The  true  test  is  whether  the  contract  or  combination, 
in  its  apparent  purpose  or  natural  consequence,  places  a 

«  State  V.  Racine  Suttley  Co.  (Tex.  Civ.  App.,  1911),  134  S.  W.  400,  403. 

«  Ft.  Smith  Light  &  Power  Co.  v.  Kelley  (Ark.,  1910),  127  S.  W.  975, 
981. 

«  See  §§  67,  68,  herein. 

«  Diamond  Match  Co.  v.  Roeber,  106  N.  Y.  473,  481,  13  N.  E.  422,  60 
Am.  Rep.  464,  per  Andrews,  J.,  quoted  in  United  States  Chemical  Co.  v. 
Provident  Chemical  Co.,  64  Fed.  946,  949. 

9  129 


§  100  NATURE  ESSENTIALS   OR  TEST — 

restriction  upon  competition,  or  tends  to  create  a  monop- 
oly, or  is  inimical  to  trade  or  commerce,  and  it  is  not  neces- 
sary that  a  pure  monopoly  is  effected,  or  that  the  restraint 
is  a  complete  one."^" 

The  words  of  the  court  in  a  Minnesota  case  are  pertinent, 
they  are:  ''To  say  that  a  combination  restrains  trade  and 
prevents  competition  is  a  repetition  of  the  same  idea — the 
giving  of  two  names  to  the  same  thing.  Whatever  re- 
strains trade  prevents  competition,  and  whatever  pre- 
vents competition  in  trade  necessarily  restrains  trade. 
The  word  'monopoly'  which  plays  so  great  a  part  in  the 
law,  conveys  the  same  idea,  because  where  there  is  monop- 
oly there  can  be  no  competition.  Production  and  hence 
prices,  are  under  the  control  of  the  monopoHst,  to  the 
possible  and  probable  injury  of  the  pubhc.  Freedom  of 
trade  requires  competition.  Without  one  the  other  cannot 
exist,  and  whatever  restrains  the  one  restricts  the  other. 
It  is  true  that  unrestrained  and  unregulated  competition 
may  destroy  what  it  is  designed  to  preserve;  but  the  theory 
of  law  and  legislation  still  is  that  the  welfare  of  the  public 
requires  that  competition  in  trade  and  commerce  shall 
exist,  in  order  that  freedom  of  trade  may  be  maintained."  ^^ 

But  a  contract  is  in  restraint  of  trade  and  clearly  bad 
where  it  covers  a  necessity  of  life  and  tends  to  injure  the 
public  by  stifling  competition  and  creating  a  monopoly, 
as  where  the  manifest  purpose  of  said  contract  was  to 
secure  to  the  covenantee  a  monopoly  in  the  production 
and  sale  of  ice  in  a  certain  locality,  and  such  was  its  opera- 
tion and  effect,  and  especially  so  where  one  of  the  results 
was  to  reduce  the  available  supply  of  ice  below  the  needs 
of  the  locahty  affected  by  it.  It  also  operated  to  put  it 
into  the  power  of  the  covenantee  to  arbitrarily  fix  prices. 
Such  a  contract  not  only  creates  a  monopoly  but  is  against 
pubhc  poHcy  as  stifling  competition. ''^     A  combination 

«» Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823,  831,  per 
Meyers,  J. 

"  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  523,  121  N.  W.  395, 
per  Elliott,  J. 

"Tuscaloosa  Ice  Mfg.  Co.  v.  Williams,  127  Ala.  110,  28  Lo.  669,  85 
Am.  St.  Rep.  125,  50  L.  R.  A.  175. 

130 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  101 

is  also  in  restraint  of  trade  when  it  is  organized  for  the 
purpose  of  getting  control  of  the  manufacture  and  sale 
of  all  distillery  products  so  as  to  stifle  competition  and 
to  be  able  to  dictate  the  amount  to  be  manufactured  and 
the  prices  at  which  the  same  should  be  sold  and  it  creates, 
or  tends  to  create,  a  monopoly,  especially  so  when  no 
rational  purpose  for  such  organization  can  be  shown 
consistent  with  an  intention  to  allow  business  to  run  in 
its  normal  channels,  to  give  competition  its  legitimate 
operation,  and  to  allow  both  production  and  prices  to  be 
controlled  by  the  natural  influence  of  supply  and  demand, 
and  the  results,  as  shown  by  the  information,  were  such 
as  might  be  anticipated.^^ 

§  101.  What  Degree  of  Competition  Permissible. 

There  should  be  and  is  a  distinction  between  a  consoh- 
dation  of  properties  by  purchase  for  legitimate  business 
reasons  in  order  to  increase  production  and  reduce  cost, 
and  a  combination  of  owners  and  properties  under  one 
management  which  in  many  instances  stifles  competition 
and  arbitrarily  increases  prices.^^  So  agreements  that  in 
their  operation  and  effect  tend  to  facilitate,  stimulate  or 
promote  trade  are  regarded  with  favor  where  they  do 
not  directly  or  indirectly  injure  the  public. ^^  The  principle 
has  been  established  in  New  York,  and  remains  unim- 
paired up  to  the  present  time,  that  security  from  and 
limitation  of  competition  in  a  given  business  is  a  valuable 
right  in  connection  with  said  business,  and  that  there  are 
some  contracts  which,  although  they  curtail  competition 
to  limited  extent  are  vaUd  and  may  be  enforced. ^^  Again, 
the  law  prohibiting  contracts  in  restraint  of  trade  does  not 

"  DistillinR  &  Cattle  Feeding  Co.  v.  People,  156  111.  448,  486,  41  N.  E. 
188,  47  Am.  St.  Rep.  200. 

"  Harbison-Walker  Refractories  Co.  v.  Stanton,  227  Pa.  St.  55,  63,  75. 
Atl.  988,  per  Elkin,  J.    See  United  States  v.  .American  Tobacco  Co.  (U. 
S.  C.  C),  164  Fed.  700,  considered  hereinafter. 

"  Stewart  &  Bro.  v.  Sterns  &  Culver  Lumber  Co.,  56  Fla.  570,  48  So.  19. 

"  McCall  V.  Wright,  198  N.  Y.  143,  91  N.  E.  516,  518,  citing  Wood  v. 
\Mutehead  Bros.  Co.,  165  N.  Y.  545,  59  N.  E.  357;  Tode  v.  Gross,  127  N. 
Y.  480,  28  N.  E.  469,  24  Am.  St.  Rep.  475,  13  L.  R.  A.  652;  Diamond 
Match  Co.  V.  Roeber,  106  N.  Y.  473,  60  Am.  Rep.  464,  13  N.  E.  419. 

131 


§  101  NATURE   ESSENTIALS   OR  TEST — 

prevent  one  from  making  a  contract  by  which  he  agrees 
to  compete  with  others  in  the  price  of  the  commodity 
which  he  produces  for  the  use  of  the  pubhc."  And  a  con- 
tract which  in  effect  transfers  the  good  will  and  custom  of 
a  business  is  not  in  restraint  of  trade  and  void  as  against 
public  policy  even  though  competition  ceases  to  some 
extent. ^^  An  agreement  may  be  entered  into  between 
two  corporations  to  prevent  competition  in  the  manufac- 
ture of  a  valuable  commodity  out  of  an  article  nearly 
worthless,  and  such  a  combination  is  not  against  public 
policy.*^ 

It  is  said  by  the  court  in  a  New  Jersey  case  that:  "I  am 
unable  to  find  any  foundation,  either  in  law  or  in  morals, 
for  the  notion  that  the  public  have  the  right  to  have  these 
private  owners  of  this  sort  of  property"  (certain  mineral 
deposits)  "continue  to  do  business  in  competition  with 
each  other.  No  doubt  the  public  has  reasonable  ground 
to  entertain  the  hope  and  expectation  that  its  individual 
members  will  generally,  in  their  several  struggles  to  ac- 
quire the  means  of  comfortable  existence,  compete  with 
each  other.  But  such  expectation  is  based  entirely  upon 
the  exercise  of  the  free  will  and  choice  of  the  individual, 
and  not  upon  any  legal  or  moral  duty  to  compete,  and 
can  never,  from  the  nature  of  things,  become  a  matter  of 
right  on  the  part  of  the  public  against  the  individual. 
In  fact,  the  essential  quality  of  that  series  of  acts  or  course 
of  conduct  which  we  call  competition  is  that  it  shall  be 
the  result  of  the  free  choice  of  the  individual  and  not  of 
any  legal  or  moral  obligation  or  duty."  ^° 

In  an  Illinois  case  it  is  declared  that  the  object  of  the 
Sherman  Anti-Trust  Act "  and  of  the  Anti-Trust  Act  of 

"Ft.  Smith  Light  &  Traction  Co.  v.  Kelley  (Ark.,  1910),  127  S.  W.  975, 
981.  The  text  is  as  the  court  states  the  law,  although  it  would  seem  that 
the  word  "not"  should  be  inserted  so  as  to  read  "agrees  not  to  compete" 
instead  of  "agrees  to  compete." 

«  Wood  V.  Whitehead  Bros.  Co.,  165  N.  Y.  545,  59  N.  E.  357. 

®  Gloucester  Isinglass  &  Glue  Co.  v.  Russia  Cement  Co.,  154  Mass.  93, 
27  N.  E.  1005,  12  L.  R.  A.  563. 

«  Meredith  v.  Zinc  &  Iron  Co.,  55  N.  J.  Eq.  211,  221,  37  Atl.  539,  per 
Pitney,  V.  C. 

61  See  §§  13,  14,  herein. 

132 


CONTRACTS    IN   RESTRAINT   OF   TRADE  §  102 

that  State  ^^  is  to  prohibit  the  formation  of  truscs  and 
combinations  and  remove  all  obstructions  in  restraint  of 
trade  and  free  competition;  and  that  it  was  not  the  pur- 
pose of  either  law  to  hinder  or  prohibit  contracts  on  the 
part  of  corporations  or  individuals  made  to  foster  or  in- 
crease trade  or  business.  But  that  a  contract  may  inci- 
dentally restrain  competition  or  trade  without  violating 
the  statutes  if  its  chief  purpose  is  to  promote  and  increase 
the  business  of  those  who  enter  into  it.^^ 

§  102.  Circumstances  Are  To  Be  Considered  in  De- 
termining Legality  of  Restraint. 

It  seems  that,  while  the  early  doctrine  of  the  common 
law  that  contracts  in  general  restraint  of  trade  are  void, 
without  regard  to  circumstances,  has  not  been  fully  abro- 
gated, it  has  been  much  weakened  and  modified.*^'  Whether 
a  contract  in  effect  unlawfully  tends  to  restrain  trade  or 

*2  And  the  111.  Stat.  (Kurd's  Stat.,  1905,  par.  269a,  p.  725). 

«»  Southern  Fire  Brick  &  Clay  Co.  v.  Garden  City  Sand  Co.,  223  III.  61»J, 
79  N.  E.  313. 

"  Diamond  Match  Co.  v.  Roeber,  106  N.  Y^473,  13  N.  E.  422.  In  thi.^ 
case  the  history  of  litigation  upon  tEe  subject  of  contracts  in  restraint  of 
traxie  showing  the  tendency  of  judicial  opinion  toward  the  relaxation  of  the 
old  common  law  rule  is  given,  and  the  authorities  collated. 

"The  old  courts  judged  such  contracts  by  very  strict  standards  but  they 
have  been  regarded  more  favorably  by  later  decisions.  The  case  of  Dia- 
mond Match  Co.  V.  Roeber,  106  N.  Y.  473,  was  quite  a  departure  from  the 
old  law.  *  *  *  It  was  there  said:  'The  tendency  of  recent  adjudications  is 
marked  in  the  direction  of  rela.\ing  the  rigor  of  the  doctrine  that  all  con- 
tracts in  general  restraint  of  trade  are  void  irrespective  of  special  circum- 
stances.' The  principle  of  that  case  has  been  fully  carried  out  in  the  subse- 
quent decisions  of  this  court.  (Hodge  v.  Sloan,  107  N.  Y.  244,  17  N.  E. 
335,  1  Am.  St.  Rep.  816;  Leshe  v.  Lorillard,  110  N.  Y.  519,  18  N.  E.  363,  1 
L.  R.  A.  456;  Tode  v.  Gross,  127  N.  Y.  480,  28  N.  E.  469,  13  L.  R.  A.  652; 
and  Wood  v.  WTiitehead  Bros.  Co.,  165  N.  Y.  545,  550,  59  N.  E.  357);" 
New  York  Bank  Note  Co.  v.  Hamilton  Bank  Note  Engraving  &  Printing 
Oi.,  180  N.  Y.  280,  293,  73  N.  E.  48. 

The.  old  ride  of  law  that  all  covenants  in  restraint  of  trade  are  prima  facie 
contrary  to  public  policy,  and  therefore  void,  has  not  been  rescinded  by  recent 
decisions.  Underwood  &  Son,  Ltd.,  v.  Barker,  Law  Rep.  [1899],  1  Ch.  D. 
300, 68  L.  J.  Ch.  201.  SO  L.  T.  306,47  W.  R.  347,  per  Vaughan  Williams,  L.  J. 
Prej^umption  i.s-  that  contrarl.-i  are  legal,  not  illegal,  and  tlie  burden  is  on 
him  who  sets  up  illegahty  as  a  defense  in  a  suit  to  enforce  a  contract  to  show 
how  and  why  it  is  unlawful.  Harbi.'^on- Walker  Refractories  Co.  v.  Stanton, 
227  Pa.  St.  55,  75  Atl.  988.    See  also  Hubbard  v.  Miller,  27  Mich.  15. 

133 


§  102  NATURE   ESSENTIALS   OR  TEST — 

to  a  monopoly  cannot  be  ascertained  by  any  accurately 
defined  rules,  but  must  be  ascertained  from  a  practical 
consideration  of  the  circumstances  of  the  case  in  connec- 
tion with  pro\'isions  and  principles  of  law  and  construc- 
tion. The  vahdity  or  invalidity  of  the  contract  should 
be  determined  by  its  real  tendency  with  reference  to  trade 
and  monopoly  when  in  full  operation  ^-^  and  each  case 
involving  the  question  of  pubhc  policy  and  restraint  of 
trade  should  be  decided  upon  its  own  facts.^*^  So  in  ascer- 
taining whether  the  exclusion  is  wider  than  the  coven- 
antee's protection  requires,  and  therefore  uselessly  in 
restraint  of  trade,  each  case  will  be  considered  and  deter- 
mined on  the  facts  attendant  upon  the  particular  transac- 
tion *^  and  in  determining  whether  or  not,  under  the  princi- 

"  Stewart  &  Bro.  v.  Stems  &  Culvert  Lumber  Co.,  56  Fla.  570,  48  So.  19. 
See  also  Haynes  v.  Doraan,  L.  J.  [1899],  2  Ch.  13,  68  L.  J.  Ch.  419,  80  Law 
T.  (N.  S.)  569. 

Contract  must  be  reasonable  under  all  the  circumstances  of  the  case. 
Lanzit  v.  J.  W.  Sefton  Mfg.  Co.,  184  lU.  326,  56  N.  E.  393,  75  Am.  St.  Rep. 
171,  case  reverses  84  111.  App.  168. 

Contracts  in  restraint  of  trade  which,  considered  with  reference  to  the 
situation,  business  and  object  of  the  parties,  and  in  the  light  of  all  the  sur- 
rounding circumstances,  appear  to  have  been  made  for  a  just  and  honest 
purpose  and  for  the  protection  of  legitimate  interests,  and  are  reasonable  as 
between  the  parties,  and  not  especially  injurious  to  the  public  will  be  up- 
held; and  the  weight  or  effect  to  be  given  to  the  surrounding  circumstances 
is  not  affected  by  any  presumption  for  or  against  the  validity  of  the  restric- 
tion.   Hubbard  v.  Miller,  27  Mich.  15. 

^  Over  v.  Byram  Foundry  Co.,  37  Ind.  App.  452,  457,  77  N.  E.  302,  per 
Roby,  C.  J.,  citing  Oregon  Steam  Navigation  Co.  v.  Winsor,  20  Wall.  (87 
U.  S.)  64,  22  L.  ed.  315;  Fowle  v.  Park,  131  U.  S.  88,  9  Sup.  Ct.  658,  33  L. 
ed.  67;  Gibbs  v.  Consolidated  Gas  Co.,  130  U.  S.  396,  32  L.  ed.  979,  9  Sup. 
Ct.  553;  Consumers'  Oil  Co.  v.  Nunnemaker,  142  Ind.  560,  564,  51  Am.  St. 
Rep.  193,  41  N.  E.  1048. 

"Public  welfare  is  first  considered  and  if  it  be  not  involved  and  the  re- 
straint upon  one  party  is  not  greater  than  protection  to  the  other  party  re- 
quires the  contract  may  be  sustained.  The  question  is  whether,  under  the 
particular  circumstances  of  the  case  and  the  nature  of  the  particular  con- 
tract involved  in  it,  the  contract  is  or  is  not  unreasonable."  Gibbs  v.  Con- 
solidated Gas  Co.,  130  U.  S.  396,  409,  9  Sup.  Ct.  553,  557,  32  L.  ed.  979, 
quoted  in  Frame  v.  Fcrrell,  166  Fed.  702,  705,  92  C.  C.  A.  374,  per  Knappen, 
Dist.  J.,  as  "the  modem  rule." 

"  Trenton  Potteries  Co.  v.  Oliphant,  56  N.  J.  Eq.  680,  39  Atl.  923,  case 
modified  in  58  N.  J.  Eq.  507,  43  Atl.  723,  78  Am.  St.  Rep.  612,  46  L.  R.  A. 
255. 

134 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  103 

pies  and  rules  of  the  common  law,  a  contract  or  combina- 
tion is  in  unreasonable  restraint  of  trade,  not  only  the 
contract  should  be  considered,  but  its  subject-matter, 
the  situation  of  the  parties,  and  all  the  circumstances 
surrounding  the  transaction  so  far  as  they  are  disclosed 
by  the  allegations  of  the  bill.*'^  And  questions  about 
contracts  in  restraint  of  trade  must  be  judged  not  alone 
according  to  the  circumstances  on  which  they  arise,  but 
in  subservience  to  the  general  rule  that  there  must  be  no 
injury  to  the  public  by  its  being  deprived  of  the  restricted 
party's  industry,  and  that  the  party  himself  must  not  be 
precluded  from  pursuing  his  occupation  and  thus  pre- 
vented from  supporting  himself  and  his  family.  "^^  Again, 
in  determining  that  a  contract  is  not  void  as  being  in 
general  restraint  of  trade  or  against  public  policy,  the 
contract  will  be  interpreted  in  view  of  a  condition  imphed 
by  law,  the  condition  being  one  that  is  not  and  cannot  be 
dispensed  with.^° 

§  103.  Whether  Contract  is  in  Restraint  of  Trade  is 
Question  for  Court. 

The  question  whether  or  not  a  contract  is  restraint  of 
trade,  and  therefore  void  in  law,  is  a  question  of  law  for  the 
determination  of  the  court,  and  if  certain  questions  are  left 
to  the  jury  it  will  be  assumed  that  they  were  so  left  in 

88  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60  W.  Va.  508,  56 
S.  E.  264,  10  L.  R.  A.  (N.  S.)  268,  116  Am.  St.  Rep.  901. 

Whether  such  a  contract  "can  be  supported  or  not,  depends  upon  mat- 
ters outside  of  and  beyond  the  abstract  fact  of  the  contract  or  the  pecun- 
iar>'  consideration.  It  will  depend  upon  the  situation  of  the  parties,  the 
nature  of  their  business,  the  interests  to  be  protected  bj'  the  restriction,  its 
effect  upon  the  public;  in  short  upon  all  the  surrounding  circumstances; 
and  the  weight  or  effect  to  be  given  to  these  circumstances  is  not  to  be  af- 
fected by  any  presumption  for  or  against  the  validity  of  the  restriction; 
if  reasonable  and  just  the  restriction  will  be  sustained,  if  not,  it  will  be  held 
void."  Hubbard  v.  Miller,  27  Mich.  15,  21,  per  Christiancy,  Ch.  J.,  quoted 
in  Western  Wooden-Ware  As.soc.  v.  Starkey,  84  Mich.  76,  81,  47  N.  W.  604, 
11  L.  R.  A.  503,  22  Am.  St.  Rep.  686. 

«» Oregon  Steam  Navigation  Co.  v.  Winsor,  20  Wall.  (87  U.  S.)  64,  22 
L.  ed.  315. 

'«  Chicago,  St.  L.  &  N.  G.  R.  Co.  v.  Pullman  Southern  Car  Co.,  139  U.  S. 
79,  35  L.  ed.  97,  11  Sup.  Ct.  490. 

135 


§  104  NATURE   ESSENTIALS  OR   TEST — 

order  that  they  might  find  certain  issues  of  fact  necessary 
to  be  ascertained  to  enable  the  judge  at  the  trial  to  decide 
whether  the  covenants  in  question  were  void  for  this  rea- 
son." So  the  reasonableness  of  a  contract  in  alleged  re- 
straint of  trade  depends  upon  its  true  construction  and 
legal  effect  and  is,  therefore,  a  question  for  the  court  alone, 
so  that  evidence  from  persons  in  the  trade  giving  their 
views  as  to  the  reasonableness  of  the  contract  is  inadmis- 
sible "-  and  the  question  whether  the  terms  of  a  covenant 
not  to  carry  on  a  business  beyond  what  is  reasonably  neces- 
sary for  the  protection  of  the  covenantee  under  the  cir- 
cumstances of  the  case  is  a  question  for  the  judge  and  not 
for  the  jiu-y.^^ 

§  104.  Consideration  of  Contract  in  Restraint  of  Trade. 
Contracts  in  restraint  of  trade  if  unobjectionable  in 

^1  United  Shoe  Machinery  Co.  of  Canada  v.  Brunet,  Law  Rep.  [1909] 
App.  Cas.  330,  341,  78  L.  J.  P.  C.  101,  100  L.  T.  579,  53  S.  J.  396,  25  T.  L. 
R.  442.  The  case  of  Nordenfelt  v.  Maxim  Nordenfelt  Guns  &  Ammunition 
Co.,  Law  Rep.  [1894]  App.  Cas.  535,  explained  and  held  to  have  no  appli- 
cation.   See  also  Lanzit  v.  J.  W.  Sefton  Mfg.  Co.,  184  111.  326,  56  N.  E.  39. 

Whether  an  agreement  is  in  restraint  of  trade  is  a  question  of  law  for  the 
court.  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823,  citmg 
Cohen  v.  BerUn  &  Jones  Envelope  Co.,  166  N.  Y.  292,  59  N.  E.  906;  Houck 
V.  Anheuser-Busch  Brewing  Ass'n,  88  Tex.  184,  30  S.  W.  869.  See  also 
Lanzit  v.  J.  W.  Sefton  Mfg.  Co.,  184  111.  326,  56  N.  E.  393,  75  Am.  St.  Rep. 
171,  cases  reverses  83  111.  App.  168. 

Facts  and  circumstances;  question  a  judicial  one.  Carter  v.  AlUng  (U.  S. 
C.  C),  43  Fed.  208,  8  Ry.  &  Corp.  L.  J.  428. 

"  Haynes  v.  Doman,  Law  Rep.  [1899],  2  Ch.  D.  13,  68  L.  J.  Ch.  419,  80 
L.  T.  569. 

^\^lat  is  a  reasonable  restraint  of  trade  is  a  question  of  law  for  the  court 
to  determine  under  the  facts  and  circumstances  of  each  particular  case. 
Consumers'  Oil  Co.  v.  Nunnemaker,  142  Ind.  560,  564,  41  N.  E.  1048,  51 
Am.  St.  Rep.,  per  Jordan,  J. 

"The  reasonableness  of  an  agreed  restraint  is  a  court  question,  and  should 
be  deducible  from  facts  and  circumstances  recited  in  the  contract  or  averred 
in  the  pleadings."  Rosenbaum  v.  United  States  Credit-System  Co.,  65 
N.  J.  L.  255,  48  Atl.  237,  239,  53  L.  R.  A.  449,  per  Collins,  J.,  citing  Mallan 
V.  May,  11  Mees.  &  W.  652. 

Contracts  in  restraint  of  trade  must  be  construed  b}'  the  court  and  the 
reasonable  character  and  consideration  of  it  determined.  Linn  v.  Sigsbee, 
67  111.  75,  quoted  in  Hursen  v.  Gavin,  162  111.  377,  380,  44  N.  E.  735. 

"  Dawden  &  Pook,  Ltd.,  v.  Pook,  Law  Rep.  [1904],  1  K.  B.  D.  45,  73 
L.  J.  K.  B.  38,  89  L.  T.  688,  52  W.  R.  97,  20  T.  L.  R.  39. 

136 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §§  105,  106 

other  respects,  require  no  greater  pecuniary  or  valuable 
consideration  to  support  them  than  any  other  contract, 
and  if  objectionable  in  other  respects  no  amount  of  pe- 
cuniary consideration  will  render  them  valid ;  and  the  fact 
that  the  price  paid  does  not  exceed  the  cost  of  the  goods 
protected  does  not  affect  the  vahdity  of  the  contract,^^ 

§  105.  Motive. 

It  is  held  by  the  United  States  Supreme  Court  that  a 
combination  that  is  actually  in  restraint  of  trade  under  a 
State  statute  which  is  constitutional,  is  illegal  whatever 
may  be  the  motive  or  necessity  inducing  it  '^•'  and  it  is  de- 
clared in  a  New  York  case  that  the  motive  of  the  coven- 
antee is  not  the  test  of  the  vahdity  of  the  covenant."^ 

§  106.  Reasonable  and  Unreasonable  Restraints  Gen- 
erally. 

Contracts  creating  reasonable  restraints  of  trade  have 
generally  been  upheld  the  question  being  in  most  cases 
whether  the  restraint  was  reasonable  or  not.'^  And  it  is 
held  that  although  a  party  may  legally  pm-chase  the  trade 
and  business  of  another  for  the  very  purpose  of  preventing 
competition,  still  the  validity  of  the  contract,  if  supported 
by  a  consideration,  depends  upon  its  reasonableness  be- 
tween the  parties. ^^    Generally  stated  contracts  or  com- 

7<  Hubbard  v.  Miller,  27  Mich.  15. 

Contract  in  partial  restraint  of  trade  is  valid  if  based  on  a  legal  and  rea- 
sonable consideration.  Hursen  v.  Gavin,  162  111.  377,  380,  44  N.  E.  735; 
Linn  v.  Sigsbee,  67  111.  75;  Up  River  Ice  Co.  v.  Denier,  114  Mich.  296,  302, 
72  N.  W.  157;  Merriman  v.  Lover,  Drayton  &  Leonard,  104  Va.  428,  51 
S.  E.  817. 

"  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  535,  54 
L.  ed.  826,  Code  Miss.,  1906,  chap.  145,  §  5002  (Laws  1900,  chap.  88). 
Compare  Laws  Miss.,  1908,  p.  124,  chap.  119  (writ  of  error  to  review  decree 
dissolving  a  voluntary  association  of  retail  lumber  dealers  a.s  a  combination 
in  restraint  of  trade  under  state  statute;  case  affirms  Retail  Lumber  Dealers' 
Assoc,  v.  State,  95  Miss.  337,  1909,  48  So:  1021. 

'«  Diamond  Match  Co.  v.  Roeber,  106  N.  Y.  473,  13  N.  E.  419,  60  Am. 
Rep.  464. 

"  New  York  Bank  Note  Co.  v.  Hamilton  Bank  Note  Engraving  &  Print- 
ing Co.,  180  N.  Y.  280,  293,  73  N.  E.  48,  per  Cullen,  Ch.  J. 

"  Diamond  Match  Co.  v.  Roeber,  106  N.  Y.  473,  13  N.  E.  419,  60  Am. 
Rep.  464. 

137 


§  106  NATURE   ESSENTIALS   OR   TEST — 

binations  in  partial  restraint  of  trade  which  are  reasonable 
are  valid;  ^^  but  contracts  in  restraint  of  trade  which  are 
unreasonable  are  unlawful  and  unenforceable.^" 

79  United  States:  Frame  v.  Ferrell,  166  Fed.  702,  92  C.  C.  A.  374  (if 
reasonable  is  enforceable);  National  Enamel  &  Stamping  Co.  v.  Haberman 
(U.  S.  C.  C),  120  Fed.  415;  Fisheries  Co.  v.  Lennen  (U.  S.  C.  C.)  116  Fed. 
217  (held  not  unreasonable  or  invalid);  Carter  v.  Ailing  (U.  S.  C.  C),  43 
Fed.  208,  8  Ry.  &  Corp.  L.  J.  428. 

Arkansas:  Hampton  v.  Caldwell  &  Hall.  (Ark.  1910)  129  S.  W.  816; 
Edgar  Lumber  Co.  v.  Cornie  Stave  Co.  (Ark.  1910),  130  S.  W.  452;  Ft. 
Smith  Light  &  Traction  Co.  v.  Kelley  (Ark.  1910),  127  S.  W.  975,  981 
(when  reasonable  are  not  against  pubUc  poUcy  and,  therefore,  not  void, 
citing  Webster  v.  Williams,  62  Ark.  101,  34  S.  W.  537;  Keith  v.  Herschberg 
Optical  Co.,  48  Ark.  146,  2  S.  W.  777);  Bloom  v.  Home  Ins.  Agency,  91 
Ark.  367,  121  S.  W.  293  (when  reasonable  and  on  legal  consideration  will 
be  enforced). 

Colorado:  Fredenthal  v.  Espey,  45  Colo.  488,  102  Pac.  280. 

Georgia:  Bullock  v.  Johnson,  110  Ga.  486,  35  S.  E.  703  (held  not  invalid  as 
an  unreasonable  restraint);  Jenkins  v.  Temples,  39  Ga.  655,  90  Am.  Dec. 
452. 

Illinois:  Southern  Fire  Brick  &  Clay  Co.  v.  Garden  City  Sand  Co.,  223 
111.  616,  79  N.  E.  313;  Andrews  v.  Kingsbury,  212  111.  97,  72  N.  E.  11,  af- 
firming 112  111.  App.  518;  Lanzit  v.  J.  W.  Sefton  Mfg.  Co.,  184  111.  326,  56 
N.  E.  393,  75  Am.  St.  Rep.  171  (valid  if  reasonable  and  supported  by  good 
consideration)  case  reverses  83  111.  App.  168;  Hoff  v.  Lenerrman,  143  111. 
App.  170  (valid  if  reasonable  as  to  time,  place  and  terms,  and  if  not  against 
public  policy). 

Indiana:  Trentman  v.  Wahrenburg,  30  Ind.  App.  304,  65  N.  E.  1057. 

Iowa:  Roush  v.  Gesman,  126  Iowa,  498,  102  N.  W.  495;  Swigert  v.  How- 
ard &  Tilden,  121  Iowa,  650,  97  N.  W.  82,  63  L.  R.  A.  608  (enforceable  if 
reasonable  and  on  good  consideration). 

Kentucky:  Sutton  v.  Head,  86  Ky.  156,  9  Ky.  L.  Rep.  453,  9  Am.  St.  Rep. 
274,  5  S.  W.  410,  citing  Turner  v.  Johnson,  7  Dana  (37  Ky.),  435;  Grundy 
V.  Edwards,  7  J.  J.  Marsh.  (30  Ky.)  368,  23  Am.  Dec.  409;  Hill  v.  Gudgell,  9 
Ky.  L.  Rep.  436. 

Michigan:  Up  River  Ice  Co.  v.  Denier,  114  Mich.  296,  302,  4  Det.  L. 
N.  507,  72  N.  W.  157  (held  not  unreasonable);  Hubbard  v.  Miller,  27 
Mich.  15. 

Minnesota:  Espenson  v.  Koepke,  93  Minn.  278,  101  N.  W.  168. 

Missouri:  Mallinckrodt  Chemical  Works  v.  Ncmnich,  83  Mo.  App.  6. 

Nebraska:  Engles  v.  Morgenstern,  85  Neb.  51,  122  N.  W.  688  (vahd 
when  not  against  public  pohcy  or  unreasonable). 

New  Hampshire:  Bancroft  v.  Embossing  Co.,  72  N.  H.  402,  57  Atl.  97, 
64  L.  R.  A.  298. 

New  Jersey:  Trenton  Potteries  Co.  v.  Oliphant,  56  N.  J.  Eq.  680,  39 

80  Queen  Ins.  Co.  v.  The  State,  86  Tex.  250,  263,  268,  24  S.  W.  397,  22 
L.  R.  A.  483. 

See  also  the  following  cases: 

United  States:  Bailey  v.  Phillips  (U.  S.  C.  C),  159  Fed.  535;  United 

138 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  107 

§  107.  Where  Contract  in  Restraint  of  Trade  is  One 
of  a  System  of  Contracts — Reasonable  and  Unreason- 
able Restraints. 

A  contract  when  reasonable  in  its  scope  and  as  to  dura- 
tion and  territory  cannot  lend  itself  to  the  formation  of 

Atl.  923,  case  modified  in  58  N.  J.  Eq.  507,  43  Atl.  723,  78  Am.  St.  Rep. 
612,  46  L.  R.  A.  255. 

New  York:  Jacobs  v.  Cohen,  183  N.  Y.  207,  76  N.  E.  5,  2  L.  R.  A.  (N.  S.), 
292;  New  York  Bank  Note  Co.  v.  Hamilton  Bank  Note  Engraving  & 
Printing  Co.,  180  N.  Y.  280,  73  N.  E.  48;  Hackett  v.  A.  L.  &  J.  J.  Reynolds 
Co.,  62  N.  Y.  Supp.  1076,  30  Mis(;.  733  (valid  when  reasonable  and  not 
against  public  poHcy). 

North  Carolina:  Wooten  v.  Harris,  153  N.  C.  43,  68  S.  E.  898;  Anders 
V.  Gardner,  151  N.  C.  604  (vaUd  if  reasonable  and  supported  by  sufficient 
consideration);  Jolly  v.  Brady,  127  N.  C.  142,  37  S.  E.  153;  Hauser  v. 
Harding,  126  N.  C.  295,  35  S.  E.  586;  King  v.  Fountain,  126  N.  C.  196, 
35  S.  E.  427;  Kramer  v.  Old,  119  N.  C.  1,  6,  25  S.  E.  813;  Cowan  v.  Fair- 
brother,  118  N.  C.  406,  24  8.  E.  212. 

Pennsylvania:  Monongahela  River  Consol.  Coal  &  Coke  Co.  v.  Jutte, 
210  Pa.  St.  288,  310,  .59  Atl.  1088,  1119,  105  Am.  St.  Rep.  812. 

Texas:  Tobler  v.  Austin,  22  Tex.  Civ.  App.  99,  53  S.  W.  706  (not  un- 
reasonable, held  vaUd). 

Virginia:  Merriman  v.  Cover,  104  Va.  428,  51  S.  E.  817. 

Wisconsin:  Cottington  v.  Swan,  128  Wis.  321,  107  N.  W.  336. 

England:  Hood  &  Moores  Stores,  Ltd.,  v.  Jones,  81  L.  T.  (N.  S.)  169; 
Haynes  v.  Doman,  L.  J.  [1899],  2  Ch.  13,  68  L.  J.  Ch.  419,  80  Law  T. 
(N.  S.)  569  (enforceable  whem  not  unreasonable);  Underwood  v.  Barker, 
L.  J.  [1899],  1  Ch.  .300,  68  L.  J.  Ch.  201,  80  Law  T.  (N.  S.)  306,  47  Wkly. 
Rep.  347  (not  unreasonable,  may  be  enforced);  White,  Tompkins  &  Courage 
V.  Wilson,  23  T.  L.  R.  469,  Swinfen  Eadey,  J.;  Barr  v.  Craven,  89  L.  T.  574, 
20  T.  L.  R.  51;  TivoU,  Manchester,  Ltd.,  v.  Colley,  52  W.  R.  632,  20  T.  L. 
R.  437,  Walton,  J. 

States  v.  Trans-Missouri  Freight  Assoc.  (U.  S.  C.  C.  A.),  58  Fed.  58,  7  C. 
C.  A.  15. 

As  to  reasonableness  and  unreasonableness  of  contracts  in  restraint  of 
trade,  see  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  526,  121  N.  W. 
395,  per  Elliott,  J. 

California:  Getz  Bros.  &  Co.  v.  Federal  Salt  Co.,  147  Cal.  115,  87  Pac. 
416;  More  v.  Bonnet,  40  Cal.  251,  6  Am.  Rep.  621;  Wright  v.  Ryder,  36 
Cal.  342,  95  Am.  Dec.  186. 

Georgia:  Rakestraw  v.  Lanier,  104  Ga.  188,  30  S.  E.  735;  Goodman  v. 
Henderson,  58  Ga.  567;  Hohnes  v.  Martin,  10  Ga.  503. 

Illinois:  Dunbar  v.  American  Teleph.  &  Teleg.  Co.,  238  111.  456,  87  N. 
E.  521. 

I  Juliana:  Consumers'  Oil  Co.  v.  Nunnemaker,  142  Ind.  560,  51  Am.  St. 
Rep.  193;  Wiley  v.  Baumgardner,  97  Ind.  66,  49  Am.  Rep.  427;  Beard  v. 
Dennis,  6  Ind.  200,  63  Am.  Doc.  380. 

Kentucky:  demons  v.  Moadow.s,  123  Ky.  178,  94  S.  W.  13,  29  Ky.  L, 

139 


§  107  NATURE    ESSENTIALS   OR  TEST — 

trusts  or  monopolies,  unless  shown  to  be  one  of  many  simi- 
lar contracts  tending  to  engross  that  particular  business  in 
a  given  territory.^  ^  But  while  a  single  contract,  taken 
alone,  may  not  be  within  the  rule  at  common  law  against 
contracts  in  restraint  of  trade,  yet  where  it  is  one  of  a 
great  nmnber  of  identical  contracts  made  between  a  pro- 
ducer of  an  article  of  commerce  and  dealers  therein,  and 
they  form  a  system  of  contracts  which  taken  as  a  whole 
materially  affects  the  pubHc  interests  by  stifling  competi- 
tion and  trade  in  said  article,  it  constitutes  an  unreasonable 
restraint,  within  the  rule  of  the  conmion  law  against  con- 
tracts in  restraint  of  trade,  if,  from  an  examination  of  the 
workings  of  the  whole  system,  it  appears  that  the  restraint 
is  actually,  though  not  ostensibly,  the  main  result  and 

Rep.  619,  6  L.  R.  A.  (N.  S.)  847;  Sutton  v.  Head,  86  Ky.  156,  9  Ky.  L. 
Rep.  410,  5  S.  W.  410,  9  Am.  St.  Rep.  274. 

Maryland:  Jones  Cold  Store  Door  Co.  v.  Jones,  108  Md.  439,  70  Atl.  88; 
Warfield  v.  Booth,  33  Md.  63;  Guerand  v.  Bandelet,  32  Md.  561;  Davis 
V.  Barney,  2  Gill.  &  J.  (Md.)  382. 

Massachusetts:  Bishop  v.  Pulmer,  146  Mass.  469,  16  N.  E.  299;  Alger  v. 
Thacher,  19  Pick.  (36  Mass.)  51,  31  Am.  Dec.  119. 

Michigan:  Western  Wooden-Ware  Assoc,  v.  Starkey,  84  Mich.  76,  85, 
47  N.  W.  604,  11  L.  R.  A.  503,  22  Am.  St.  Rep.  686. 

Missouri:  Peltz  v.  Eichclc,  62  Mo.  171;  Long  v.  Towl,  42  Mo.  545,  97 
Am.  Dec.  355. 

Nebraska:  Roberts  v.  Lemont,  73  Neb.  365,  102  N.  W.  770. 

North  Carolina:  Shute  v.  Heath,  131  N.  C.  281,  42  S.  E.  704. 

New  Jersey:  Mandeville  v.  Harman,  42  N.  J.  Eq.  185,  7  Atl.  27. 

New  York:  Curtis  v.  Gokey,  69  N.  Y.  300;  Chappcl  v.  Brockway,  21 
Wend.  (N.  Y.)  157;  Blauner  v.  WUliams  Co.,  69  N.  Y.  Supp.  165,  36 
Misc.  173. 

Ohio:  Grassvilli  v.  Lowden,  11  Ohio  St.  349;  Thomas  v.  Miles,  3  Ohio 
St.  274. 

Oklahoma:  Anderson  v.  Shawnee  Compress  Co.,  17  Okl.  231,  87  Pac.  315. 

Pennsylvania:  Smith's  Appeal,  113  Pa.  St.  579,  6  Atl.  251. 

Rhode  Island:  Herreschoff  v.  Boutineau,  17  R.  I.  3,  19  Atl.  712. 

West  Virginia:  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co., 
60  W.  Va.  508,  56  S.  E.  204;  Slaughter  v.  Thacker  Coal  &  Coke  Co.,  55 
W.  Va.  642,  47  S.  E.  247,  104  Am.  St.  Rep.  1013. 

Wisconsirr.  Berlin  Machine  Works  v.  Perry,  71  Wis.  495,  38  N.  W.  82, 
5  Am.  St.  Rep.  236. 

England:  Underwood  &  Son,  Ltd.,  v.  Barker,  Law  Rep.  [1899],  1  Ch.  D. 
300,  68  L.  J.  Ch.  201,  80  L.  T.  306,  47  W.  R.  347,  per  Vaughan  Williams, 
L.  J.;  Beetham  v.  Frazer,  21  T.  L.  R.  8. 

8'  Wooten  V.  Harris,  153  N.  C.  43,  45,  68  S.  E.  898,  per  Clark,  C.  J. 

140 


CONTRACTS   IN    RESTRAINT   OF   TRADE  §  108 

object  of  such  system  of  contracts,  and  not  merely  ancill- 
ary or  incidental  to  another  and  legitimate  object.*- 

§  108.    Reasonableness  as  to  Territory  or  Area  Cov- 
ered. 

The  restraint  must  be  reasonable  as  to  the  territory  or 
area  covered. ^^    Mere  territorial  limits  are  not  in  all  in- 

»2  W.  H.  Hill  &  Co.  V.  Gray  &  Worcester,  163  Mich.  12,  127  N.  W.  803. 

«»  United  States:  Fowle  v.  Park,  131  U.  S.  88,  36  L.  ed.  67,  9  Sup.  Ct.  658; 
Oregon  Steam  Navigation  Co.  v.  Winsor,  20  Wall.  (87  U.  S.)  64,  22  L.  ed. 
315;  National  Enameling  &  Stamping  Co.  v.  Haberman  (U.  S.  C.  C),  120 
Fed.  415;  Harrison  v.  Glucose  Sugar  Refining  Co.  (U.  S.  C.  C.  A.),  116 
Fed.  304. 

California:  Ragsdale  v.  Naglo,  106  Cal.  332;  City  Carpet  Beating  & 
Works  V.  Jones,  102  Cal.  506;  Brown  v.  Kling,  101  Cal.  295. 

District  of  Columbia:  Godfrey  v.  Roessle,  5  D.  C.  App.  299. 

Illiiuns:  Union  Strawboard  Co.  v.  Bonfield,  193  111.  420,  61  N.  E.  1038, 
86  Am.  St.  Rep.  346,  afT'g  96  111.  App.  413;  Lunzit  v.  J.  W.  Sefton  Mfg. 
Co.,  184  111.  326,  56  N.  E.  393,  75  Am.  St.  Rep.  171,  case  reverses  83  111. 
App.  168;  Harding  v.  American  Glucose  Co.,  182  111.  551,  55  N.  E.  577, 
64  L.  R.  A.  738,  74  Am.  St.  Rep.  189;  Hoops  Tea  Co.  v.  Dorsey,  99  111. 
App.   181. 

Indiana:  Eisel  v.  Hayes,  141  Ind.  41;  Martin  v.  Murphy,  129  Ind.  464. 

Iowa:  Cole  v.  Edwards,  93  Iowa,  477. 

Michigan:  Western  Wooden-Ware  Assoc,  v.  Starkey,  84  Mich.  76,  47 
N.  W.  604,  48  Alb.  L.  J.  108,  1  L.  R.  A.  503,  32  Cent.  L.  J.  186  (limitation 
void). 

Minnesota:  National  Benefit  Co.  v.  Union  Hospital  Co.,  45  Minn.  279, 
47  N.  W.  806,  11  L.  R.  A.  437,  9  Ry.  &  Corp.  L.  J.  243. 

Missouri:  MalUnckrodt  Chemical  Works  v.  Nemnich,  83  Mo.  App.  6, 
affirmed  in  169  Mo.  388,  69  S.  W.  355  (held  void  as  covering  too  extended 
an  area);  Osbom  v.  Benbow,  38  Mo.  App.  25. 

Montana:  Newell  v.  Meyendorff,  9  Mont.  454,  8  L.  R.  A.  440. 

New  Jersey:  Ellerman  v.  Chicago  Junction  Rys.  &  Union  Stockyards 
Co.,  49  N.  J.  Eq.  217,  23  Atl.  287,  11  Ry.  &  Corp.  L.  J.  97,  35  Am.  & 
Eng.  Corp.  Cas.  388. 

New  York:  LesUe  v.  Lorillard,  110  N.  Y.  519,  1  L.  R.  A.  456;  Diamond 
Match  Co.  v.  Roeber,  106  N.  Y.  473;  Davies  v.  Racer,  72  Hun  (N.  Y.),  43; 
Greite  v.  Henricks,  71  Hun  (N.  Y.),  7. 

Ohio:  Lufkin  Rule  Co.  v.  Fringcb,  57  Ohio  St.  596,  49  N.  E.  1030,  63 
Am.  St.  Rep.  736,  41  L.  R.  A.  185;  Peterson  v.  Schmidt,  13  Ohio  C.  C. 
205,  7  Ohio  Dec.  202,  29  Chic.  Leg.  N.  291;  Paragon  Oil  Co.  v.  Hall,  7 
Ohio  C.  Ct.  240;  Kevil  v.  Standard  Oil  Co.,  8  Ohio  N.  P.  311,  11  Ohio  S. 
&  C.  P.  Dec.  114. 

Pennsylvania:  Patterson  v.  Glassmire,  166  Pa.  St.  230,  31  Atl.  40;  Smith's 
Appeal,  113  Pa.  579;  Cooper  v.  Edeburn,  31  Pittsb.  Leg.  J.  (N.  S.)  50. 

Rhode  Island:  Herreschoff  v.  Boutineau,  17  R.  I.  1,  8  L.  R.  A.  469. 

Wisconsin:  Washburn  v.  Dosch,  68  Wis.  436. 

141 


§  109  NATURE   ESSENTIALS   OR   TEST — 

stances  however  the  controUing  test  of  the  legaUty  of  such 
contracts.  All  contracts  which  have  a  tendency  to  stifle 
competition  are  void  as  against  pubhc  poHcy.^^  But  al- 
though the  restraint  contracted  for  in  respect  to  the  areas 
covered  may  be  offered  to  pubhc  policy  and  so  unenforce- 
able to  that  extent,  still,  if  the  restraint  contracted  for  in 
respect  to  areas  within  which  the  business  had  been  carried 
on  is  reasonably  for  the  protection  of  the  purchaser  the 
contract  to  that  extent  is  not  opposed  to  public  pohcy  and 
may  be  enforced.^'  In  an  Ilhnois  case  the  reason  consti- 
tuting the  basis  of  the  common  law  rule  seems  to  be  fol- 
lowed in  this,  that  it  is  held  in  that  State  that  a  contract 
is  void  as  against  the  public  policy  of  the  State  where  the 
covenantor  agrees  not  to  engage  in  business  within  his 
State  and  the  effect  would  be  to  deprive  the  public,  the 
people  of  the  entire  State,  of  the  industry  and  skill  of  the 
covenantor  and  compel  him  to  engage  in  some  other  bus- 
iness or  move  to  another  State  in  order  to  support  him- 
self and  family  and  so  expatriate  himself  so  far  as  his 
citizenship  of  the  State  extended.^^ 

§  109.  Test  of  Reasonableness — Fair  Protection  to 
Covenantee. 

It  seems  that  the  sense  of  the  modern  decisions  is  that 
if  the  restraint  is  only  conmensurate  with  the  fair  pro- 
tection of  the  business  sold,  the  contract  is  reasonable, 
valid  and  enforceable.  It  is  only  where  the  restriction 
can  be  of  no  avail  to  the  vendee  and  unnecessarily  hamp- 
ers the  vendor,  that  it  becomes  oppressive  and  void.^^ 

England:  Haynes  v.  Doman,  L.  J.  [1899],  2  Ch.  13,  68  L.  J.  Ch.  419, 
80  Law  T.  (N.  S.)  569. 

8<  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  38,  87  N.  E.  823,  per 
Myers,  J.,  citing  numerous  cases. 

>'^  Trenton  Potteries  Co.  v.  Oliphant,  .58  N.  J.  Eq.  .507,  43  Atl.  723,  78 
Am.  St.  Rep.  612,  46  L.  R.  A.  25.5,  case  modifies  56  N.  J.  Eq.  680,  39  Atl. 
923. 

86  Lanzit  v.  J.  W.  Sefton  Manufacturing  Co.,  184  111.  326,  56  N.  E.  393, 
75  Am.  St.  Rep.  171,  reversing  83  111.  App.  168. 

8^  United  States  Chemical  Co.  v.  Provident  Chemical  Co.,  64  Fed.  946, 
949,  per  Priest,  DLst.  J.,  citing  Fowle  v.  Park,  131  U.  S.  88,  9  Sup.  Ct.  658, 
33  L.  ed.  67;  Long  v.  Towl,  42  Mo.  545;  Eilerman  v.  Chicago  Junction  Rys. 

142 


CONTRACTS   IN   RESTRAINT   OF   TRADE  §  lU'J 

It  is  also  said  in  a  Virginia  case  "In  some  of  the  later  cases, 
both  in  England  and  this  country,  there  has  been  a  tend- 
ency to  ignore  the  distinction  between  general  and  partial 
restraints,  and  to  hold  that  restraints  are  valid  and  en- 

&  Union  Stockyards  Co.,  49  N.  J.  Eq.  217,  23  Atl.  287;  Diamond  Match 
Co.  V.  Rocber,  106  N.  Y.  473,  13  N.  E.  473;  Lawson  on  Cont.,  §  327. 

See  also  tlie  following  cases: 

United  Slatea:  Oregon  Steam  Navigation  v.  Winsor,  20  Wall.  (87  U.  S.) 
64,  22  L.  cd.  315. 

Alabajna:  Arnold  &  Co.  v.  Jones'  Cotton  Co.,  152  Ala.  501,  504,  44  So, 
662;  Harris  v.  Theus,  149  Ala.  133,  136,  43  So.  131;  McCurry  v.  Gibson,  108 
Ala.  451,  18  So.  806,  54  Am.  St.  Rep.  177. 

Colorado:  Freudenthal  v.  Espey,  45  Colo.  280,  102  Pac.  280. 

Georgia:  Holmes  v.  Martin,  10  Ga.  503. 

Illinois:  Superior  Coal  Co.  v.  E.  R.  Darlington  Lumber  Co.,  236  111.  83, 
86  N.  E.  180,  127  Am.  St.  Rep.  275;  Talcott  v.  Brackett,  5  111.  App.  60. 

Indiana:  Trenton  v.  Wuhrenburg,  30  Ind.  App.  304,  65  N.  E.  1057;  Duflfy 
V.  Stockey,  11  Ind.  70,  71  Am.  Dec.  348;  Beard  v.  Dennis,  6  Ind.  200. 

Iowa:  Swigert  v.  Tilden,  121  Iowa  650,  97  N.  W.  82. 

Kentucky:  Skaggs  v.  Simpson,  110  S.  W.  251,  33  Ky.  L.  Rep.  410. 

Maine:  Warren  v.  Jones,  51  Me.  146. 

Maryland:  Gucrand  v.  Dandelet,  32  Md.  561,  3  Am.  Rep.  564. 

Massachusetts:  New  York  Bank  Note  Co.  v.  Kidder  Press  Mfg.  Co.,  192 
Mass.  391,  78  N.  E.  463. 

Michigan:  Grand  Union  Tea  Co.  v.  Lewitsky,  153  Mich.  244,  116  N.  W. 
1090;  Beal  v.  Chase,  31  Mich.  490;  Hubbard  v.  Miller,  27  Mich.  15,  15  Am. 
Rep.  153. 

Minnesota:  ICronschnabel-Smith  Co.  v.  Kronschnabel,  87  Minn.  230,  91 
N.  W.  892;  National  Benefit  Co.  v.  Union  Hospital  Co.,  45  Minn.  272,  47 
N.  W.  806. 

Missouri:  Angelica  Jacket  Co.  v.  Angelica,  121  Mo.  App.  226,  98  S.  W. 
805. 

Nebraska:  Roberts  v.  Lemont,  73  Nev.  365,  102  N.  W.  770. 

New  Hampshire:  Bancroft  v.  Union  Embossing,  72  N.  H.  402,  37  Atl. 
97. 

New  Jersey:  Hoagland  v.  Scgur,  38  N.  J.  L.  230;  Ellerman  v.  Chicago 
Junction  Rys.  &  Union  Stockyards  Co.,  49  N.  J.  Eq.  217,  23  Atl.  287. 

Ohio:  GrasseUi  v.  Lowden,  11  Ohio  St.  349;  Lange  v.  Werk,  2  Ohio  St. 
519. 

Oklahoma:  Anderson  v.  Shawnee  Compress  Co.,  17  Okl.  231,  87  Pac.  315. 

Pennsylvania:  Monongahcla  River  Consol.  Coal  &  Coke  Co.  v.  Jutto,  210 
Pa.  St.  288,  310,  59  Atl.  1088,  1119;  Morris  Run  Coal  Co.  v.  Barclay  Coal 
Co.,  68  Pa.  St.  173,  8  Am.  Rep.  159. 

Rhode  Island:  Oakdale  Mfg.  Co.  v.  Caret,  18  R.  I.  484,  28  Atl.  973.  49 
Am.  St.  Rep.  724,  23  L.  R.  A.  639;  Herreshoff  v.  Boutineau,  17  R.  I.  3,  19 
Atl.  712,  33  Am.  St.  Rep.  850,  8  L.  R.  A.  469. 

South  Carolina:  Wood  Mowing  &  Reaping  Co.  v.  Greenwood  Hardware 
Co.,  75  S.  C.  378,  55  S.  E.  973. 

143 


§  109  NATURE    ESSENTIALS    OR   TEST — 

forcible  when  they  are  not  greater  than  necessary  for  the 
fair  protection  of  the  covenantee  in  respect  to  the  subject 
matter  of  the  contract  and  not  injurious  to  trade  in  gen- 
eral." *^    It  is  not  the  intention  with  which  the  covenantee 

Texas:  Watkins  v.  Morley,  2  Tex.  App.  Div.  Cas.  §  723. 

Virginia:  Merriman  v.  Cover,  Drayton  v.  Leonard,  104  Va.  428,  51 
S.  E.  817. 

West  Virginia:  Pocahontas  Coke  Co.  v.  Powhatan  Coal  &  Coke  Co.,  60 
W.  Va.  508,  56  S.  E.  264. 

Wisconsin:  My  Laundry  Co.  v.  Schmeling,  129  Wis.  597,  109  N.  W.  540; 
Cottington  v.  Swan,  128  Wis.  321,  107  N.  W.  336;  Richards  v.  American 
Desk  &  Seating  Co.,  87  Wis.  503,  58  N.  W.  787. 

88  Merriman  v.  Cover,  Drayton  &  Leonard,  104  Va.  427,  51  S.  E.  817. 

Test  of  reasonableness  is  fair  protection  to  covenantee  and  not  so  large  as  to 
interfere  ivith  public  interests.  National  Benefit  Co.  v.  Union  Hospital  Co., 
45  Minn.  279,  47  N.  W.  806,  11  L.  R.  A.  437,  9  Ry.  &  Corp.  L.  J.  243;  Eller- 
man  v.  Chicago  Junction  Railways  &  Union  Stockyards  Co.,  49  N.  J. 
Eq.  217,  23  Atl.  287,  35  Am.  &  Eng.  Corp.  Cas.  388,  11  Ry.  &  Corp.  L.  J. 
97;  Sternberg  v.  O'Brien,  14  N.  J.  L.  237,  33  Cent.  L.  J.  224;  Lufkin  Rule 
Co.  V.  Fringeli,  57  Ohio  St.  596,  39  Ohio  L.  J.  253,  49  N.  E.  1030,  63  Am. 
St.  Rep.  736,  41  L.  R.  A.  185. 

Such  contract  valid  when  not  greater  than  jrrotection  requires  when  not  in- 
jurious to  public  interests.    See  the  following  cases: 

United  States:  National  Enameling  &  Stamping  Co.  v.  Haberman  (U.  S. 
C.  C),  120  Fed.  415. 

District  of  Columbia:  Godfrey  v.  Roessle  (D.  C.  App.),  23  Wash.  L. 
Rep.  129. 

Missouri:  Gordon  v.  Mansfield,  84  Mo.  App.  367;  Mallinckrodt  Chemical 
Works  V.  Nemnich,  83  Mo.  App.  6. 

Pennsylvania:  Harbison-Walker  Refractories  Co.  v.  Stanton,  227  Pa. 
St.  55,  75  Atl.  988. 

England:  Underwood  v.  Barker,  L.  J.  [1899],  1  Ch.  300,  68  L.  J.  Ch.  201, 
80  Law  T.  (N.  S.)  306,  47  Wkly.  Rep.  347. 

\\1iere  the  prohibition  is  greater  than  the  interest  to  be  protected  requires 
the  covenant  is  unreasonable  on  its  face  and  void  as  against  public  policy. 
Oregon  Steam  Navigation  Co.  v.  Hale,  1  Wash.  Ty.  283,  relying  upon 
Wright  V.  Ryder,  36  Cal.  342;  Leng  &  Co.,  Ltd.,  v.  Andrews,  Law  Rep. 
[1909],  1  Ch.  D.  763,  78  L.  J.  Ch.  80,  100  L.  T.  7,  25  L.  T.  R.  93;  Leetham 
v.  Johnstone-White,  76  L.  J.  Ch.  304,  Law  Rep.  [1907],  1  Ch.  322,  96  L.  T. 
348,  23  T.  L.  R.  254,  14  Manson  162;  Peris  v.  Saalfield  Co.  (C.  A.)  [1892], 
2  Ch.  149,  66  L.  T.  Rep.  (N.  S.)  666,  46  Alb.  L.  J.  146. 

United  States:  Courts  decline  to  enforce  contracts  which  impose  a  re- 
straint though  only  partial,  upon  business  of  such  character,  that  restraint 
to  any  extent  will  be  prejudicial  to  the  public  interest.  But  where  the 
public  welfare  is  not  involved  and  the  restraint  upon  one  party  is  not  greater 
than  protection  to  the  other  party  reqiiires,  a  contract  in  restraint  of  trade 
may  be  sustained.  Gibbs  v.  ConsoUdated  Gas  Co.  of  Baltimore,  130  U.  S. 
396,^32  L.  ed.  979,  9  Sup.  Ct.  553. 

"It  would  certainly  seem  to  follow  from  the  tests  laid  down  for  deter- 

144 


CONTRACTS    IN    RESTRAINT   OF   TRADE  §  109 

bought,  but  the  relation  of  the  covenant  to  the  thing  sold, 
which  furnishes  the  test  or  guide  for  ascertaining  the  rea- 

tniDing  the  validity  of  such  an  agreement  that  no  conventional  restraint  of 
trade  can  be  enforced  unless  the  covenant  embodying  it  is  merely  ancillary 
to  the  main  purpose  of  a  lawful  contract,  or  to  protect  him  from  the  dan- 
gers of  an  unjust  use  of  those  fruits  by  the  other  party.  In  Homer  v. 
Graves,  7  Bing.  735,  Chief  Justice  Tindal,  who  seems  to  be  regarded  as  the 
highest  judicial  authority  on  this  branch  of  the  law  (see  Lord  Macnaghten's 
judgment  in  Nordenfeldt  v.  Maxim  Nordenfelt  Co.  [1894],  App.  Cas.  535, 
567)  used  the  following  language:  'We  do  not  see  how  a  better  test  can  be 
applied  to  the  question  whether  this  is  or  is  not  a  reasonable  restraint  of 
trade  than  by  considering  whether  the  restraint  is  such  only  as  to  afford  a 
fair  protection  to  the  interests  of  the  party  in  favor  of  whom  it  is  given,  and 
not  so  large  as  to  interfere  with  the  interests  of  the  pubhc.  Whatever  re- 
straint is  larger  than  the  necessary  protection  of  the  party  requires  can  be 
of  no  benefit  to  either.  It  can  only  be  oppressive.  It  is  in  the  eye  of  the  law 
unreasonable.  Whatever  is  injurious  to  the  interests  of  the  public  is  void 
on  the  ground  of  public  policy.  This  very  statement  of  the  rule  implies 
that  the  contract  must  be  one  in  which  there  is  a  main  purpose,  to  which  the 
covenant  in  restraint  of  trade  is  merely  ancillary.  The  covenant  is  inserted 
merely  to  protect  one  of  the  parties  from  the  injury  which,  in  the  execution 
of  the  contract  or  the  enjoyment  of  its  fruits,  he  may  suffer  from  the  unre- 
strained competition  of  the  other.  The  main  purpose  of  the  contract  sug- 
gests the  measure  of  protection  needed,  and  furnishes  a  sufficiently  uniform 
standard  by  which  the  validity  of  such  restraints  may  be  judicially  deter- 
mined. In  such  a  case  if  the  restraint  exceeds  the  necessity  presented  by 
the  main  purpose  of  the  contract,  it  is  void  for  two  reasons:  First,  because 
it  oppresses  the  covenantor,  without  any  corresponding  benefit  to  the 
covenantee;  and  second,  because  it  tends  to  a  monopoly.  But  where  the 
sole  object  of  both  parties  in  making  the  contract  as  expressed  therein  is 
merely  to  restrain  competition,  and  enhance  or  maintain  prices,  it  would 
seem  that  there  was  nothing  to  justify  or  excuse  the  restraint,  that  it  would 
necessarily  have  a  tendency  to  monopoly  and  would  therefore  be  void.  In 
such  a  case  there  is  no  measure  of  what  is  necessary  to  the  protection  of 
either  party,  except  the  vague  and  varying  opinion  of  judges  as  to  how 
much,  on  principles  of  political  economy,  men  ought  to  be  allowed  to  re- 
strain competition.  There  is  in  such  contracts  no  main  lawful  purpose,  to 
subserve  which  partial  restraint  is  permitted,  and  by  which  its  reasonable- 
ness is  measured,  but  the  sole  object  is  to  restrain  trade  in  order  to  avoid 
the  competition  which  it  has  always  been  the  policy  of  the  common  law  to 
foster.  *  *  *  It  is  true  that  certain  rules  for  determining  whether  a  cove- 
nant, in  re^straint  of  trade  ancillary  to  the  main  purpose  of  a  contract  was 
reasonably  adapted  and  limited  to  the  necessary  protection  of  a  party  in  the 
carrying  out  of  such  purpose  have  been  somewhat  modified  by  modern 
authorities."  The  court  then  considers  several  cases  and  adds.  "But  these 
cases  all  involved  contracts  in  which  the  covenant  in  restraint  of  trade 
was  ancillary  to  the  main  and  lawful  purpose  of  the  contract,  and  was  nec- 
essary to  the  protection  of  the  covenantee  in  the  carrying  out  of  that  main 
purpose.    They  do  not  manifest  any  general  disposition  to  be  more  liberal 

10  145 


§  109  NATURE    ESSENTIALS    OR   TEST 

sonableness  of  the  restraint  imposed  by  the  covenant.*^ 
Where  an  agreement  is  lawful  in  itself  and  is  so  limited 
as  to  time,  place,  subject  matter  and  purpose  as  that  its 

in  supporting  contracts  having  for  their  sole  object  the  restraint  of  trade 
than  did  the  courts  of  an  earlier  time."  United  States  v.  Addyston  Pipe  & 
Steel  Co.,  85  Fed.  271,  282,  283,  29  C.  C.  A.  141,  per  Taft,  Cir.  J.  (in  con- 
_8idering  effect  of,  and  in  construing  Sherman  Anti-Trust  Act  of  July  2, 
1890,  see  §  13  herein)  quoted  in  part  in  Home  Telephone  Co.  v.  North 
Manchester  Teleph.  Co.  (Ind.  App.,  1910),  92  N.  E.  558,  560,  561. 

Illinois:  "The  restraint  is  reasonable,  when  it  is  such  only  as  to  afford  a 
fair  protection  to  the  interests  of  the  party  in  whose  favor  it  is  imposed.  If 
the  restraint  goes  beyond  such  fair  protection,  it  is  oppressive  to  the  other 
party  and  injurious  to  the  interests  of  the  public,  and  consequently  void 
upon  the  ground  of  public  policy.  A  contract  in  restraint  of  trade,  to  be 
valid,  must  show  that  the  restraint  imposed  is  partial,  reasonable  and 
founded  upon  a  consideration  capable  of  enforcing  the  agreement."  Hur- 
sen  V.  Gavin,  162  111.  377,  380,  44  N.  E.  735,  aff'g  59  111.  App.  66. 

Indiana:  The  rule  is  that  all  contracts  in  restraint  of  trade  are  not  nec- 
essarily invaUd  where  such  restraint  is  only  partial,  incidental  or  minor 
to  the  main  object  sought  to  be  obtained  which  is  for  the  pubUc  good. 
Home  Telephone  Co.  v.  North  Manchester  Teleph.  Co.  (Ind.  App.,  1910), 
92  N.  E.  558,  560,  citing  and  considering  United  States  v.  Addyston  Pipe 
&  Steel  Co.,  85  Fed.  271,  29  C.  C.  A.  141,  46  L.  R.  A.  122;  Wayne  Monroe 
Teleph.  Co.  v.  Ontario  Teleph.  Co.,  112  N.  Y.  Supp.  424,  60  Misc.  435. 

Massachusetts:  It  is  held  that  it  is  now  settled  that  a  covenant,  even  if  it 
be  unlimited  both  in  time  and  space,  not  to  engage  in  a  particular  business 
is  valid  if  it  is  coupled  with  the  sale  of  a  business  and  is  necessary  to  give  the 
purchaser  what  he  has  bought.  Marshall  Engine  Co.  v.  New  Marshall  En- 
gine Co.,  203  Mass.  410,  89  N.  E.  548.  See  also  United  Shoe  Machinery 
Co.  v.  Kimball,  193  Mass.  351,  79  N.  E.  790;  Anchor  Electric  Co.  v.  Hawkes, 
171  Mass.  101,  50  N.  E.  509. 

Minnesota:  "All  restraints  of  trade  were  then  thought  to  be  unlawful;  but 
in  the  course  of  time  it  was  found  that  so  rigorous  and  far-reaching  a  rule 
seriously  interfered  with  ordinary  everyday  business  transactions,  and  it 
was  gradually  relaxed  until  it  is  now  the  law  of  England  and  America  that 
contracts  in  partial  restraint  of  trade  are  valid,  when  reasonably  necessary 
to  protect  the  legitimate  interests  of  the  covenantee.  It  must,  however,  be 
a  restraint  which  under  all  the  circumstances  and  conditions,  is  reasonable, 
and  as  said  by  Tindal,  C.  J.,  in  Hcjrnor  v.  Graves,  7  Bing.  735:  'We  do  not 
see  how  a  better  test  can  be  appUed  to  the  question  whether  reasonable  or 
not,  than  by  considering  whether  the  restraint  is  such  only  as  to  afford  a 
fair  protection  to  the  interests  of  the  party  in  favor  of  whom  it  is  given, 
and  not  so  large  as  to  interfere  with  the  interests  of  the  public'  *  *  *  As 
stated  in  a  recent  Enghsh  textbook:  'The  sole  test  of  the  validity  of  a 
contract  in  restraint  of  trade  is  its  reasonableness  in  the  interest  of  the  cove- 


s' Trenton  Potteries  Co.  v.  Oliphant,  50  N.  J.  Eq.  680,  39  Atl.  923,  case 
modified  in  58  N.  J.  Eq.  507,  43  Atl.  723,  46  L.  R.  A.  255,  78  Am.  St.  Rep. 
612. 

146 


CONTRACTS    IN    RESTRAINT   OF   TRADE  §  109 

operation  will  afford  only  necessary  and  proper  protection 
to  the  parties  in  the  enjoyment  of  their  rights,  and  will  not 
materially  or  really  injure  the  public,  the  agreement  may 

nantcc,  subject  to  the  proviso  that  the  covenant  does  not  otherwise  offend 
against  public  poUcy.'"  State  v.  Duluth  Board  of  Trade,  107  Minn.  506, 
524,  525,  121  N.  W.  395,  per  Elliott,  J.,  citing  to  last  quotation  Matthews  & 
Adler,  Restraint  of  Trade,  chap.  2,  p.  39  (1907). 

New  Jersey:  While  the  public  interest  may  be  that  trade  in  general  shall 
not  be  restrained,  yet  it  also  permits  and  favors  a  restraint  of  trade  in  cer- 
tain cases.  Contracts  of  this  sort  which  have  been  sustained  and  enforced 
by  courts  have  been  generally  declared  to  be  such  as  restrain  trade,  not 
generally,  but  only  partially,  and  no  more  extensively  than  is  reasonably 
required  to  protect  the  purchaser  in  the  use  and  enjoyment  of  the  business 
purchased,  and  are  not  otherwise  injurious  to  the  public  interest.  Trenton 
Potteries  Co.  v.  Ohphant,  58  X.  J.  Eq.  507,  514,  43  Atl.  723,  46  L.  R.  A.  255, 
78  Am.  St.  Rep.  612,  case  modifies  56  N.  J.  Eq.  680,  39  Atl.  923. 

Whether,  considering  the  changed  conditions  of  trade  and  business,  a  con- 
tract that  the  vendor  of  a  business  and  its  good  will  will  not  engage  in  a 
competitive  business  should  now  be  pronounced  against  public  pohcy  if 
the  restraint  contracted  for  is  general,  but  so  broad  a  restraint  is  reasonably 
necessary  for  the  protection  of  the  purchaser,  quaere.  Trenton  Potteries 
Co.  V.  OUphant,  58  N.  J.  Eq.  507,  43  Atl.  723,  78  Am.  St.  Rep.  612,  46  L.  R. 
A.  255,  case  modifies  56  N.  J.  Eq.  680,  39  Atl.  923. 

"The  modern  doctrine  seems  to  be  that  the  restraint  may  properly  be 
made  as  extensive  as  the  reasonable  need  of  protection."  Rosenbaum  v. 
United  States  Credit-System  Co.,  65  N.  J.  L.  255,  48  Atl.  237,  239,  53  L.  R. 
A.  449,  per  Collins,  J. 

New  York:  "The  law  permits  contracts  in  partial  restraint  of  trade,  if 
they  are  reasonable — if  they  be  such  as  only  to  afford  a  fair  protection  to 
the  interests  of  the  party  in  favor  of  whom  it  is  given,  and  not  so  large  as 
to  interfere  with  the  interests  of  the  pubUc.  It  is  always  to  be  remembered 
that  the  court  should  not  arbitrarily  interfere  with  freedom  of  contract. 
To  justify  its  action,  apprehension  of  danger  to  public  interests  should  rest 
on  clear  grounds.  In  some  tangible  form  the  contract  should  threaten  the 
public  welfare."  WTiitaker  v.  Kilby,  106  N.  Y.  Supp.  511,  515,  55  Misc. 
337,  per  Andrews,  J. 

North  Carolina:  "The  law  intends  that  the  one  shall  have  the  lawful  au- 
thority to  dispose  of  his  right  to  compete,  but  restricts  his  power  of  disposi- 
tion territorially  so  as  to  make  it  only  co-extensive  with  the  right  of  protec- 
tion on  the  part  of  the  purchaser.  *  *  *  Where  the  nature  of  the  business 
was  such  that  complete  protection  could  not  be  otherwse  afforded,  the  re- 
straint  upon  the  right  to  compete  has  been  held  good  in  one  or  more  in- 
stances where  it  extended  throughout  the  world,  and  in  other  cases  where 
it  appHed  to  a  State  or  boundary'  including  several  States."  Cowan  v. 
Fairbrother,  118  N.  C.  406,  412,  24  S.  E.  212,  per  Aver>',  J.,  citing  Norden- 
felt  V.  Maxim  Nordenfelt  Guns  &  Ammunition  Co.,  Law  Rep.  [1894J,  App. 
Cas.  535. 

Virginia:  A  contract  in  restraint  of  trade  is  valid  when  founded  on  a  val- 
uable consideration  if  the  restraint  imposed  is  reasonable  as  between  the 

147 


§  109  NATUKE   ESSENTIALS   OR  TEST  — 

be  enforced,  even  though  it  relates  to  and  operates  upon 
trade  in  useful  commodities.^" 

parties,  and  not  injurious  to  the  public  by  reason  of  its  effect  upon  trade. 
Whether  or  not  the  restraint  is  reasonable  is  to  be  determined  by  consider- 
ing whether  it  is  such  as  only  to  afford  a  fair  protection  to  the  interests  of 
the  party  in  whose  favor  it  is  given,  and  not  so  large  as  to  interfere  with  the 
interests  of  the  public.  Merriman  v.  Cover,  Drayton  &  Leonard,  104  Va. 
427,  429,  51  S.  E.  817;  quoted  in  Edgar  Lumber  Co.  v.  Cornie  Stave  Co. 
(Ark.,  1910),  130  S.  W.  452. 

England:  A  covenant  in  restraint  of  trade  which  is  not  wider  than  is 
reasonably  required  for  the  protection  of  the  covenantee,  will  not  be  held 
void  on  any  ground  of  public  policy,  unless  some  specific  ground  for  so 
holding  it  void  can  be  clearly  established.  But  such  cases  are  exceptional. 
Underwood  &  Son,  Ltd.,  v.  Barker,  Law  Rep.  [1899],  1  Ch.  D.  300,  68  L.  J. 
Ch.  201,  80  L.  T.  306,  47  W.  R.  347,  per  Lindley,  M.  R.  &  Rigby,  L.  J. 

"We  do  not  see  how  a  better  test  can  be  applied  to  the  question,  whether 
reasonable  or  not,  than  by  considering  whether  the  restraint  is  such  only 
as  to  afford  a  fair  protection  to  the  interests  of  the  party  in  favor  of  whom 
it  is  given,  and  not  so  large  as  to  interfere  with  the  interests  of  the  public. 
Whatever  restraint  is  larger  than  necessary  for  the  protection  of  the  party 
can  be  of  no  benefit  to  either;  it  can  only  be  oppressive,  and,  if  oppressive, 
it  is  in  the  eye  of  the  law,  unreasonable."  Horner  v.  Graves,  7  Bing.  735, 
743,  quoted  with  approval  in  Nordenfelt  v.  Maxim  Nordenfelt  Guns  & 
Ammunition  Co.,  Law  Rep.  App.  [1894]  Cas.  535,  549,  per  Lord  Her- 
schel,  L.  C,  quoted  in  Cowan  v.  Fairbrother,  118  N.  C.  406,  413,  24  S.  E. 
212,  per  Avery,  J.,  quoted  in  Walker  v.  Lawrence  (U.  S.  C.  C.  A.),  177 
Fed.  S63,  366,  per  Brawley,  Dist.  J. 

90  Stewart  &  Bro.  v.  Stems  &  Culvert  Lumber  Co.,  56  Fla.  570,  48  So.  19. 


148 


CONSTRUCTION   OF  §  110 


CHAPTER  X 

SHERMAN   ANTI-TRUST  ACT— CONSTRUCTION   OF 
§110.  Power  of  Congress — Gener-      §116.  Construction  of  Act — Should 


ally. 

Not  Be  Narrow  or  Forced. 

111. 

Constitutionality  of  Act. 

117. 

Statute  Does  Not  Extend  to 

112. 

Purpose  of  Act. 

Acts     Done     in     Foreign 

113. 

Scope  of  Act — Generally. 

Countries. 

114. 

Construction  of  Act — Gener- 

118. 

The  Question  of  Reasonable- 

ally. 

ness  or   Unreasonableness 

115. 

Construction  of  Act — "Com- 

of Restraint. 

merce"  and  "Restraint  of 

119. 

Conspiracy  May  Have  Con- 

Trade" Construed. 

tinuance. 

§  110.  Power  of  Congress — Generally. 

Congress  is  declared  to  have  plenary  and  indisputable 
power  under  the  Commercial  clause  of  the  United  States 
constitution  to  restrict  and  regulate  the  use  of  every  in- 
strumentality employed  in  interstate  or  international 
commerce,  so  far  as  it  may  be  necessary  to  do  so  in  order 
to  prevent  the  restraint  thereof  denounced  by  the  Anti- 
Trust  Act.^  Congress  has  the  power  to  establish  rules  by 
which  interstate  and  international  commerce  shall  be  gov- 
erned and  by  the  Sherman  Anti-Trust  Act  has  prescribed 
the  rule  of  free  competition  among  those  engaged  in  such 
commerce.  2  And  it  has  been  declared  by  the  United  States 
Supreme  Court  that  when  Congress  declared  contracts, 
combinations  and  conspiracies  in  restraint  of  trade  or 
commerce  to  be  illegal,  it  did  nothing  more  than  to  apply 
to  interstate  commerce  a  rule  that  had  long  been  appHed 
by  the  several  States  when  dealing  with  combinations  that 
were  in  restraint  of  their  domestic  commerce.  Subject  to 
such  restrictions  as  are  imposed  by  the  constitution  upon 

'  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  P^ed.  177,  per 
Sanborn,  J. 

*  Northern  Securities  Co.  v.  Linited  States,  193  U.  S.  197,  48  L.  ed. 
679,  24  Sup.  Ct.  436. 

149 


§111  SHERMAN    ANTI-TRUST   ACT — 

the  exercise  of  all  power,  the  power  of  Congress  over  inter- 
state and  international  commerce  is  as  full  and  complete 
as  is  the  power  of  any  State  over  its  domestic  commerce.' 

§111.  Constitutionality  of  Act. 

The  grant  to  Congress  by  the  constitution  of  power  to 
regulate  commerce  among  the  several  States  includes 
power  to  legislate  upon  the  subject  of  those  contracts 
in  respect  to  interstate  or  foreign  commerce  which  directly 
affect  and  regulate  that  commerce.  In  the  application  of 
this  doctrine  it  has  been  determined  that  the  constitutional 
provisions  as  to  the  liberty  of  the  individual  does  not  limit 
the  extent  of  that  power  so  as  to  prevent  the  passage  of  a 
bill  such  as  the  Anti-Trust  Act.'' 

Notwithstanding  the  general  liberty  of  contract  which 
is  possessed  by  the  citizen  under  the  Constitution  there  are 
many  kinds  of  contracts  which  while  not  in  themselves 
normal  or  mala  in  se,  may  yet  be  prohibited  by  the  legisla- 
tion of  the  States  or,  in  certain  cases,  by  Congress.  And 
in  the  exercise  of  the  power  conferred  upon  it,  Congress 
has  power  to  prohibit  generally  contracts  in  restraint  of 
trade  as  is  done  in  the  Sherman  Anti-Trust  Act  and  such 
legislation  infringes  upon  none  of  the  constitutional  guar- 
antees of  the  individual.^  And,  the  power  given  by  the 
fourth  section  of  this  act  ''to  prevent  and  restrain  viola- 
tions "  thereof  is  not  an  invasion  of  the  right  of  trial  by 
jury.  As  to  this  objection  it  was  declared  by  the  court: 
"Little  need  be  added  to  what  has  already  been  said  upon 
that  subject.  The  same  act  may  be  a  crime  and  a  con- 
tempt of  court.  If  an  assault  or  murder  be  committed  in 
the  presence  of  a  court,  the  offender  will  be  punishable 
both  for  the  crime  and  for  the  contempt,  and  so  with  any 
other  act  committed  in  violation  both  of  a  criminal  statute 
and  of  an  injunction  or  order  of  court.    Within  the  proper 

»  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

*  AddyHton  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96. 

6  United  States  v.  Joint  Traffic  Assn.,  171  U.  S.  505,  43  L.  ed.  259,  19 
Sup.  Ct.  25. 

150 


CONSTRUCTION    OF  §  H2 

subjects  of  equita})lo  cognizance,  as  established  when  the 
Constitution  was  adopted,  it  was  competent  for  Congress 
to  vest  the  courts  with  the  jurisdiction  granted  by  this 
section  and  to  impose  upon  them  the  duty  of  its  exercise 
in  proper  cases.^ 

§  112.  Purpose  of  Act. 

The  Sherman  Act  was  not  intended  to  afifect  contracts 
which  have  a  remote  and  indirect  bearing  upon  commerce 
between  the  States.^ 

It  was  the  poUcy  of  Congress  in  passing  this  act  to 
discourage  monopoHes  and  to  refuse  to  enforce  contracts 
which  had  the  effect  to  suppress  competition,  it  being 
beUeved  that  the  pubUc  interests  were  best  subserved  when 
commerce  and  trade  were  left  unfettered  by  combinations 
and  agreements  which  had  the  effect  to  destroy  competi- 
tion in  whole  or  in  part.^ 

The  Sherman  Anti-Trust  Act  was  leveled  as  appears 
by  its  title  at  only  unlawful  restraints  and  monopolies  and 
it  was  not  intended  by  Congress  to  reach  and  destroy  those 
minor  contracts  in  partial  restraint  of  trade  which  the 
long  course  of  decisions  at  common  law  had  affirmed  were 
reasonable  and  ought  to  be  upheld.  The  general  language 
of  the  act  is  limited  by  the  power  which  each  individual 
has  to  manage  his  own  property  and  determine  the  place 
and  manner  of  its  investment.  The  freedom  of  action  in 
these  respects  is  among  the  inalienable  rights  of  every  cit- 
izen.^ 

The  Anti-Trust  Act  was  enacted  not  to  stifle  but  to  fos- 
ter competition  and  its  true  construction  is  that,  while 
unlawful  means  to  monopolize  and  to  continue  an  unlaw- 
ful monopoly  of  interstate  and  international  commerce  are 
misdemeanors  :nd  enjoinable  under  it,  monopolies  of  part 

•  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724,  per  Woods,  J. 

'  Field  V.  Barber  Asphalt  Co.,  194  U.  S.  618,  623,  48  L.  ed.  679,  24 
Sup.  Ct.  436. 

8  Chesapeake  &  O.  Fuel  Co.  v.  United  States,  115  Fed.  610,  53  C.  C.  A. 
256. 

»  Northern  Socuritie.s  Co.  v.  United  State.s,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  43t3. 

151 


§§  113,  114         SHERMAN    ANTI-TRUST  ACT — 

of  interstate  and  international  commerce,  by  legitimate 
competition,  however  successful,  are  not  denounced  by  the 
law,  and  may  not  be  forbidden  by  the  courts.  ^°  And  again 
it  is  declared  that  the  purpose  of  the  Sherman  Anti-Trust 
Act  was  to  keep  the  rates  of  transportation  and  the  prices 
of  articles  in  interstate  and  international  commerce  open 
to  free  competition,  and  any  contract  or  combination  of 
two  or  more  parties,  whereby  the  control  of  such  rates  or 
prices  is  taken  from  separate  competitors  in  that  trade  and 
vested  in  a  person  or  an  association  of  persons,  necessarily 
restricts  competition  and  restrains  that  conamerce." 

§  113.  Scope  of  Act— Generally. 

The  Federal  Anti-Trust  Act  has  a  broader  application 
than  the  prohibition  of  restraints  of  trade  unlawful  at  com- 
mon law.  It  prohibits  any  combination  which  essentially 
obstructs  the  free  flow  of  commerce  between  the  States,  or 
restricts,  in  that  regard,  the  liberty  of  a  trader  to  engage 
in  business.  And  this  includes  restraints  of  trade  aimed 
at  compelling  third  parties  and  strangers  involuntarily 
not  to  engage  in  the  course  of  interstate  trade  except 
on  conditions  that  the  combination  imposes.  ^^ 

§  114.  Construction  of  Act — Generally. 

The  Sherman  Act  is  not  inconsistent  with  the  previous 
act  of  1887  ^^  ''to  regulate  commerce."  ^^ 

Although  the  act  of  Congress  known  as  the  Sherman 
Anti-Trust  Act  has  no  reference  to  the  mere  manufacture 
or  production  of  articles  or  commodities  within  the  limits 
of  the  several  States,  it  embraces  and  declares  to  be  illegal 
every  contract,  combination  or  conspiracy,  in  whatever 
form,  of  whatever  nature,  and  whoever  may  be  parties  to 

10  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177,  per 
Sanborn,  J.;  quoted  in  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183 
Fed.  427,  456. 

"  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 

12  Loewe  v.  Lawlor,  208  U.  S.  274,  52  L.  ed.  488,  28  Sup.  Ct.  301. 

"  Act  Feb.  4,  1887,  c.  104. 

'*  United  States  v.  Trans-Missouri  Freight  Assn.,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540. 

152 


CONSTRUCTION   OF  §  115 

it  which  directly  or  necessarily  operates  in  restraint  of 
trade  or  commerce  among  the  several  States  or  with  foreign 
nations J^  Such  a  construction  should  be  given  to  the 
Anti-Trust  Act  as  tends  to  promote  the  remedy  provided 
therein  and  to  abate  the  mischief  it  was  passed  to  pre- 
vent.'^ 

Sections  one  and  two  of  this  act  make  illegal  two  differ- 
ent though  nearly  allied  things,  that  is,  the  first  section 
refers  to  combinations  in  restraint  of  interstate  trade  and 
commerce  and  the  second  section  refers  to  combinations 
or  conspiracies  to  monopolize,  or  to  attempt  to  monopolize, 
interstate  trade  or  conmierce.^^ 

In  the  construction  and  enforcement  of  this  statute, 
corporations  are  persons,  they  are  legal  entities  distinct 
from  their  stockholders,  and  the  combination  of  two  or 
more  of  them  in  restraint  of  trade  is  as  unlawful  as  the 
combination  of  individuals.^^ 

§  115.  Construction  of  Act— "  Commerce  "  and  "  Re- 
straint of  Trade  "  Construed. 

The  word  "commerce"  as  used  in  thjs  act  is  not  synony- 
mous with  "trade"   as  used  in  the  common-law  phrase 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436;  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C), 

164  Fed.  700. 

"  WhitweU  V.  Continental  Tobacco  Co.,  125  Fed.  454,  60  C.  C.  A.  290. 

As  to  application  and  construction  of  Sherman  Anti-Trust  Act  see  In  re 
Charge  to  Grand  Jurj^  (U.  S.  D.  C),  151  Fed.  834. 

In  the  case  of  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724,  the 
construction  of  this  act  is  considered.  The  case  was  appealed  and  it  was 
said  by  the  United  States  Supreme  Court  as  to  the  determination  reached 
by  the  court  below,  "We  enter  into  no  examination  of  the  Act  of  July  2, 
1890,  chap.  647,  26  Stat.  209,  upon  which  the  Circuit  Court  relied  mainly 
to  sustain  its  jurisdiction.  It  must  not  be  understood  from  this  that  we 
dissent  from  the  conclusions  of  that  court  in  reference  to  the  scope  of  the 
act,  but  simply  that  we  prefer  to  rest  our  judgment  on  the  broader  ground 
which  has  been  discussed  in  this  opinion,  believing  it  of  importance  that 
the  principles  underlying  it  should  be  fully  stated  and  affirmed."  Per 
Mr.  Justice  Brewer,  In  re  Debs,  158  U.  S.  564,  600,  39  L.  ed.  1092,  15 
Sup.  Ct.  900. 

"  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C), 

165  Fed.  774. 

"  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 

153 


§§  116,  117         SHERMAN   ANTI-TRUST   ACT — 

"restraint  of  trade"  and  should  not  be  given  a  meaning 
more  restricted  than  it  has  in  the  Constitution  and  as 
defined  by  the  Supreme  Court.  ^^  And  though  there  may 
be  a  technical  distinction  between  the  phrase  "  in  restraint 
of  trade"  as  used  in  the  act  and  the  phrases  "to  injure 
trade"  and  "to  restrain  trade"  yet  it  is  said  that  the  use 
of  one  expression  rather  than  the  other  should  not  vary 
the  interpretation  of  this  act.^° 

§  116.  Construction  of  Act— Should  Not  Be  Narrow  or 
Forced. 

In  the  construction  of  the  Sherman  Anti-Trust  Act  the 
rule  has  been  applied  that  although  cases  should  not  be 
brought  within  a  statute  containing  criminal  provisions 
that  are  not  clearly  embraced  by  it,  the  court  should  not 
by  narrow,  technical  or  forced  construction  of  words 
exclude  cases  from  it  that  are  obviously  within  its  provi- 
sions. And  while  this  act  contains  criminal  provisions 
the  Federal  court  has  power  by  the  terms  thereof  ^Mn  a 
suit  in  equity,  to  prevent  and  restrain  violations  of  the 
act  and  may  mold  its  decree  so  as  to  accomplish  practical 
results  such  as  law  and  justice  demand. ^^ 

§  117.  Statute  Does  Not  Extend  to  Acts  Done  in 
Foreign  Countries. 

A  statute  will,  as  a  general  rule,  be  construed  as  intended 
to  be  confined  in  its  operation  and  effect  to  the  territorial 
limits  within  the  jurisdiction  of  the  lawmaker,  and  words 
of  universal  scope  will  be  construed  as  meaning  only  those 
subject  to  the  legislation. ^^ 

In  the  application  of  this  doctrine  it  has  been  deter- 
mined that  the  prohibitions  of  the  Sherman  Anti-Trust 
Law  do  not  extend  to  acts  done  in  foreign  countries,  even 

"  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724. 

20  United  States  v.  Debs  (U.  S.  C.  C),  64  Fed.  724. 

"  Section  4. 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  46  L.  ed.  679, 
24  Sup.  Ct.  436. 

"  American  Banana  Co.  v.  United  Fruit  Co.,  213  U.  S.  347,  53  L.  ed. 
826,  29  Sup.  Ct.  511,  aff'g  166  Fed.  2G1,  92  C.  C.  A.  325. 

154 


CONSTRUCTION   OF  §11" 

though  done  by  citizens  of  the  United  States  and  in- 
juriously affecting  other  citizens  of  the  United  States  and 
that  a  conspiracy  in  this  country  to  do  acts  in  another 
jurisdiction  does  not  draw  to  itself  those  acts  and  make 
them  unlawful  if  they  are  permitted  by  the  local  law.'^* 

**  American  Banana  Co.  v.  United  Fruit  Co.,  213  U.  S.  347,  53  L.  ed. 
826,  29  Sup.  Ct.  511,  aff'g  166  Fed.  261,  92  C.  C.  A.  325.  Tiie  allegations 
of  the  complaint  were  summed  up  as  follows  by  Mr.  Justice  Holmes: 
"The  plaintiff  is  an  Alabama  corporation,  organized  in  1904.  The  de- 
fendant is  a  New  Jersey  corporation,  organized  in  1899.  Long  before  the 
plaintiff  was  formed,  the  defendant,  with  intent  to  prevent  competition, 
and  to  control  and  monopolize  the  banana  trade,  bought  the  property  and 
business  of  several  of  its  previous  competitors,  with  provisions  against 
their  resuming  the  trade,  made  contracts  with  others,  including  a  majority 
of  the  most  important,  regulating  the  quantity  to  be  purchased  and  the 
price  to  be  paid,  and  acquired  a  controlling  amount  of  stock  in  still  others. 
For  the  same  purpose  it  organized  a  selling  company,  of  which  it  held  the 
stock,  that  by  agreement  sold  at  fixed  prices  all  the  bananas  of  the  com- 
bining parties.  By  this  and  other  means  it  did  monopolize  and  restrain 
the  trade  and  maintained  unreasonable  prices.  The  defendant  being  in 
this  ominous  attitude,  one  McConnell  in  1903  started  a  banana  planta- 
tion in  Panama,  then  part  of  the  United  States  of  Colombia,  and  began  to 
build  a  railway  (which  would  afford  his  only  means  of  export),  both  in 
accordance  with  the  laws  of  the  United  States  of  Colombia.  He  was 
notified  by  the  defendant  that  he  must  either  resign  or  stop.  Two  months 
later,  it  is  believed  at  the  defendant's  instigation,  the  governor  of  Panama 
recommended  to  his  national  government  that  Costa  Rica  be  allowed  to 
administer  the  territory  through  which  the  railroad  was  to  run  and  this 
although  that  territory  had  been  awarded  to  Colombia  under  an  arbitra- 
tion agreed  to  by  treaty.  The  defendant,  and  afterwards,  in  September, 
the  government  of  Costa  Rica,  it  is  believed  by  the  inducement  of  the 
defendant,  interfered  with  McConnell.  In  November,  1903,  Panama 
revolted  and  became  an  independent  republic,  declaring  its  boundary  to 
be  that  settled  by  the  award.  In  June,  1904,  the  plaintiff  bought  out 
McConnell  and  went  on  with  the  work,  as  it  had  a  right  to  do  under  the 
laws  of  Panama.  But  in  July,  Costa  Rican  soldiers  and  officials,  instigated 
by  the  defendant,  seized  a  part  of  the  plantation  and  a  cargo  of  supplies 
and  have  held  them  ever  since  and  stopped  the  construction  and  operation 
of  the  plantation  and  railway.  In  August,  one  Astua,  by  ex  parte  pro- 
ceedings, got  a  judgment  from  a  Costa  Rican  court,  declaring  the  planta- 
tion to  be  his,  although,  it  is  alleged,  the  proceedings  were  not  within  the 
jurisdiction  of  Costa  Rica,  and  were  contrary  to  its  laws  and  void.  Agents 
of  the  defendant  then  bought  the  lands  from  Astua.  The  plaintiff  has 
tried  to  induce  the  government  of  Costa  Rica  to  withdraw  its  soldiers  and 
also  has  tried  to  persuade  the  United  States  to  interfere  but  has  been 
thwarted  in  both  by  the  defendant  and  has  failed.  The  government  of 
Costa  Rica  remained  in  possession  down  to  the  bringing  of  the  suit.  As  a 
result  of  the  defendant's  acts  the  plaintiff  has  been  deprived  of  the  use  of 

155 


§  118  SHERMAN    ANTI-TRUST   ACT — 

§  118.  The  Question  of  Reasonableness  or  Unreason- 
ableness of  Restraint. 

By  the  terms  of  the  Sherman  Anti-Trust  Act  contracts, 
combinations  or  conspiracies  in  restraint  of  trade  or  com- 
merce among  the  several  States,  or  with  foreign  nations, 
are  declared  to  be  illegal.  Under  such  provision  according 
to  the  earlier  decisions  the  only  question  for  the  court  to 
determine  is  whether  the  contract  or  combination  is  in 
its  necessary  effect  a  restraint  upon  such  commerce,  and 
it  is  not  concerned  with  the  question  whether  the  restraint 
is  a  reasonable  or  unreasonable  one  and  one  which  at 
common  law  would  have  rendered  the  contract  invalid.  ^^ 
And  it  was  decided  that  the  terms  of  the  act  control, 
and  as  they  forbid  any  such  contract  or  combination  with- 
out respect  to  its  nature  or  beneficial  results  it  was  not 
essential  that  the  restraint  should  be  unreasonable  within 
the  well-understood  definition  of  an  unlawful  restraint 
before  the  statute,-^  and  that  the  prohibitory  provisions 
of  this  act  applied  to  all  contracts  in  restraint  of  interstate 
or  foreign  trade  or  commerce  without  exception  or  limita- 
tion and  were  not  confined  to  those  in  which  the  restraint 
was  um'easonable  -^  but  embraced  all  direct  restraints.-^ 
The  United  States  Supreme  Court  has,  however,  in  the 
recent  decision  in  The  Standard  Oil  Co.  v.  United  States  ^^ 
determined  that  the  terms  ''restraint  of  trade"  and  "at- 

the  plantation  and  the  railway,  the  plantation  and  supplies  have  been 
injured.  The  defendant  also,  by  outbidding,  has  driven  purchasers  out 
of  the  market,  and  has  compelled  producers  to  come  to  its  terms  and  it 
has  prevented  the  plaintiff  from  buying  for  export  and  sale.  This  is  the 
substantial  damage  alleged." 

"  Chesapeake  &  O.  Fuel  Co.  v.  United  States,  115  Fed.  610,  53  C.  C.  A. 
256.  Thomson  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A. 
315,  rev'g  149  Fed.  933;  Wheeler-Stenzcl  Co.  v.  National  Window  Glass 
Jobbers'  Assn.,  152  Fed.  864,  81  C.  C.  A.  658;  United  States  v.  Coal 
Dealers  (U.  S.  C.  C),  85  Fed.  252. 

26  Bigelow  V.  Calumet  &  Hecla  Min.  Co.,  167  Fed.  721,  94  C.  C.  A.  13. 

""  United  States  v.  Trans-Missouri  PYeight  Assoc,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540;  Ware-Kramer  Tobacco  Co.  v.  American  To- 
bacco Co.  (U.  S.  C.  C),  180  P^ed.  160. 

.  28  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700, 
707. 

»221  U.  S.  1,  000  Sup.  Ct.  000. 

156 


CONSTRUCTION  OF  §  119 

tempts  to  monopolize,"  as  used  in  the  Anti-Trust  Act,  took 
their  origin  in  the  common  law  and  were  familiar  in  the 
law  of  this  country  prior  to  and  at  the  time  of  the  adoption 
of  the  act;  that  their  meaning  should  be  sought  from  the 
conceptions  of  both  English  and  American  law  prior  to 
the  passage  of  the  act;  that  the  original  doctrine  that  all 
contracts  in  restraint  of  trade  were  illegal,  was  long  since 
so  modified  in  the  interest  of  freedom  of  individuals  to 
contract  that  the  contract  was  valid  if  the  resulting  re- 
straint was  only  partial  in  its  operation  and  was  otherwise 
reasonable;  that  the  Anti-Trust  Act  of  1890  was  enacted 
in  the  light  of  the  then  existing  practical  conception  of  the 
law  against  restraint  of  trade  and  that  the  intent  of  Con- 
gress was  not  to  restrain  the  right  to  make  and  enforce 
contracts,  whether  resulting  from  combination  or  other- 
wise, which  do  not  unduly  restrain  interstate  or  foreign 
commerce,  but  to  protect  that  commerce  from  contracts 
or  combinations  by  methods,  whether  old  or  new,  w^hich 
would  constitute  an  interference  with,  or  an  undue  re- 
straint upon  it;  and  that  the  Anti-Trust  Act  contemplated 
and  required  a  standard  of  interpretation,  and  it  was  in- 
tended that  the  standard  of  reason  which  had  been  applied 
at  the  common  law  should  be  appUed  in  determining 
whether  particular  acts  were  within  its  prohibition.^^ 

§  119.  Conspiracy  May  Have  Continuance. 

The  conspiracies  made  criminal  bj"^  the  Sherman  Anti- 
Trust  Act  may  have  continuance,  although  mere  continu- 
ance of  result  of  a  crime  does  not  continue  the  crime  itself; 
if  such  continuance  of  result  depends  upon  continuous 
co-operation  of  the  conspirators,  the  conspiracy  continues 
until  the  time  of  its  abandonment  or  success.^" 


="»  Sec  " Appendix  A",  herein,  wherein  the  opinion  in  this  case  is  given; 
and  also  see  §  83a,  herein,  wherein  the  decision  is  considered. 

»"  United  States  v.  Kissel,  218  U.  S.  601,  54  L.  ed.  1168,  31  Sup.  Ct. 
124,  rev'g  (U.  S.  C.  C.)  173  Fed.  823. 


157 


§120 


SHERMAN   ANTI-TRUST  ACT — 


CHAPTER  XI 


SHERMAN  ANTI-TRUST  ACT — VIOLATIONS — GENERALLY 


§  120.  Test  of  Legality  of  Contract      §  125. 
or  Combination. 

121.  Where  Chief  Object  Is  to  In-  126. 

crease  Trade. 

122.  Where  Separate  Elements  of  127. 

Scheme  Lawful. 

123.  Violations — What    Essential 

to  Constitute.  128. 

124.  Violations  —  Essential       of 

Contracts  in  Order  to  Con- 
stitute. 129. 


Violations  —  What  Consti- 
tute—Generally. 

Violations — Size  or  Extent  of 
Business  Not  Alone  a  Test. 

Violations  —  Combinations 
Entered  Into  Before  Pas- 
sage of  Act. 

Violations  —  By  Combina- 
tions —  Stockholder  Not 
Criminally  Liable. 

Defenses — Generally . 


§  120.  Test  of  Legality  of  Contract  or  Combination. 

The  test  of  the  legaUty  of  a  contract  or  combination 
under  the  Sherman  Anti-Trust  Act  is  its  direct  and  neces- 
sary effect  upon  competition  in  interstate  or  international 
commerce.  If  the  necessary  effect  of  a  combination, 
contract  or  conspiracy  is  to  stifle,  or  directly  and  sub- 
stantially to  restrict,  free  competition  in  commerce  among 
the  States,  or  with  foreign  nations,  it  is  a  contract,  combina- 
tion or  conspiracy  in  restraint  of  that  trade,  and  it  violates 
this  law.^ 

"The  criterion  as  to  whether  any  given  business  scheme 
falls  within  the  prohibition  of  the  statute  is  its  effect 
upon  interstate  commerce;  it  is  enough  if  its  necessary 
operation  tends  to  restrain  interstate  commerce  and  to 
deprive  the  public  of  the  advantage  flowing  from  free 
competition."  2    And  if  the  necessary  effect  of  a  combina- 

>  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177;  Union 
Pacific  Coal  Co.  v.  United  States,  173  Fed.  737,  97  C.  C.  A.  578;  Bigelow 
V.  Calumet  &  Hecla  Min.  Co.,  167  Fed.  721,  94  C.  C.  A.  13;  Phillips  v. 
lola  Portland  Cement  Co.,  125  Fed.  593,  61  C.  C.  A.  19;  see  also  Gibbs 
V.  McNeely,  118  Fed.  120,  55  C.  C.  A.  70,  60  L.  R.  A.  152,  rev'g  107  Fed. 
210. 

2  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 

158 


VIOLATIONS — GENERALLY  §  121 

tion  is  to  restrain  interstate  commerce  it  comes  within  the 
meaning  of  the  iVnti-Trust  Act  though  the  contract  does 
not  in  express  terms  refer  thereto. ^  But  a  contract  in 
restraint  of  trade  may  or  may  not  be  in  restraint  of  inter- 
state trade.  If  it  directly  affects  only  production  within 
the  limits  of  a  State  it  is  in  restraint  of  intrastate  trade 
and  is  subject  only  to  State  laws.  Any  remote  or  inci- 
dental effect  upon  interstate  trade  is  insufficient  to  brmg 
it  within  the  Federal  enactment.  If,  however,  the  con- 
tract is  for  the  purpose  of  controlling  the  disposition  of 
the  manufactured  article  across  State  lines,  it  directly 
affects  interstate  commerce  and  thus  may  contravene 
both  State  and  national  laws."* 

§  121.  Where  Chief  Object  Is  to  Increase  Trade. 

Although  it  is  held  to  be  no  defense  that  the  main  pur- 
pose of  an  agreement  of  such  a  character  was  to  increase 
the  trade  of  the  parties,  to  enhance  competition  in  a 
larger  field,  and  to  improve  the  character  of  the  product, 
which  results  are  beneficial  to  the  public  and  therefore  a 
justification  for  an  indirect  and  partial  restraint  of  trade,^ 
yet  an  attempt  to  monopolize  a  part  of  interstate  com- 
merce which  promotes,  or  but  indirectly  or  incidentally 
restricts,  competition  therein,  while  its  main  purpose  and 
chief  effect  are  to  increase  the  trade  and  foster  the  business 
of  those  who  make  it,  was  not  intended  to  be  made  and 
was  not  made  illegal  by  the  Anti-Trust  Act,  because  such 

823,  per  Hough,  J.;  quoted  in  Ware-Kramer  Tobacco  Co.  v.  American 
Tobacco  Co.  (U.  S.  C.  C),  180  Fed.  160. 

The  true  inquiry  is,  does  the  combination  tend  directly  to  appreciably 
restrain  interstate  commerce  and  it  is  immaterial  that  the  restraint  of 
trade  as  such  was  not  the  ultimate  object  or  to  ascertain  just  what  pro- 
portion the  resulting  restraint  of  interstate  commerce  bears  to  other 
cfTects  or  results  of  the  combination.  Rice  v.  Standard  Oil  Co.  (U.  S.  C.  C), 
134  Fed.  404. 

'  Gibbs  V.  McNeely,  118  Fed.  120,  55  C.  C.  A.  70,  60  L.  R.  A.  152,  rev'g 
107  Fed.  210. 

*  Pennsylvania  Sugar  R.  Co.  v.  American  Sugar  R.  Co.,  166  P>d.  254, 
92  C.  C.  A.  318,  rev'g  160  Fed.  144. 

'  Chesapeake  &  O.  Fuel  Co.  v.  United  States,  115  Fed.  610,  53  C.  C.  A. 
256. 

159 


§§  122,  123         SHERMAN   ANTI-TRUST  ACT — 

attempts  are  indispensable  to  the  existence  of  any  compe- 
tition among  the  States.^ 

§  122.  Where  Separate  Elements  of  Scheme  Lawful. 

Where  the  effect  of  a  combination  upon  interstate 
commerce  is  direct  even  though  the  separate  elements  of 
such  a  scheme  may  be  lawful  yet  if  they  are  bound  to- 
gether by  common  intent  as  parts  of  an  unlawful  scheme 
to  monopolize  interstate  commerce,  the  plan  may  make 
the  parts  unlawful 7 

A  series  of  acts  each  of  which  may  be  innocent  in  itself, 
may  be  wrongful  if  the  direct  object,  purpose  and  result 
thereof  be  to  carry  into  effect  a  combination  agreement 
whereby  the  free  flow  of  commerce  between  the  States  or 
the  liberty  of  a  trader  to  carry  on  his  business  be  ob- 
structed .  Whatever  is  done  by  those  engaged  in  the  scheme 
or  plot  with  the  motive  and  intent  to  carry  out  the  unlaw- 
ful purpose  itself  becomes  tainted  with  the  illegality  of  the 
scheme,  the  separate  acts  becoming  thereby  so  interwoven 
with  the  unlawful  scheme  as  to  cause  the  injury  '*by  rea- 
son" of  the  combination  within  the  language  of  the  pro- 
vision of  the  act  giving  the  remedy.^  So  a  combination 
may  be  in  restraint  of  trade  and  within  the  meaning  of 
the  Anti-Trust  Act,  although  the  persons  exercising  the 
restraint  may  not  themselves  be  engaged  in  interstate 
trade,  and  some  of  the  means  employed  may  be  acts 
within  the  State  and  individually  beyond  the  scope  of 
Federal  authority,  and  operate  to  destroy  intrastate  trade 
as  well  as  interstate  trade.  The  acts  must  be  considered 
as  a  whole,  and  if  the  purposes  are  to  prevent  interstate 
transportation  the  plan  is  open  to  condemnation  under 
the  act.^ 

§  123.  Violations— What  Essential  to  Constitute. 

In  order  to  condemn  an  agreement  as  void  under  the 

•  Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454,  60  C.  C.  A.  290. 

7  Swift  &  Co.  V.  United  States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct. 
276. 

"  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

»  Loewe  v.  Lawlor,  208  U.  S.  274,  52  L.  ed.  488,  28  Sup.  Ct.  301. 

160 


VIOLATIONS — GENERALLY  §  123 

Act  of  July  2,  1890,  its  dominant  purpose  must  be  an  inter- 
ference with  interstate  or  international  commerce.'"  In 
order  to  come  within  the  provisions  of  the  statute  the 
direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  that  trade  or  commerce  which  is  among  the 
several  States  or  wdth  foreign  nations. '^  And  to  constitute 
the  offense  of  monopolizing  or  attempting  to  monopolize 
under  this  act,  it  is  necessary  to  acquire,  or  attempt  to 
acquire,  an  exclusive  right  in  such  commerce  by  means 
which  will  prevent  others  from  engaging  therein. '^  In 
this  case  it  was  said:  "In  order  to  constitute  a  violation 
of  this  statute,  which  prohibits  combinations  and  con- 
spiracies to  'monopolize,'  the  monopoly  must  affect  and 
operate  directly  upon  commerce  among  the  States  of 
the  United  States  or  with  foreign  nations.  It  is  not  suffi- 
cient that  it  affects  only  the  commerce  within  a  single 
State.  It  must  be  interstate  or  foreign  commerce.  Such 
commerce  includes  the  purchase  and  sale  of  articles  that 
are  intended  to  be  transported  from  one  State  to  another — 
every  species  of  commercial  intercourse  among  the  States 
and  with  foreign  nations.  The  term  comprehends  new 
intercourse  for  the  purpose  of  trade  in  any  and  all  of  its 
forms,  including  transportation,  purchase,  sale  and  ex- 
change of  commodities  between  the  citizens  residing  and 
domiciled  in  the  different  States."  '^  But  in  order  to 
maintain  a  suit  under  the  Sherman  Anti-Trust  Act  the 
government  is  not  obliged  to  show  that  the  agreement  in 
question  was  entered  into  for  the  purpose  of  restraining 
trade  or  commerce,  if  such  restraint  is  its  necessary  effect.^* 
And  in  order  to  constitute  a  violation  of  the  act  it  is  not 
necessary  that  the  restraint  of  interstate  trade  and  com- 

"  Virtue  v.  Creamery  Package  Mfg.  Co.,  179  Fed.  115,  102  C.  C.  A. 
413. 

»  Anderson  v.  United  States,  171  U.  S.  604,  43  L.  ed.  300,  19  Sup.  Ct.  50. 

"  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed. 
455. 

'»  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed.  455, 
per  Sheppard,  J. 

"  United  States  v.  Trans-Missouri  Freight  Assn.,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540. 

11  161 


§§  124,  125         SHERMAN   ANTI-TRUST   ACT — 

merce  shall  be  so  complete  as  to  amount  to  total  destruc- 
tion.^^ 

§  124.  Violations— Essentials  of  Contracts  m  Order  to 
Constitute. 

To  violate  the  act  there  must  be  a  contract,  combina- 
tion or  conspiracy,  which  in  purpose  or  effect  tends  to 
restrain  trade  or  commerce  among  the  States  or  to  monop- 
ohze  some  portion  thereof.  Whether  in  purpose  or  effect 
violative  of  the  act,  such  contract,  combination  or  conspir- 
acy must  have  the  ordinary  meaning  attached  to  those 
words.  There  must  be  the  meeting  of  the  minds  of  two 
or  more,  to  accomplish  some  common  purpose  directly 
violative  of  the  act,  or  a  purpose  which  will,  whether 
intentional  or  not,  in  effect  constitute  a  restraint  of  trade 
and  commerce  among  the  several  States.  ^^  So  an  agent 
of  a  corporation  cannot  alone  form  an  unlawful  combina- 
tion between  himself  and  his  corporation  by  his  thoughts 
and  acts  within  the  scope  of  his  agency  without  the  knowl- 
edge or  participation  of  any  agent  or  officer  of  the  corpora- 
tion. The  union  of  two  or  more  persons,  the  conscious 
participation  in  the  scheme  of  two  or  more  minds,  is  indis- 
pensable to  an  unlawful  combination  and  it  cannot  be 
created  by  the  action  of  one  man  alone.  ^^ 

§  125.  Violations — What  Constitute — Generally. 

In  determining  whether  a  contract  amounts  to  a  combi- 
nation in  restraint  of  trade  in  violation  of  the  Anti-Trust 
Act  all  the  facts  and  circumstances  will  be  considered.  ^^ 
Where  the  direct,  immediate  and  intended  effect  of  a 
contract  or  combination  among  dealers  in  a  commodity  is 
the  enhancement  of  its  price  it  amounts  to  a  restraint  of 

"  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

J«  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  455,  per 
Gray,  J. 

"  Union  Pacific  Coal  Co.  v.  United  States,  173  Fed.  737,  97  C.  C.  A. 
578. 

18  Continental  Wall  Paper  Co.  v.  Wright  &  Sons  Co.,  212  U.  S.  227,  53 
L.  ed.  486,  29  Sup.  Ct.  280,  aff'g  148  Fed.  939,  78  C.  C.  A.  567. 

162 


VIOLATIONS — GENERALLY  §  120 

trade  in  the  commodity,  even  though  contracts  to  buy  it 
at  the  enhanced  price  are  being  made.  ^^  The  natural  effect 
of  competition  is  to  increase  commerce,  and  an  agreement 
whose  direct  effect  is  to  prevent  this  play  of  competition 
restrains  instead  of  promotes  trade  and  commerce.-"  The 
power  to  regulate  commerce  and  to  prescribe  the  rules  by 
which  it  shall  be  governed  being  vested  in  Congress  and 
that  body  having  enacted  a  statute  such  as  the  Sherman 
Anti-Trust  Act  entitled  "  an  act  to  protect  trade  and  com- 
merce against  unlawful  restraints  and  monopolies  "  any 
agreement  or  combination  which  directly  operates,  not 
alone  upon  the  manufacture,  but  upon  the  sale,  transporta- 
tion and  delivery  of  an  article  of  interstate  commerce  by 
preventing  or  restricting  its  sale,  thereby  regulates  inter- 
state commerce  to  that  extent  and  thus  trenches  upon  the 
power  of  the  national  legislature  and  violates  the  statute.-^ 
Therefore,  where  combinations  relate  to  the  sale  and 
transportation  to  other  States  of  specific  articles,  not  inci- 
dentally or  collaterally,  but  as  a  direct  and  inmiediate  re- 
sult of  the  combination  entered  into  and  they  restrain 
the  manufacturing,  purchase,  sale  or  exchange  of  the  man- 
ufactured articles  among  the  several  States  and  enhance 
their  value,  such  combinations  come  within  the  provisions 
of  the  Anti-Trust  Act.22 

§  126.  Violations— Size  or  Extent  of  Business  Not 
Alone  a  Test. 

In  construing  the  Anti-Trust  Act  it  is  said  that  the  mere 
extent  of  acquisition  of  business  or  property  achieved  by 
fair  or  lawful  means  cannot  be  the  criterion  of  monopoly. 
In  addition  to  acquisition  and  acquirement,  there  must  be 

"  AddyBton  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
1.30,  20  Sup.  Ct.  96. 

="  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  43G. 

='  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96. 

=-  Addyston  Pipe  &  Steel  Co.  v.  United  States.  175  U.  S.  211,  44  L.  ed. 
13l>,  20  Sup.  Ct.  96;  sec  also  Whitwell  v.  Continental  Tobacco  Co.,  125 
Fed.  454,  60  C.  C.  A.  290. 

163 


§  127  SHERMAN   ANTI-TRUST  ACT — 

an  exclusion  or,  an  intent  by  unlawful  means  to  exclude, 
others  from  the  same  traffic  or  business,  or  from  acquiring 
by  the  same  means  property  and  material  things.-^ 

The  size  of  a  business  is  not  in  itself  a  violation  of  the 
Anti-Trust  Act  and  should  carry  with  it  no  great  weight. 
The  criminal  act  in  the  statute  is  the  certain  and  necessary 
prevention  of  all  other  persons  from  engaging  in  such  busi- 
ness, and  thereby  stifling  competition.  The  evil  is  not  the 
enlargement  of  the  trade  or  business  of  one  corporation, 
but  the  destruction  of  the  trade  of  all  other  persons  in  the 
same  commodity.^^  So  it  is  said:  "  Size  is  not  the  test." 
Two  individuals  who  have  been  driving  rival  express  wag- 
ons between  villages  in  two  contiguous  States,  who  en- 
ter into  a  combination  to  join  forces  and  operate  a  single 
line,  restrain  an  existing  competition;  and  it  would  seem 
to  make  little  difference  whether  they  make  such  combina- 
tion more  effective  by  forming  a  partnership  or  not."  " 
So  the  fact  that  a  business  is  conducted  by  means  of  a 
large  number  of  stores  is  not  of  itself  important,  since 
many  merchants  find  it  more  profitable  to  conduct  their 
business  through  a  chain  of  stores.  The  statute  was  not 
intended  to  strike  down  enterprise  or  to  prevent  the  re- 
straint of  trade  by  destroying  it.^^ 

§  127.  Violations— Combinations  Entered  Into  Before 
Passage  of  Act. 

Though  a  combination  or  agreement  entered  into  prior 
to  the  passage  of  the  Sherman  Anti-Trust  Act  might  have 
been  legal  when  made,  yet  where  it  came  within  the  provi- 
sions of  such  act  it  became  illegal  on  its  passage  and  acts 
done  under  it  after  that  statute  became  operative  were 
done  in  violation  of  it.^^ 

2'  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  456,  per 
Gray,  J. 

2<  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed. 
455. 

"  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700, 
702,  per  Lacombe,  P.  J. 

2«  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700. 

"  United  States  v.  Trans-Missouri  P'reight  Assn.,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540. 

164 


VIOLATIONS — GENERALLY  §§  128,  129 

§  128.  Violations—By  Combinations— Stockholder  Not 
Criminally  Liable. 

A  corporation  is  another  and  entirely  different  person 
from  any  of  its  stockholders,  whether  they  are  corporations 
or  individuals,  and  no  corporation  can  by  violating  a  law- 
make  any  one  of  its  stockholders  who  does  not  participate 
in  that  violation  criminally  liable  therefor.-** 

§  129.  Defenses — Generally. 

Where  a  combination  so  embraces  and  is  so  directed 
against  commerce  among  the  States  that  it  comes  within 
the  provisions  of  this  act  it  is  immaterial  that  it  embraces 
restraint  and  monopoly  of  trade  within  a  single  State.-' 
That  the  combination  complained  of  was  formed  in  a  for- 
eign country  is  immaterial  where  it  affects  the  commerce 
of  this  country  and  is  put  into  operation  here.^°  If  the 
purposes  of  a  combination  are  to  prevent  any  interstate 
transportation,  the  fact  that  the  means  operate  at  one 
end  before  physical  transportation  commences  and  at  the 
other  end  after  the  physical  transporation  was  ended  is  im- 
material.^' 

28  Union  Pacific  Coal  Co.  v.  United  States,  173  Fed.  737,  97  C.  C.  A.  578. 

»  Swift  &  Co.  V.  United  States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct. 
276. 

so  Thomsen  v.  Union  Caatle  MaU  S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A.  315, 
reversing  149  Fed.  933. 

»»  Loewe  v.  Lawlor,  208  U.  S.  274,  52  L.  ed.  488,  28  Sup.  Ct.  301,  rev'g 
148  Fed.  924. 


165 


§130 


SHERMAN   ANTI-TRUST  ACT — 


CHAPTER  XII 

SHERMAN     ANTI-TRUST    ACT — VIOLATIONS — PARTICULAR 
CONTRACTS   CONSTRUED 


§  130.  Purchase  of  Good  Will  and      §  141. 
Business. 

131.  Where    Corporation     Holds  142. 

Majority  of  Stock  of  An- 
other Corporation.  143. 

132.  Exchange  of  .Shares  of  Stook- 

Holding  Corporations.  144. 

133.  Contracts  Between  Holders 

of  Copyrights.  145. 

134.  Contracts   Between   Owners 

of  Patents.  14G. 

135.  Patents  —  Licenses — Condi- 

tions— Generally.  147. 

136.  Patents  —  Licenses — Partic- 

ular Conditions.  148. 

137.  Patents  —  Right  to  Modify  149. 

Terms  of  Licenses. 

138.  Proprietary       Medicines  —  150. 

Contracts  as  to. 

139.  Acts   and    Combinations   of         151. 

Labor  Organizations.  152. 

140.  Manufacturing    and    Other  153. 

Contracts — Generally.  154. 


Contracts    as    to    Manufac- 
tures Within  a  State. 

By   Manufacturers  of  Shin- 
gles. 

By    Manufacturers   of    Iron 
Pipes. 

By  Tobacco  Manufacturers 
and  Jobbers. 

By  Manufacturers  of   Lico- 
rice Paste. 

By    Association    Dealing    in 
Tiles,  Mantels  and  Grates. 

By    Sugar    Refining    Com- 
panies. 

By  Dealers  in  Fresh  Meat, 

By    Association    of    Cattle 
Dealers. 

By   Board   of  Trade — Con- 
tract as  to  Quotations. 

By  Railroad  Companies. 

By  Owners  of  Vessels. 

Mining  Contracts. 

Contracts  Between  Coal 
Companies. 


§  130.  Purchase  of  Good  Will  and  Business. 

Where  a  person  purchased  the  business  and  good  will  of 
a  corporation  engaged  in  business  in  different  States  and  by 
the  terms  of  the  contract  the  stockholders  of  the  corpora- 
tion agreed  that  they  would  not  either  directly  or  indi- 
rectly be  guilty  of  any  act  interfering  with  the  business,  its 
good  will,  its  trade  or  its  customers,  or  come  in  competition 
with  the  same,  it  was  decided  that  the  Sherman  Anti-Trust 
Act  had  no  bearing  upon  the  controversy.^    In  respect  to 

» Booth  &  Co.  V.  Davis  (U.  S.  C.  C),  127  Fed.  875,  131  Fed.  31,  65  C. 
C.  A.  269. 

166 


VIOLATIONS — PARTICULAR   CONTRACTS   §§  131,    132 

the  contention  that  there  was  a  violation  of  the  Anti-Trust 
Act  it  was  said  in  the  Circuit  Court  of  Appeals:  "  There  is 
a  clean  distinction  which  seems  to  be  lost  sight  of  in  the 
argument  here,  between  the  aggregation  of  properties  by 
purchase  where  the  seller  no  longer  retains  an  interest  in 
the  property  and  a  combination  of  owners  and  properties 
under  one  management,  where  each  owner's  interest  is 
continued  in  the  combination."- 

§  131.  Where  Corporation  Holds  Majority  of  Stock  of 
Another  Corporation. 

The  mere  fact  that  the  majority  of  the  stock  of  a  cor- 
poration which  sells  the  manufactured  products  of  an- 
other corporation  is  held  by  the  latter  does  not  constitute 
a  violation  of  the  Anti-Trust  Act,  it  appearing  that  the 
former  is  engaged  in  the  general  business  of  selling  to  its 
customers  whatever  they  may  want  no  matter  by  whom  it 
is  manufactured.^ 

§  132.  Exchange  of  Shares  of  Stock-Holding  Corpora- 
tions. 

The  exchange  of  the  stock  or  shares  of  competitive  cor- 
porations engaged  in  interstate  or  international  conunerce 
for  stock  or  shares  in  the  ownership  of  a  single  corporation, 
the  necessary  effect  of  which  is  a  direct  and  substantial  re- 

2  Davis  V.  Booth  &  Co.,  131  Fed.  31,  37,  65  C.  C.  A.  269,  per  Severens, 
C.  J.,  who  also  further  said,  "To  this  latter  class  belong  the  case  of  Merz 
Capsule  Co.  v.  United  States  Capsule  Co.  (U.  S.  C.  C),  67  Fed.  414, 
affirmed  in  71  Fed.  787.  It  may  be  that  the  practice  of  acquiring  by  a 
single  corporation,  through  purchase  of  a  great  number  of  single  plants  in 
several  States,  of  power  to  control  the  market  of  a  given  commotlity  in  a 
wide  area  of  territory',  may  become  injurious  to  the  public;  but,  if  so,  it 
would  seem  that  the  limitations  and  the  means  for  the  restriction  and 
connection  must  be  suppUed  by  the  law  making  power,  since  the  old  law 
against  forestalling  the  market  has  become  obsolete.  It  is  possible  that 
it  may  be  developed  at  the  final  hearing  that  interstate  traffic  may  be 
directly  involved  in  this  agreement.  But,  if  so,  it  will  be  prudent  to  post- 
pone final  decision  in  respect  to  the  consequences  thereof  upon  the  validity 
of  the  agreement  until  the  case  is  presented  upon  full  proof,  rather  than 
by  ex  parte  affidavits  as  now." 

See  Metcalf  v.  American  School  Furn.  Co.  (U.  S.  C.  C),  122  Fed.  115. 

»  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700. 

107 


§  132  SHEKMAN   ANTI-TRUST  ACT— 

striction  of  competition  in  tliat  commerce,  constitutes  a 
combination  in  restraint  of  commerce  among  the  States  or 
with  foreign  nations  that  is  declared  illegal  by  the  Sherman 
Anti-Trust  Act."*  And  it  has  been  determined  by  the 
United  States  Supreme  Court  that  a  combination  of  stock- 
holders of  two  competing  railroad  companies  to  obtain 
control  of  the  stock  of  such  company  by  transferring  it  to 
a  holding  company  for  the  purpose  of  eliminating  compe- 
tition, the  object  of  which  is  accomplished  by  the  organiza- 
tion of  such  holding  company  and  the  transfer  of  the  stock 
necessary  for  such  a  purpose  to  it,  is  a  ''  trust  "  within  the 
meaning  of  the  Sherman  Anti-Trust  Act,  but  if  not  it  is  a 
combination  in  restraint  of  international  and  interstate 
commerce  which  is  sufficient  to  bring  it  under  the  con- 
demnation.'^ So  where  in  pursuance  to  a  combination  of 
stockholders  of  competing  and  substantially  parallel  rail- 
road lines  a  corporation  is  organized  to  hold  the  shares 
of  constituent  companies,  the  shareholders  of  such  com- 
panies to  receive  in  lieu  of  their  shares  therein,  shares  of 
the  holding  corporation  upon  an  agreed  basis  of  value 
and  under  such  scheme  the  holding  company  becomes  the 
holder  of  a  large  majority  of  the  stock  in  such  companies, 
the  stock  of  the  holding  company  being  received  by  those 
who  delivered  their  stock  upon  the  agreed  basis,  neces- 
sarily the  constituent  companies  cease,  under  such  ar- 
rangement, to  be  in  active  competition  for  trade  and  com- 
merce along  their  respective  lines  and  become  practically, 
one  powerful  consolidated  corporation,  by  the  name  of  a 
holding  corporation,  the  principal,  if  not  the  sole,  object 
for  the  formation  of  which  is  to  carry  out  the  purpose  of 
the  original  combination  under  which  competition  between 
the  constituent  companies  would  cease.  Such  an  arrange- 
ment is  an  illegal  combination  in  restraint  of  interstate 
commerce  and  falls  within  the  prohibitions  and  provisions 
of  the  Sherman  Anti-Trust  Act.  Under  such  conditions 
it  is  within  the  power  of  the  Circuit  Court  in  an  action 

4  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 
'  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

168 


VIOLATIONS — PARTICULAR   CONTRACTS  §  133 

brought  by  the  Attorney-General  of  the  United  States 
after  the  completion  of  the  transfer  of  such  stock  to  it, 
to  enjoin  the  holding  company  from  voting  such  stock  and 
from  exercising  any  control  whatever  over  the  acts  and 
doings  of  the  railroad  companies,  and  also  to  enjoin  the 
railroad  companies  from  paying  any  dividends  to  the 
holding  corporation  on  any  of  their  stock  held  by  it.^  And 
where  twenty  corporations  which  were  engaged  in  the 
production  and  purchase  of  petroleum  and  the  refining 
thereof  apd  the  transportation  and  sale  of  the  same  and  of 
its  products  and  which  controlled  numerous  smaller  com- 
panies entered  into  an  agreement  by  which  the  majority 
of  the  stock  of  nineteen  of  such  corporations  was  trans- 
ferred to  the  Standard  Oil  Co.  of  New  Jersey,  one  of  the 
twenty,  and  by  which  the  latter  corporation  was  given  the 
power  to  fix  the  rates  of  transportation  and  the  purchase 
and  selling  prices  which  all  these  companies  should  pay  and 
receive  for  petroleum  and  its  products  throughout  the 
United  States  and  in  the  traffic  with  foreign  nations,  it 
was  held  that  such  combination  was  in  violation  of  the 
Anti-Trust  Act  and  an  injunction  against  the  continuance 
of  the  combination  was  granted/ 

§  133.  Contracts  Between  Holders  of  Copyrights. 

Though  under  the  copyright  laws  a  single  pubhsher  may 
do  as  he  pleases  with  his  copyrighted  book  yet  it  is  de- 
clared that  this  right  cannot  be  so  extended  that  he  can 
combine  with  other  owners  of  cop3a'ights  and  permit  his 
book  to  be  subject  to  the  rules  laid  down  by  the  united 
owners.^  So  where  about  ninety  per  cent  of  the  book 
business  was  in  the  hands  of  certain  pubHshers  who  formed 
an  association  under  an  agreement  which  provided  that 
they  would  not  sell  to  anyone  who  cut  prices  on  copy- 
righted books,  nor  to  anyone  who  should  have  been  known 
to  have  sold  to  others  who  cut  prices  and  that  a  black 

•  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

'  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 
«  Mines  v.  Scribner  (U.  8.  C.  C),  147  Fed.  927. 

169 


§  134  SHERMAN   ANTI-TRUST  ACT — 

list  was  to  be  kept  containing  the  names  of  such  persons 
and  that  no  one  on  that  black  hst  could  buy  books  of  any- 
body in  the  scheme  it  was  held  that  such  agreement  re- 
lated to  interstate  trade  and  commerce  and  was  violative 
of  the  Anti-Trust  Act.^ 

§  134.  Contracts  Between  Owners  of  Patents. 

A  contract  whereby  the  manufacturers  of  two  inde- 
pendent patented  devices  agree  not  to  compete  in  the 
same  commercial  field  deprives  the  public  of  the  benefits 
of  competition  and  creates  a  restraint  of  trade  which 
results  not  from  the  granting  of  the  letters  patent  but 
from  agreement.  In  such  a  case  though  the  monopoly 
of  the  patented  articles  is  not  increased,  the  monopoly 
of  the  commercial  field  is  increased.  ^°  So  where  manu- 
facturers of  liquid  door  checks  protected  by  patents, 
entered  into  contracts  the  plan  which  of  comprehended 
the  maintaining  offices,  the  pooling  of  profits,  the  elimina- 
tion of  competition  by  agreeing  not  to  compete  in  the 
same  commercial  field,  and  the  restraint  of  improvement, 
it  was  held  such  a  combination  was  within  the  Sherman 
Act  for  the  reason  that  the  restraint  of  trade  or  monopoly 
arose  from  combination,  and  not  from  the  exercise  of 
rights  granted  by  letters  patent."    But  in  another  case 

9  Mines  v.  Scribner  (U.  S.  C.  C),  147  Fed.  927;  see  also  Bobbs-Merrill 
Co.  V.  Straus  (U.  S.  C.  C),  139  Fed.  155,  affirmed,  147  Fed.  15,  77  C.  C. 
A.  607. 

10  Blount  Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.  (U.  S.  C.  C),  166  Fed.  555. 
"  Blount  Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.  (U.  S.  C.  C),  166  Fed.  555. 

In  this  case  the  court  said:  "An  attempt  to  make  profit  out  of  letters  patent 
by  suppressing  the  invention  covered  thereby  is  outside  the  patent  grant, 
and  is  so  far  removed  from  the  spirit  and  intent  of  the  patent  law  that  the 
mere  fact  that  an  inventor  may  make  a  profit  by  suppressing  his  invention 
is  not  a  sufficient  reason  for  holding  the  Sherman  act  inapplicable  to  agree- 
ments affecting  patented  articles.  If  there  is  secured  to  the  patentee  all 
profits  legitimately  arising  from  the  manufacture,  use  and  sale  of  his  in- 
vention, this  is  all  that  is  within  the  terms  of  the  grant.  To  prohibit  con- 
tracts for  the  suppression  or  restraint  of  his  own  trade  by  the  application  of 
the  Sherman  Anti-Trust  Act  is  not  inconsistent  with  his  right  to  manufac- 
ture, use  and  vend.  That  the  Sherman  act  interferes  with  some  supposed 
right,  granted  by  the  patent,  to  suppress  an  invention,  is  an  unsound  prop- 
osition, for  the  reason  that  letters  patent  grant  no  such  rights  either  in 
terms  or  by  reasonable  implication.  *  *  *    The  Sherman  act  is  not  incon- 

170 


VIOLATIONS — PARTICULAR   CONTRACTS  §  135 

it  was  determined  that  provisions  in  contracts  by  several 
owners  of  patents  in  respect  to  the  same  invention  and  b}' 
which  the  patents  were  conveyed  to  one  of  tlie  parties, 
that  the  number  of  hcenses  which  should  be  granted 
should  be  limited  to  those  licensees  who  should  be  agreed 
upon,  that  the  use  and  ownership  of  the  patented  machines 
by  the  hcensee  should  be  subject  to  certain  conditions 
and  that  he  should  use  no  other  machines  of  a  similar 
character  were  held  not  to  be  in  violation  of  the  Sherman 
Anti-Trust  Act.^-  And  where  a  condition  excluded  the 
licensee  from  making  such  harrows  as  were  made  by  others 
who  were  engaged  in  manufacturing  and  selling  other 
machines  under  other  patents  it  was  decided  that  the 
condition  so  far  as  it  operated  to  have  this  effect  was 
reasonable,  but  that  it  would  be  unreasonable  to  so  con- 
strue the  provisions  as  to  prevent  the  defendant  from 
using  any  letters  patent  legally  obtained  by  it  and  not 
infringing  patents  owned  by  others.  ^^ 

§  135.  Patents — Licenses — Conditions — Generally. 

Monopoly  being  the  object  of  the  patent  laws  it  is  a 
general  rule  subject  to  few  exceptions  that  the  patentee 
may  enforce  such  conditions  as  are  not  illegal  in  regard 
to  this  kind  of  property  as  to  the  rights  of  the  hcensee 
to  manufacture  or  use  or  sell  the  article,  and  that  where 
such  conditions  were  assented  to  by  the  latter  they  will 

sistent  with  any  rights  acquired  by  the  patentee  when  it  prevents  agree- 
ments in  restraint  of  trade  which  are  not  designed  to  make  valuable  the 
right  to  use.  There  is  no  inconsistency  between  the  grant  of  an  exclusive 
and  assignable  right  to  make,  use,  and  vend,  and  the  prohibition  of  an  agree- 
ment restraining  or  suppressing  the  sale  of  the  article  in  interstate  com- 
merce, because  any  profit  from  such  an  agreement  docs  not  arise  from  the 
value  of  making,  using,  and  vending.  There  is  no  inconsistency  between  the 
proposition  that  an  inveintor  may  withhold  his  invention  from  use  as  he 
sees  fit,  and  the  proposition  that  he  may  not  make  an  agreement  whereby, 
for  the  advantage  of  a  competitor,  trade  in  his  patented  article  is  restrained 
or  suppres.sed."    Per  Brown,  J. 

"  United  States  Consol.  Seeded  Raisin  Co.  v.  Griffin  &  Shelley  Co.,  126 
Fed.  364,  61  C.  C.  A.  334.  Examine  National  Harrow  Co.  v.  Hench  (U. 
S.  C.  C),  84  Fed.  226,  83  Fed.  36,  27  C.  C.  A.  349. 

"  Bement  v.  National  Harrow  Co.,  1S6  U.  S.  70,  46  L.  ed.  1058,  22  Sup. 
Ct.  747. 

171 


§  136  SHERMAN   ANTI-TRUST  ACT — ■ 

be  upheld  by  the  courts.  Therefore  the  fact  that  condi- 
tions of  this  nature  inserted  in  a  contract  tend  to  keep  up 
a  monopoly  does  not  render  them  illegal  as  in  violation 
of  the  Sherman  Anti-Trust  Act.^'*  There  is,  however,  a 
limit  of  course  as  to  the  extent  to  which  the  conditions 
in  a  license  may  go,  and  they  may  be  of  such  a  character  as 
to  be  in  restraint  of  trade  within  the  meaning  of  the  Anti- 
Trust  Act.  ^5 

§  136.  Patents — Licenses — Particular  Conditions. 

The  right  of  the  owner  of  letters  patent  to  assign  rights 
to  manufacture,  use  and  vend,  upon  condition  that  the 
assignee  shall  maintain  certain  prices,  and  to  agree  not 
to  compete  with  his  assignee  or  to  license  others  to  compete 
is  recognized.  ^^  In  respect  to  a  provision  in  a  license  in 
regard  to  the  price  at  which  the  patent  may  be  sold  by  the 
licensee  it  is  said  in  a  case  in  the  United  States  Supreme 
Court  in  which  this  question  arose:  "The  provision  in 
regard  to  the  price  at  which  the  licensee  would  sell  the 
article  manufactured  under  the  license  was  also  an  appro- 
priate and  reasonable  condition.  It  tended  to  keep  up 
the  price  of  the  implements  manufactured  and  sold,  but 
that  was  only  recognizing  the  nature  of  the  property 
dealt  in,  and  providing  for  its  value  so  far  as  possible. 
This  the  parties  were  legally  entitled  to  do.  The  owner 
of  a  patented  article  can,  of  course,  charge  such  price  as 
he  may  choose,  and  the  owner  of  a  patent  may  assign  it 
or  sell  the  right  to  manufacture  and  sell  the  article  pat- 
ented upon  the  condition  that  the  assignee  shall  charge 
a  certain  amount  for  such  article."  ^^ 

1*  Bement  v.  National  Harrow  Co.,  186  U.  S.  70,  46  L.  ed.  1058,  22  Sup. 
Ct.  747;  Indiana  Mfg.  Co.  v.  J.  I.  Caae  Threshing  Mach.  Co.,  154  Fed.  365, 
83  C.  C.  A.  343;  John  D.  Park  &  Sons  Co.  v.  Hartman,  153  Fed.  24,  82 
C.  C.  A.  158;  United  States  Consol.  Seeded  Raisin  Co.  v.  Griffin  &  Shelley 
Co.,  126  Fed.  364,  61  C.  C.  A.  334. 

"  Rubber  Tire  Wheel  Co.  v.  Milwaukee  Rubber  Works  Co.  (U.  S.  C.  C), 
142  Fed.  531,  holding  that  under  the  facts  of  the  case  certain  conditions 
were  of  such  a  character. 

1"  Blount  Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.  (U.  S.  C.  C),  166  Fed.  555. 

"  Bement  v.  National  Harrow  Co.,  186  U.  S.  70,  46  L.  ed.  1058,  22  Sup. 
Ct.  747.    Per  Mr.  Justice  Peckham. 

172 


VIOLATIONS — PARTICULAR   CONTRACTS     §§  137,  138 

So  a  condition  in  a  license  that  the  patented  article  shall 
not  be  sold  by  the  licensee  except  at  the  price  provided 
for  in  the  contract  and  which  restricts  the  licensee  as  to 
the  amount  of  his  production  will  not  be  construed  as 
being  in  restraint  of  trade  within  the  meaning  of  the 
Anti-Trust  Act  where  they  are  inserted  in  good  faith  and 
have  for  their  object  the  protection  of  the  monopoly  of 
the  patentee.  ^^ 

§  137.  Patents — Right  to  Modify  Terms  of  Licenses. 

The  dominion  of  the  patentee  remains  after  the  execu- 
tion of  a  Ucense  for  the  purpose  of  securing  a  substantial 
performance  of  the  agreement  by  the  licensee,  and  the 
terms  of  the  license  may  be  modified  at  any  time  by  a 
subsequent  arrangement  between  the  licensor  and  the 
hcensee,  and  is  not  in  violation  of  the  Anti-Trust  Act,  as 
the  only  right  secured  to  the  public  by  the  licenses  is  to 
purchase  the  patented  article  after  it  has  been  manufac- 
tured and  offered  for  sale  and  it  does  not  obtain  any  right 
to  have  competition  between  different  licensees  continued 
or  in  any  way  prevent  a  modification  of  the  licenses.  ^^ 

§  138.  Proprietary  Medicines — Contracts  as  to. 

The  exemption  from  common-law  rules  against  monop- 
olies and  restraints  of  trade,  and  the  provisions  of  the 
Federal  Anti-Trust  Act,  which  has  been  extended  to 
contracts  affecting  the  sale  and  resale,  the  use  or  the 
price  of  articles  made  under  a  patent  or  productions 
covered  by  a  copyright  does  not  extend  to  articles  made 
under  a  secret  process  or  medicine  compounded  under  a 
private  formula.^"  So  where  the  manufacturers  of  pro- 
prietary medicines  put  them  upon  the  market  under  a 

"  Rubber  Tire  Wheel  Co.  v.  Milwaukee  Rubber  Works  Co.  (U.  S.  C.  C), 
142  Fed.  531,  holding  that  the  fact  that  in  some  circuits  of  the  Federal 
courts  the  patent  had  been  held  invalid  did  not  operate  to  impeach  the 
question  of  good  faith,  such  patent  having  been  upheld  as  vahd  in  ether  cir- 
cuits. 

>'  Goshen  Rubber  Works  v.  Single  Tube  Automobile  &  Bicycle  Tire  Co., 
166  Fed.  431,  92  C.  C.  A.  183. 

-0  John  D.  Park  &  Sons  Co.  v.  Harlman,  153  Fed.  24,  82  C.  C.  A.  158. 

173 


§  138  SHERMAN    ANTI-TRUST   ACT — 

system  of  contracts  intended  to  maintain  the  prices  fixed 
by  them,  and  the  effect  of  the  contract  with  jobbers, 
whether  regarded  as  one  of  sale  or  agency,  was  to  restrain 
jobbers  from  selUng  to  any  save  retailers  hcensed  by  the 
manufacturers,  and  to  restrain  retailers  from  selling  for 
resale  to  any  save  those  hcensed  to  buy  or  to  persons 
who  bought  for  consumption  only,  and  to  none,  by  either 
jobber  or  retailer,  except  at  a  price  imposed  by  the  manu- 
facturers and  the  confessed  object  of  the  plan  or  system 
was  to  obtain  a  price  to  the  jobber  and  to  the  retailer 
unaffected  by  any  competition  between  them,  it  was 
decided  that  such  system  of  contracts  was  in  violation 
of  the  Anti-Trust  Act.-^  And  where  manufacturers, 
wholesalers  and  retailers  of  drugs  and  proprietary  medi- 
cines entered  into  a  combination  for  the  purpose  of  fixing 
a  minimum  price  at  which  such  articles  should  be  sold  at 
retail  and  prohibiting  their  sale  only  to  those  retailers  who 
sold  the  same  in  accordance  with  the  prices  fixed  by  the 
combination  it  was  determined  that  such  articles  being 
of  general  use,  the  combination  was  one  in  restraint  of 
trade  within  the  meaning  of  the  Anti-Trust  Act.^^ 

"  Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co.,  164  Fed.  803,  90 
C.  C.  A.  579.  The  court  said :  "  It  is  said  that  the  proprietor  of  such  a  secret 
remedy  need  never  communicate  his  formula.  Concede  this.  To  say  that 
he  need  never  compound  his  medicine,  and  that,  if  he  does,  he  need  not 
sell  it  unless  he  chooses,  is  undoubtedly  true.  But  as  much  may  be  said 
about  any  article  which  the  producer  may  choose  to  make  or  not  to  make, 
sell  or  not  sell,  as  he  wills.  So  much  pertains  inherently  to  the  natural  free- 
dom of  man  in  respect  to  his  own  actions.  But  if  he  elects  to  make  and  sell 
a  product  according  to  his  formula,  a  public  interest  is  affected  if  he  be  per- 
mitted to  restrain  freedom  of  trade  in  the  article  when  it  has  once  passed 
under  the  dominion  of  a  buyer.  A  free  right  of  alienation  is  an  incident  to 
the  general  right  of  property  in  articles  which  pass  from  hand  to  hand  in  the 
commerce  of  the  world.  Coke  on  Littleton,  §  360.  The  mere  fact  that  one 
article  or  class  of  articles  is  made  under  an  unknown  and  private  formula 
and  another  class  is  not  is  an  undeniable  fact  which  may  serve  for  some  pur- 
poses to  differentiate  them.  But  that  single  fact  does  not  afford  an  eco- 
nomic reason,  and  still  less  a  legal  reason,  for  saying  that  it  operates  to  ex- 
empt such  articles  from  rules  against  unlawful  restraints  of  trade."  Per 
Lurton,  C.  J. 

See  also  John  D.  Park  &  Sons  Co.  v.  Hartman,  1.53  Fed.  24,  82  C.  C.  A. 
158. 

"  Loder  v.  Jayne  (U.  S.  C.  C),  142  Fed.  1010,  reversed  upon  other 
grounds  in  Jayne  v.  Loder,  149  Fed.  21,  78  C.  C.  A.  653. 

174 


VIOLATIONS — PARTICULAR   CONTRACTS  §  13'J 

§  139.  Acts  and  Combinations  of  Labor  Organizations. 

The  Anti-Trust  Act  makes  no  distinction  between 
classes.  Organizations  of  farmers  and  laborers  were  not 
exempted  from  its  operation,  notwithstanding  the  offers 
which  the  records  of  Congress  show  were  made  in  that 
dii*ection.23  ^j  combinations  in  restraint  of  commerce 
without  reference  to  the  character  of  the  persons  who 
entered  into  them  are  within  the  operation  of  the  act. 
The  interdiction  includes  combinations  of  labor  as  well  as 
capital.-^ 

A  combination  of  labor  organizations  and  the  members 
thereof,  to  compel  a  manufacturer  where  goods  are  almost 
entirely  sold  in  another  State,  to  unionize  his  shops,  and 
on  his  refusal  so  to  do  to  boycott  his  goods  and  prevent 
their  sale  in  States  other  than  his  own  until  such  time  as 
the  resulting  damages  force  him  to  comply  with  their 
demands,  is  a  combination  in  restraint  of  interstate  trade 
or  commerce  within  the  meaning  of  the  Anti-Trust  Act 
which  entitles  such  manufacturer  to  maintain  an  action 
for  threefold  damages.  ^^  So  there  was  held  to  be  a  com- 
bination in  restraint  of  trade  where  it  appeared  that  a 
combination  of  labor  associations  set  out  to  secure  and 
compel  the  employment  of  none  but  union  men  in  a  given 
business  and  as  a  means  to  effect  this  compulsion,  finally 
enforced  a  discontinuance  of  labor  in  all  kinds  of  business, 
including  the  business  of  transportation  of  goods  and 
merchandise  which  were  in  transit  through  the  city  from 
State  to  State  and  to  and  from  foreign  countries.  ^^  And 
the  fact  that  corporations  of  various  labor  organizations 
were  in  their  origin  and  purposes  innocent  and  lawful  is 
not  available  as  a  ground  of  defense  to  a  charge  of  unlaw^ful 
combination  which  charge  is  fully  estabUshed.-" 

"  Loewe  v.  Lawlor,  208  U.  S.  274,  52  L.  ed.  488,  28  Sup.  Ct.  .301. 

"United  States  v.  Workingmen's  Amalgamated  Council  of  New  Or- 
leans (U.  S.  C.  C),  54  Fed.  994. 

"  Loewe  v.  Lawlor,  208  U.  S.  274,  52  L.  ed.  488,  28  Sup.  Ct.  301,  rev'g 
148  Fed.  924. 

=«  United  States  v.  Workingmen's  Amalgamated  Council  of  New  Or- 
leans (U.  S.  C.  C),  54  Fed.  994. 

2'  United  States  v.  Workingmen's  Amalgamated  Council  of  New  Or- 
leans (U.  S.  C.  C),  54  Fed.  994. 

175 


§  140  SHERMAN   ANTI-TRUST  ACT^- 

§  140.  Manufacturing  and  Other  Contracts — Generally. 

A  contract  by  which  a  manufacturer  gives  to  another 
the  exclusive  right  to  sell  his  products,  which  are  the  sub- 
ject of  interstate  commerce,  is  not  in  violation  of  the 
statute.  Such  a  contract  is  a  usual  and  reasonable  method 
by  which  the  manufacturer  may  provide  for  the  disposi- 
tion of  the  product  and  the  effect,  if  any,  upon  interstate 
or  international  commerce,  is  only  incidental  and  in- 
direct. ^^  And  where  a  manufacturer  enters  into  a  contract 
with  jobbers  for  the  shipment  of  some  of  the  manufactured 
product  to  the  latter  in  another  State  and  by  the  terms  of 
the  contract  it  is  provided  that  the  purchaser  shall  neither 
sell,  ship  nor  allow  to  be  shipped  any  of  the  product  so 
purchased  outside  of  a  certain  State,  such  contract  has 
been  held  not  to  be  in  violation  of  the  Anti-Trust  Act.^^ 
But  where  a  number  of  manufacturers  situated  in  different 
States  organize  a  selling  company  through  which  their 
entire  output  is  sold,  in  accordance  with  an  agreement 
between  themselves,  to  such  persons  only  as  enter  into  a 
purchasing  agreement  by  which  their  sales  are  restricted, 
the  effect  is  to  restrain  and  monopolize  interstate  and 
foreign  trade  and  commerce  and  is  illegal  under  the  Anti- 
Trust  Act.^°  And  where  a  manufacturer,  a  corporation 
and  its  employees  restricted  the  sales  of  its  products  to 
those  who  refrained  from  dealing  in  the  commodities  of 
its  competitors  by  fixing  the  prices  of  its  goods  to  those 
who  did  not  thus  refrain  so  high  that  their  purchase  was 
unprofitable,  while  it  reduced  the  prices  to  those  who 
declined  to  deal  in  the  wares  of  its  competitors  so  that  the 
purchase  of  its  goods  was  profitable  to  them  it  was  held 
that  the  restriction  of  their  own  trade  by  the  defendants 
to  those  purchasers  who  declined  to  deal  in  the  goods  of 
their  competitors  was  not  violative  of  the  Anti-Trust  Act.^^ 

«>  Virtue  v.  Creamery  Package  Mfg.  Co.,  179  Fed.  115,  102  U.  S.  C.  C.  A. 
413. 

»  Phillips  V.  lola  Portland  Cement  Co.,  125  Fed.  593,  61  C.  C.  A.  19. 

«•  Continental  Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  212  U.  S.  227,  53 
L.  ed.  486,  29  Sup.  Ct.  280,  aff'g  148  Fed.  939,  78  C.  C.  A.  567. 

"  Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454,  60  C.  C.  A.  290. 
The  court  naid:  "There  is  another  reason  why  the  complaint  in  this  action 

176 


VIOLATIONS — PARTICULAR   CONTRACTS  §141 

And  where  a  number  of  jobbers  who  had  been  purchasing 
their  suppHes  through  brokers  organized  a  corporation 
to  do  their  own  brokerage  business  as  well  as  that  of 
others  and  purchased  their  merchandise  through  such 
corporation  though  they  were  not  obligated  by  any  agree- 
ment so  to  do  or  to  cease  dealing  with  any  broker,  it  was 
decided  that  the  fact  that  goods  were  purchased  through 
such  corporation  from  other  States  and  that  some  foreign 
manufacturers  placed  their  accounts  with  it,  their  action 
being  voluntary,  and  there  being  no  proof  connecting  the 
parties  in  any  unlawful  scheme,  did  not  constitute  a  viola- 
tion of  the  act. ^2 

§  141.  Contracts  as  to  Manufactures  within  a  State. 

The  monopoly  and  restraint  denounced  by  the  Sherman 
Anti-Trust  Act  "to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopoHes"  are  a  monopoly  in 
interstate  or  international  trade  or  commerce  and  not 
a  monopoly  in  the  manufacture  of  a  necessary  of  life.^^ 
In  this  case  the  distinction  was  made  that  the  combination 
related  to  the  business  of  manufacturing  within  a  State 
and  bore  no  direct  relation  to  commerce  between  the 
States  or  with  foreign  nations,  though  it  might  indirectly 
affect  it.    This  distinction  is  stated  in  a  later  case  before 

fails  to  state  facts  sufficient  to  constitute  a  cause  of  action :  The  sole  cause 
of  the  damages  claimed  in  it  is  shown  to  be  the  refusal  of  the  defendants  to 
sell  their  goods  to  the  plaintiff  at  prices  which  would  enable  him  to  resell 
them  with  a  profit.  Now  no  act  or  omission  of  a  party  is  actionable,  no 
act  or  omission  of  a  party  causes  legal  injury  to  another,  unless  it  is  either 
breach  of  a  contract  with,  or  of  a  duty  to,  him.  The  damages  from  other 
acts  or  omissions  form  a  part  of  that  damnum  absque  injuria  for  which  no 
action  can  be  maintained  or  recovery  had  in  the  courts.  The  defendants 
had  not  agreed  to  sell  their  goods  to  the  plaintiff  at  a  price  which  would 
make  their  purchases  profitable  to  him,  so  that  the  damages  he  suffered 
did  not  result  from  any  bx^each  of  any  contract  with  him.  They  were  not 
caused  by  the  breach  of  any  legal  duty  to  the  plaintiff,  for  the  defendants 
owed  him  no  duty  to  sell  their  products  to  him  at  any  price — much  less  at 
prices  so  low  that  he  could  realize  a  profit  by  selling  them  again  to  others." 
Per  Sanborn,  C.  J. 

"  Arkansas  Brokerage  Co.  v.  Dunn  &  Powell,  173  Fed.  899,  97  CCA. 
454. 

"  United  States  v.  E.  C  Knight  Co.,  156  U.  S.  1,  39  L.  ed.  325,  15  Sup. 
Ct.  249,  aff'g  60  Fed.  934,  9  C  C  A.  297. 

12  177 


§  142  SHERMAN   ANTI-TRUST  ACT — 

the  United  States  Supreme  Court  wherein  it  is  said:  "The 
case  was  decided  upon  the  principle  that  a  combination 
simply  to  control  manufacture  was  not  a  violation  of 
the  act  of  Congress,  because  such  a  contract  or  combina- 
tion did  not  directly  control  or  affect  interstate  com- 
merce, but  that  contracts  for  sale  and  transportation  to 
other  States  of  specific  articles  were  proper  subjects  for 
regulation  because  they  did  form  part  of  such  com- 
merce." ^* 

So  in  another  case  it  is  decided  that  the  act  being  for 
the  purpose  of  protecting  interstate  trade  and  commerce 
against  unlawful  restraint  and  monopolies  it  does  not  re- 
fer to  manufactories  within  a  State,  the  manufacture  within 
a  State  of  an  article  of  commerce  being  declared  not  to 
be  within  the  purview  of  the  act  although  the  manufactur- 
ing combination  constitutes  a  monopoly.  In  such  a  case 
it  is  said  to  be  immaterial  that  the  manufactured  article 
is  intended  for  sale  in  other  States  and  foreign  countries 
but  that  the  contract  or  combination  must  go  further 
and  provide  for  the  sale  and  transportation  to  other 
States.  35 

§  142.  By  Manufacturers  of  Shingles. 

Where  a  certain  kind  of  shingles  could  only  be  made  in 
one  State  but  were  to  a  great  extent  shipped  for  use  in 
other  States  and  the  manufacturers  thereof  located  in 
such  State  formed  an  association  to  control  the  produc- 
tion and  price  of  the  shingles  and  proceeded  to  reduce 
the  production  by  closing  mills  of  its  members,  and  at  the 
same  time  increased  the  price  of  the  product,  such  com- 
bination was  held  to  be  an  illegal  one  within  the  meaning 
of  the  Sherman  Anti-Trust  Act.^^ 

"  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96;  see  also  Swift  &  Co.  v.  United  States,  196  U.  S.  375, 
49  L.  ed.  518,  25  Sup.  Ct.  276,  where  a  similar  statement  is  made. 

35  Robinson  v.  Suburban  Brick  Co.,  127  Fed.  804,  62  C.  C.  A.  484. 
See  Gibbs  v.  McNeely,  107  Fed.  211,  reversed  in  118  Fed.  120,  55  C.  C.  A. 
70,  60  L.  R.  A.  1.52. 

36  Gibbs  V.  McNeely,  118  Fed.  120,  55  C.  C.  A.  70,  00  L.  R.  A.  152,  rev'g 
107  Fed.  210. 

178 


VIOL.\TIONS — PARTICULAR   CONTRACTS   §§  143-145 

§  143.  By  Manufacturers  of  Iron  Pipes. 

Several  manufacturers  who  controlled  the  market  for 
cast-iron  pipe  in  a  large  number  of  States  entered  into  an 
agreement  and  formed  a  combination  the  object  of  which 
was  to  suppress  competition  and  thus  control  the  prices  of 
their  product.  This  was  done  by  the  appointment  of  a 
board  consisting  of  one  representative  from  each  shop.  All 
inquiries  for  pipes  were  referred  to  this  board  which  fixed 
the  price  it  thought  the  job  would  stand  and  it  was  then 
sold  to  such  shop  of  the  combination  as  bid  the  highest 
bonus,  and  this  shop  at  the  public  letting  bid  the  fixed 
price  and  the  other  shops  in  the  combination  bid  in  excess 
thereof  in  order  to  deceive  the  public.  It  was  decided 
that  there  was  a  violation  of  the  Anti-Trust  Act.^^ 

§  144.  By  Tobacco  Manufacturers  and  Jobbers. 

Where  a  large  number  of  corporations  engaged  in  the 
tobacco  business  and  competing  in  purchasing  raw  ma- 
terials, in  manufacturing,  in  jobbing  and  in  selling  to  the 
consumer  formed  a  combination  controlling  a  greatly  pre- 
ponderating proportion  of  the  tobacco  business  in  the 
United  States  in  each  and  all  its  branches,  which  resulted 
in  the  elimination  of  competition,  such  combination  was 
held  to  be  in  restraint  of  interstate  commerce  and  in 
violation  of  the  Anti-Trust  Act.^^ 

§  145.  By  Manufacturers  of  Licorice  Paste. 

Where  it  appeared  that  defendants  had  agreed  that 
there  should  be  no  competition  in  price  for  licorice  paste ; 
that  they  agreed  from  time  to  time  upon  and  maintained 
noncompetitive  prices  therefor  and  actually  sold  at  such 
prices  and  also  induced  certain  competitors  to  establish 
and  maintain  arbitrary  and  noncompetitive  prices;  that 
such  prices  were  in  excess  of  reasonable  and  normal  prices 
that  would  have  prevailed;  that  there  was  a  division  and 
apportionment  of  the  amount  of  such  business  w^hich 

"  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  od. 
136,  20  Sup.  Ct.  96. 
'«  United  States  v.  American  Tobacco  Co.  (U.  S.  C.  C),  164  Fed.  700. 

179 


§  146  SHERMAN   ANTI-TRUST   ACT — 

certain  manufacturers  should  do  and  that  one  competitor 
entered  into  a  contract  stipulating  the  amount  he  might 
sell  it  was  decided  that  there  was  a  violation  of  the  Anti- 
Trust  Act.  3^ 

§  146.  By  Association  Dealing  in  Tiles,  Mantels  and 
Grates. 

It  appeared  in  this  case  that  an  association  was  formed 
in  California  by  manufacturers  of,  and  dealers  in,  tiles, 
mantles  and  grates,  the  dealers  agreeing  not  to  purchase 
materials  from  manufacturers  who  were  not  members 
and  not  to  sell  unset  tiles  to  anyone  other  than  members 
for  less  than  list  prices  which  were  fifty  per  cent  higher 
than  the  prices  to  members.  The  manufacturers,  who 
were  residents  of  States  other  than  California,  agreed  not 
to  sell  to  anyone  other  than  members.  Violations  of  the 
agreement  rendered  the  members  subject  to  forfeiture  of 
membership.  Membership  in  the  association  was  pre- 
scribed by  rules  and  dependent  on  conditions,  one  of  which 
was  the  carrying  of  not  less  than  a  certain  amount  of  stock 
and  whether  applicants  were  admitted  was  a  matter  for 
the  arbitrary  decision  of  the  association.  In  an  action  by  a 
firm  of  dealers  in  the  same  line  of  business  in  San  Francisco 
whose  members  had  never  been  asked  to  join  the  associa- 
tion and  who  had  never  applied  for  admission  therein  and 
which  did  not  always  carry  the  required  amount  of  stock, 
to  recover  damages  under  the  Sherman  Anti-Trust  Act,^" 
it  was  decided  that  though  the  sales  of  unset  tiles  was 
within  the  State  of  California,  and  although  such  sales  con- 
stituted a  very  small  portion  of  the  trade  involved,  agree- 
ment of  manufacturers  without  the  State  not  to  sell  to 
anyone  but  members  was  part  of  a  scheme  which  included 
the  enhancement  of  the  price  of  unset  tiles  by  dealers 
within  the  State,  and  that  the  whole  thing  was  so  bound 

3*  United  States  Tobacco  Co.  v.  American  Tobacco  Co.  (U.  S.  C.  C), 
163  Fed.  701,  followed  in  Weisert  Bros.  Tobacco  Co.  v.  American  Tobacco 
Co.  (U.  S.  C.  C),  16.3  Fed.  712.  See  also  United  States  v.  MacAndrews 
&  Forbes  Co.  (U.  S.  C.  C),  149  Fed.  823. 

^  Section  7  aa  given  in  §§  13,  14,  herein. 

180 


VIOLATIONS — PARTICULAR   CONTRACTS   §§  147,  148 

together  that  the  transactions  within  the  State  were  insep- 
arable and  became  a  part  of  a  purpose  which  when  carried 
out  amounted  to,  and  was,  a  combination  in  restraint  of 
interstate  trade  and  conmierce  within  the  meaning  of  the 
Anti-Trust  Act  and  that  the  parties  aggrieved  were  en- 
titled to  recover  threefold  the  damages  found  by  the  jury.^^ 

§  147.  By  Sugar  Refining  Companies. 

The  American  Sugar  Refining  Company,  a  corporation 
existing  under  the  laws  of  the  State  of  New  Jersey,  being 
in  control  of  a  large  majority  of  the  manufactories  of  re- 
fined sugar  in  the  United  States,  acquired,  through  the 
purchase  of  stock  in  four  Philadelphia  refineries,  such  dis- 
position over  those  manufactories  throughout  the  United 
States  as  gave  it  a  practical  monopoly  of  the  business. 
In  a  proceeding  under  the  provisions  of  the  Sherman  Anti- 
Trust  Act  "  to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies  "  it  was  determined  that 
the  result  of  the  transaction  was  the  creation  of  a  mo- 
nopoly in  the  manufacture  of  a  necessary  of  life  which 
could  not  be  suppressed  in  the  mode  attempted  and  that 
the  acquisition  of  the  Philadelphia  refineries  by  a  New 
Jersey  corporation,  and  the  business  of  sugar  refining  in 
Pennsylvania,  bore  no  direct  relation  to  commerce  between 
the  States  or  with  foreign  nations. ''^ 

§  148.  By  Dealers  in  Fresh  Meat. 
A  combination  of  a  dominant  proportion  of  the  dealers 
in  fresh  meats  throughout  the  United  States,  not  to  bid 
against,  or  only  in  conjunction  with,  each  other  in  order 
to  regulate  prices  in  and  induce  shipments  to  the  live  stock 
markets  in  other  States,  to  restrict  shipments,  establish 
uniform  rules  of  credit,  make  improper  rules  of  cartage, 
and  to  get  less  than  lawful  rates  from  railroads,  to  the  ex- 
clusion of  competitors,  with  the  intent  to  monopolize  corn- 
el Montague  &  Co.  v.  Lowry,  193  U.  S.  38,  48  L.  ed.  608,  24  Sup.  Ct.  307. 
«  United  Statea  v.  K.  C.  Knight  Co.,  156  U.  S.  1,  39  L.  ed.  325,  15  Sup. 
Ct.  249,  aff'g  GO  Fod.  934,  9  C.  C.  A.  297. 

181 


§  149  SHERMAN   ANTI-TRUST   ACT — 

merce  among  the  States,  is  an  illegal  combination  within 
the  meaning  and  prohibition  of  the  x\nti-Trust  Act/^ 

§  149.  By  Association  of  Cattle  Dealers. 

Where  an  exchange  was  composed  of  an  association  of 
men  doing  business  at  its  stockyards,  and  the  business  of 
the  members  was  to  receive  consignments  of  cattle  from 
different  States,  to  prepare  the  same  for  market,  to  dispose 
of  the  cattle,  and  to  receive  and  account  for  the  proceeds 
to  the  owners  after  deducting  charges,  expenses  and  ad- 
vances and  the  members  were  in  the  habit  of  soliciting 
consignments  from  owners  but  were  forbidden  from  buy- 
ing from  a  commission  merchant  in  the  same  city  who 
was  not  a  member  of  the  exchange  and  the  rules  also 
fixed  the  commission  to  be  paid  for  selling  such  stock  but 
prohibited  the  employment  of  agents  except  upon  a  stip- 
ulated salary;  or  the  sending  prepaid  telegrams  or  tele- 
phone messages  as  to  the  condition  or  the  market;  or  the 
transaction  of  business  with  any  person  violating  the  rules 
or  regulations  or  with  any  expelled  or  suspended  mem- 
ber after  notice  of  such  violation,  it  was  determined  that 
such  business  or  occupation  was  not  within  the  meaning 
of  the  Anti-Trust  Act  and  that  such  act  did  not  cover 
and  was  not  intended  to  cover  such  kinds  of  agreements 
it  being  declared  that  such  services  were  collateral  to  inter- 
state trade  or  commerce  and  in  the  nature  of  local  aid  or 
facility  provided  for  the  cattle  owner  toward  the  accom- 
plishment of  his  purpose  to  sell  them  and  that  an  agree- 
ment among  those  who  render  the  services  relating  to  the 
terms  under  which  they  will  render  them  is  not  a  contract 
in  restraint  of  interstate  trade  or  commerce/'^ 

In  another  case  the  Supreme  Court  reached  a  similar 
conclusion  upon  facts  which  were  substantially  the  same, 
the  main  difference  being  that  the  members  of  the  ex- 
change, defendants  in  the  present  case,  were  themselves 
purchasers  of  cattle  on  the  market,  while  the  defendants  in 

«  Swift  &  Co.  V.  United  States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct. 
276. 

"  Hopkins  V.  United  States,  171  U.  S.  578,  43  L.  cd.  290,  19  Sup.  Ct.  40. 

182 


VIOLATIONS — PARTICULAR   CONTRACTS  §§  150,  151 

the  former  case  were  commission  merchants  who  sold  cattle 
upon  commission  as  a  compensation  for  their  services.  In 
this  case  it  was  declared  that  where  the  subject-matter  of 
the  agreement  does  not  directly  relate  to  and  act  upon  and 
embrace  interstate  commerce  and  where  the  undisputed 
facts  clearly  show  that  the  purpose  of  the  agreement  was 
not  to  regulate,  obstruct  or  restrain  that  commerce,  but 
that  it  was  entered  into  with  the  object  of  properly  and 
fairly  regulating  the  transaction  of  the  business  in  which 
the  parties  to  the  agreement  were  engaged,  such  agreement 
will  be  upheld  as  not  within  the  statute,  where  it  can  be 
seen  that  the  character  and  terms  of  the  agreement  are 
well  calculated  to  attain  the  purpose  for  which  it  was 
formed,  and  where  the  effect  of  its  formation  and  enforce- 
ment upon  interstate  trade  or  commerce  is  in  any  event 
but  indirect  and  incidental,  and  not  its  purpose  or  object. ^^ 

§  150.  By  Board  of  Trade— Contracts  as  to  Quotations. 

Contracts  under  which  a  board  of  trade,  which  collects 
at  its  own  expense,  quotations,  furnishes  them  to  telegraph 
companies  when  it  could  refrain  from  communicating  them 
at  all,  on  condition  that  they  will  only  be  distributed  to 
persons  in  contractual  relations  with,  and  approved  by, 
the  board  and  not  to  what  are  known  as  bucket  shops, 
are  not  void  and  against  public  policy  as  being  in  restraint 
of  trade  either  at  common  law  or  under  the  Sherman  Anti- 
Trust  Act.46 

§  151.  By  Railroad  Companies. 

Railroad  carriers  engaged  in  interstate  or  international 
trade  or  commerce  are  embraced  by  the  Sherman  Anti- 
Trust  Act  and  every  combination  or  conspiracy  which 
would  extinguish  competition  between  otherwise  compet- 
ing railroads  engaged  in  interstate  trade  or  commerce,  and 
which  would  in  that  way  restrain  such  trade  or  commerce, 

«  Anderson  v.  United  States,  171  U.  S.  604,  43  L.  ed.  300,  19  Sup.  Ct. 
50. 

«  Board  of  Trade  v.  Christie  Grain  &  Stock  Co.,  198  IT.  S.  236,  49  L.  ed. 
1031,  25  Sup.  Ct.  637,  rev'g  125  Fed.  161,  61  C.  C.  A.  11. 

183 


§  151  SHERMAN   ANTI-TRUST  ACT — 

is  made  illegal  by  the  act."^  The  provisions  of  the  act 
apply  to  a  contract  between  such  carriers  in  restraint  of 
such  trade  or  commerce,  even  though  the  contract  is 
entered  into  between  competing  railroads,  only  for  the 
purpose  of  thereby  affecting  traffic  rates  for  the  transporta- 
tion of  persons  and  property/^ 

The  doctrine  above  was  shortly  after  affirmed  by  the 
United  States  Supreme  Court  in  a  case  where  it  appeared 
that  thirty-one  railroad  companies,  engaged  in  transporta- 
tion between  Chicago  and  the  Atlantic  coast,  formed 
themselves  into  an  association  known  as  the  joint  traffic 
association,  by  which  they  agreed  that  the  association 
should  have  jurisdiction  over  competitive  traffic,  except 
as  noted,  passing  through  the  western  termini  of  the  trunk 
lines  and  such  other  points  as  might  be  thereafter  des- 
ignated, and  to  fix  the  rates,  fares  and  charges  therefor, 
and  from  time  to  time  change  the  same.  No  party  to 
the  agreement  was  to  be  permitted  to  deviate  from  or 
change  these  rates,  fares  or  charges,  and  its  action  in  that 
respect  was  not  to  affect  rates  disapproved,  except  to  the 
extent  of  its  interest  therein  over  its  own  road.  It  was 
further  agreed  that  the  powers  so  conferred  upon  the 
managers  should  be  so  construed  and  exercised  as  not  to 
permit  violation  of  the  Interstate  Commerce  Act,  and 
that  the  managers  should  co-operate  with  the  Interstate 
Commerce  Commission  to  secure  stability  and  uniformity 
in  rates,  fares,  charges,  etc.  The  managers  were  given 
power  to  decide  and  enforce  the  course  which  should  be 
pursued  with  connecting  companies,  not  parties  to  the 
agreement,  which  declined  or  failed  to  observe  the  estab- 
lished rates.  Assessments  were  authorized  in  order  to  pay 
expenses,  and  the  agreement  was  to  continue  in  existence 
for  five  years.  In  construing  this  agreement  the  court 
declared  that  the  fact  that  the  rates  were  reasonable  was 
not  material  as  the  agreement  was  one  which  in  substance 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

«  United  States  v.  Trans-Missouri  Freight  Assn.,  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540. 

184 


VIOLATIONS — PARTICULAR   CONTRACTS  §  152 

operated  to  prevent  competition  between  the  companies 
which  had  entered  into  it,  the  result  of  which  would  be  to 
restrain  instead  of  promote  commerce.'*^  So  where  no  indi- 
vidual investment  is  involved  but  there  is  a  combination 
by  several  individuals  separately  owning  stock  in  two  com- 
peting railroad  companies  engaged  in  interstate  commerce, 
to  place  the  control  of  both  in  a  single  corporation,  which 
is  organized  for  that  purpose  expressly  and  as  a  mere 
instrumentality  by  which  the  competing  railroads  can  be 
combined,  the  resulting  combination  is  a  direct  restraint 
of  trade  by  destroying  competition  and  is  illegal  within 
the  meaning  of  the  Sherman  Anti-Trust  Act.^°  But  where 
a  railroad  company  entered  into  a  contract  with  an  individ- 
ual by  the  terms  of  which  the  latter  was  "to  build  up,  de- 
velop, increase,  facilitate,  and  conduct  the  business  of  the 
transportation  of  milk"  over  the  hues  of  the  former;  to  be 
wholly  responsible  for  the  milk  so  transported;  to  charge 
for  such  transportation  rates  not  in  "excess  of  those 
charged  by  competitive  railroads  for  similar  services;  to 
have  the  exclusive  privilege  to  transport  milk  on  said  lines 
and  to  retain  a  certain  per  cent  of  the  charges  as  compen- 
sation for  his  services  it  was  decided  that  such  contract 
was  not  in  violation  of  the  Anti-Trust  Act.^^  And  where 
the  competition  between  two  railroad  companies  engaged 
in  the  coal  carrying  business  was  but  slight  it  was  held 
that  the  purchase  by  one  of  the  stock  of  the  other  was  not 
a  combination  in  violation  of  the  act,  it  appearing  that  the 
main  object  of  the  purchase  was  to  provide  better  terminal 
facilities  for  both  roads  and  that  such  facilities  were  in 
fact  greatly  improved  as  a  result  thereof. ^^ 

§  152.  By  Owners  of  Vessels. 

Where  there  was  a  combination  of  shipowners,  engaged 

«  United  States  v.  Joint  Traffic  Assn.,  171  U.  S.  505,  43  L.  ed.  259,  19 
Sup.  Ct.  25. 

'^  Northern  Securities  Co.  v.  United  States,  193  U,  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

"  Delaware,  L.  &  W.  R.  Co.  v.  Kutter,  147  Fed.  51,  77  C.  C.  A.  315. 

«  United  States  v.  Reading  Co.  (L'.  S.  C.  C),  183  Fed.  427. 

185 


§  153  SHERMAN   ANTI-TRUST  ACT — 

in  foreign  commerce,  for  the  purpose  of  preventing  com- 
petition between  members  by  maintaining  uniform  rates 
and,  to  eliminate  the  possibility  of  competition  with  other 
lines,  shippers  patronizing  such  lines  were  required  to  pay 
that  which  was  equivalent  to  forfeit  money,  it  was  held 
that  there  was  a  violation  of  the  Anti-Trust  Act.^' 

A  contract,  however,  is  not  to  be  assumed  to  contem- 
plate unlawful  results  unless  a  fair  construction  requires 
it.  Therefore  where  a  contract  relates  to  cormnerce  be- 
tween points  within  a  State,  both  on  a  boundary  river,  it 
will  not  be  construed  as  falling  within  the  provisions  of 
the  Sherman  Anti-Trust  Act  because  the  vessels  affected 
by  the  contract  sail  over  soil  belonging  to  the  other  State 
while  passing  between  the  intrastate  points.  Even  if  there 
is  some  interference  with  interstate  coromerce  a  contract 
is  not  necessarily  void  under  such  act  if  the  interference 
is  insignificant  and  merely  incidental  and  not  the  domi- 
nant purpose.  The  contract  in  such  a  case  will  be  con- 
strued as  a  domestic  contract  and  its  validity  determined 
by  the  local  law.^'' 

§  153.  Mining  Contracts. 

Where  a  company,  engaged  in  mining  and  refining 
copper,  by  purchasing  outright  and  obtaining  proxies 
acquired  control  of  the  majority  of  the  shares  of  another 
company  also  engaged  in  the  same  pursuit  on  adjoining 
property,  the  object  of  the  former  company  being  to  en- 
able it  to  elect  a  majority  of  the  directors  of  the  latter 
company  and  such  act  was  authorized  by  the  law  of  the 
State  it  was  held  that  the  Anti-Trust  Act  was  not  violated 
thereby  there  being  nothing  to  show  any  intent  to  create 
a  monopoly,  restrain  competition  or  diminish  production 
and  it  being  claimed  that  the  only  object  was  to  extend 
the  industrial  life  of  the  company  so  acquiring  control  and 
to  bring  about  a  more  economical  management  of  their 

w  Thomsen  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A. 
31.5,  rev'g  149  Fed.  933. 

"  Cincinnati,  P.  P.  S.  &  P.  P.  Co.  v.  Bay,  200  U.  S.  179,  50  L.  ed.  428, 
26  Sup.  Ct.  208. 

186 


VIOLATIONS — PARTICULAR   CONTRACTS  §  154 

own  property  by  a  friendly  and  mutually  advantageous  use 
of  the  facilities  of  the  two  companies."^ 

§  154.  Contracts  Between  Coal  Companies. 

Where  an  association  composed  of  independent  pro- 
ducers of  coal  and  coke  entered  into  a  contract  with  a  fuel 
company  by  which  the  latter  was  to  handle  the  output 
of  the  members  of  such  association  for  the  western  market, 
to  be  shipped  over  a  certain  line  of  railroad,  and  by  the 
terms  of  the  contract  the  fuel  company  was  prohibited 
from  selling  the  product  of  competing  mines  or  to  sell 
below  a  minimum  price  to  be  fixed  by  an  executive  com- 
mittee, the  company  to  retain  a  certain  fixed  sum  per  ton 
as  compensation  and  to  pay  over  to  the  association  all 
profit  in  excess  of  such  sum,  and  such  committee  fixed 
the  amount  which  was  to  be  furnished  by  each  member  of 
the  association,  it  was  decided  that  the  contract  was  one 
in  restraint  of  interstate  commerce  within  the  pro\'isions 
of  the  Sherman  Anti-Trust  Act.^^  But  in  another  case  it 
was  declared  that  there  was  nothing  in  the  Anti-Trust  Act 
which  deprived  a  coal  company  of  any  of  its  rights  as 
owner  and  vender  of  merchandise  to  fix  its  prices  therefor, 
the  terms  on  which  it  will  sell,  to  select  its  customers  and 
to  sell  to  some  at  one  price  and  one  set  of  terms  and  to 
others  at  another  price  and  on  a  different  set  of  terms.  In 
the  application  of  this  principle  it  was  held  that  such  a 
company  did  not  violate  the  act  by  refusing  to  sell  its  coal 
to  a  certain  person  unless  he  would  withdraw  his  adver- 
tisement of  a  reduction  in  the  retail  price  of  it,  there  being 
no  evidence  of  a  combination  between  such  company  and 
some  other  person  or  persons  so  to  do." 

»  Bigelow  V.  Calumet  &  Hecla  Min.  Co.,  167  Fed.  721,  94  C.  C.  A.  13, 
aff'g  Bigelow  v.  Calumet  &  Hecla  Min.  Co.  (U.  S.  C.  C),  167  Fed.  704. 

"  Chesapeake  &  O.  Fuel  Co.  v.  United  States,  115  Fed.  610,  53  C.  C.  A. 
256. 

"  Union  Pacific  Coal  Co.  v.  United  States,  173  Fed.  737,  97  C.  C.  A.  578. 


187 


§  155  SHERMAN   ANTI-TRUST   ACT- 


CHAPTER  XIII 

SHERMAN    ANTI-TRUST    ACT — VIOLATIONS    AS    DEFENSE    TO 
ACTION  BY  COMBINATION 

§  155.  Contract  with  Combination  §  158.  Suit  by  Combination  for  In- 

— Voluntary    Purchaser —  fringement  of  Patent — II- 

IllegaUty  of  Combination  legaHty  of  Combination  as 

no  Defense.  Defense. 

156.  Contract  with  Combination  159.  Suit  by  Combination  for  In- 

— Voluntary    Purchaser —  fringement  of  Trade-Mark 

Application  of  Rule.  or    Copyright  —  Illegality 

157.  Contract  with  Combination  of    Combination    as    De- 

— When  Illegality  of  Com-  fense. 

bination  a  Defense. 

§  155.  Contract  with  Combination— Voluntary  Pur- 
chaser— Illegality  of  Combination  no  Defense. 

Where  a  contract  is  independent  of,  and  in  no  way  con- 
nected with,  the  illegal  purposes  for  which  a  combination 
may  be  formed  it  is  held  to  be  no  defense  to  an  action 
thereon  that  such  combination  is  one  in  violation  of  law.  ^ 

Though  a  combination  may  be  unlawful  as  being  in  re- 
straint of  trade  within  the  meaning  of  the  Anti-Trust  Act 
yet  such  act  does  not  declare  illegal  or  void  any  sale  made 
by  such  combination  or  its  agents  of  property  acquired 
for  the  purpose  of  being  sold;  such  property  not  being  at 
the  time  in  course  of  transportation  from  one  State  to 
another  or  to  a  foreign  country.  The  contract  of  sale 
may  be  regarded  as  collateral  to  the  agreement  between 
the  seller  and  the  other  corporations  forming  the  illegal 
combination  and  the  buyer  cannot  refuse  to  comply  with 
his  contract  of  purchase  upon  the  ground  of  the  illegaUty 
of  the  combination. 2    So  it  is  no  objection  to  the  enforce- 

1  Harrison  v.  Glucose  Sugar  Refining  Co.,  116  Fed.  304,  53  C.  C.  A.  484. 

2  Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  46  L.  ed.  679,  22 
Sup.  Ct.  431.  See  also  Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass 
Co.,  143  Fed.  242,  74  C.  C.  A.  462. 

188 


VIOLATIONS   AS   DEFENSE   TO   ACTION  §  156 

ment  of  a  contract,  in  the  consideration  and  performance 
of  which  nothing  illegal  adheres,  that  it  may  incidentally 
aid  one  of  the  parties  in  evading  or  violating  the  statute.'^ 

The  Sherman  Anti-Trust  Act  does  not  invahdate  or 
prevent  a  recovery  for  the  breach  of  a  collateral  contract 
for  the  manufacture  and  sale  of  goods  by  a  member  of  a 
combination  formed  for  the  purpose  of  restraining  inter- 
state trade  in  such  goods.  ^ 

One  who  voluntarily  and  knowingly  deals  with  parties 
to  such  a  combination,  cannot  on  the  one  hand  take  the 
benefit  of  his  bargain  and  on  the  other  have  a  right  of 
action  against  the  seller  for  the  money  paid,  or  any  part 
of  it,  either  upon  the  ground  that  the  combination  was 
illegal  or  the  prices  unreasonable.^ 

§  156.  Contract  with  Combination— Voluntary  Pur- 
chaser— Application  of  Rule. 

WTiere  a  combination  which  was  formed  for  the  sale  of 
sewer  pipe,  sold  some  of  such  pipe  under  special  contracts 
with  the  purchaser  for  an  agreed  price  and  the  latter  when 
sued  upon  the  contract  set  up  the  illegahty  of  the  com- 
bination as  defense,  it  was  decided  that  such  defense 
could  not  be  maintained.^    And  where  the  proof  showed 

'  Ingraham  v.  National  Salt  Co.,  130  Fed.  676,  65  C.  C.  A.  54. 

*  Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  Fed.  242,  74 
C.  C.  A.  462. 

Where  a  stranger  enters  into  a  contract  with  an  unlawful  combina- 
tion, and  such  contract  is  founded  upon  a  good  consideration  and  is  col- 
lateral to  the  unlawful  scheme  or  combination  it  is  not  tainted  thereby. 
Chicago  Wall  Paper  Mills  v.  General  Wall  Paper  Co.,  147  Fed.  491,  78 
C.  C.  A.  607. 

»  Dennehy  v.  McNulta,  86  Fed.  825,  .30  C.  C.  A.  422,  aff'g  Distilling  Co. 
V.  McNulta,  77  Fed.  700,  23  C.  C.  A.  415,  40  U.  S.  App.  578. 

« Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  46  L.  ed.  679,  22 
Sup.  Ct.  431.  Mr.  Justice  Harlan  said:  "i^Vssuming,  as  defendants  con- 
tend, that  the  alleged  combination  was  illegal  if  tested  by  the  principles 
of  the  common  law,  still  it  would  not  follow  that  they  could,  at  common 
law,  refuse  to  pay  for  pipe  bought  by  them  under  special  contracts  with 
the  plaintiff.  The  illegahty  of  such  combination  did  not  prevent  the 
plaintiff  corporation  from  selling  pipe  that  it  obtained  from  its  constituent 
companies  or  either  of  them.  It  could  pass  a  title  by  a  sale  to  anyone 
desiring  to  buy,  and  the  buyer  could  not  justify  a  refusal  to  pay  for  what 
he  bought  and  received  by  proving  that  the  seller  had  previously,  in  the 

189 


§  157  SHERMAN    ANTI-TRUST  ACT — 

that  the  tugs  mentioned  in  the  hbel  rendered  services  to 
the  claimants'  dredge  in  sums  aggregating  several  hundred 
dollars  it  was  held  that  the  claimant  could  not  avoid  pay- 
ment for  such  services  thus  requested  and  accepted  by 
him,  upon  the  ground  that  the  tug  owners  were  members 
of  an  association  which  was  illegal  and  void  under  the 
Anti-Trust  Act.^ 

§  157.  Contract  with  Combination — When  Illegality  of 
Combination  a  Defense. 

Where  a  person  is  sued  upon  a  contract  which  is  void 
as  in  violation  of  the  Anti-Trust  Act,  he  may  set  up  as  a 
defense  to  such  action  that  the  contract  is  one  in  violation 
of  the  Sherman  Anti-Trust  Act.^ 

While  a  voluntary  purchaser  of  goods  at  stipulated 
prices  under  a  collateral  independent  contract  cannot 
avoid  payment  merely  on  the  ground  that  the  vendor 
was  an  illegal  combination,  it  is  determined  that  a  vendee 
of  goods  purchased  from  an  illegal  combination  in  pur- 
suance of  an  illegal  agreement  can  plead  such  illegality 
as  a  defense.^    In  this  case  it  was  said:  "In  such  cases  the 

protection  of  its  business,  entered  into  an  illegal  combination  with  others 
in  reference  generally  to  the  sale  of  Akron  pipe." 

7  The  Charles  E.  Wisewall  (U.  S.  D.  C),  74  Fed.  802.  The  court  said: 
"Assuming,  however,  in  order  to  avoid  argument,  that  the  agreement  by 
which  the  tugs  undertook  to  act  in  unison  was  prohibited  by  the  act,  as 
being  in  restraint  of  trade,  my  present  impression  is  that  this  assumption 
will  not  aid  the  claimant.  He  should  not  be  permitted  to  repudiate  his 
just  debts  to  the  individual  tugs  because  their  association  was  illegal. 
Having  asked  for  their  services  and  having  accepted  the  benefit  thereof, 
he  should  pay."    Per  Coxe,  J. 

« Bement  v.  National  Harrow  Co.,  186  U.  S.  70,  46  L.  ed.  1058,  22  Sup. 
Ct.  747.  The  court  said:  "As  the  statute  makes  the  contract  in  itself 
illegal,  no  recovery  can  be  had  upon  it  when  the  defense  of  illegality  is 
shown  to  the  court.  The  act  provides  for  the  prevention  of  violations 
thereof,  and  makes  it  the  duty  of  the  several  district  attorneys,  under  the 
direction  of  the  Attorney-General,  to  institute  proceedings  in  equity  to 
prevent  and  restrain  such  violations,  and  it  gives  to  any  person  injured 
in  his  business  or  property  the  right  to  sue,  but  that  does  not  prevent  a 
private  individual  when  sued  upon  a  contract  which  is  void  as  in  viola- 
tion of  the  act  from  setting  it  up  as  a  defense,  and  we  think  when  proved 
it  is  a  valid  defense  to  any  claim  made  under  a  contract  thus  denounced 
as  illegal."     Per  Mr.  Justice  Peckham. 

9  Continental  Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  212  U.  S.  227,  53 

190 


VIOLATIONS   AS   DEFENSE   TO   ACTION  §  157 

aid  of  the  court  is  denied,  not  for  the  beneJSt  of  the  de- 
fendant, but  because  public  policy  demands  that  it  should 
be  denied  without  regard  to  the  interests  of  individual 
parties.  It  is  of  no  consequence  that  the  present  de- 
fendant company  had  knowledge  of  the  alleged  illegal 
combination  and  its  plans,  or  was  directly  or  indii'ectly 
a  party  thereto.  Its  interest  must  be  put  out  of  view  alto- 
gether when  it  is  sought  to  have  the  assistance  of  the 
court  in  accomplishing  ends  forbidden  by  law."  ^°  This 
case  was  also  distinguished  from  Connolly  v.  Union 
Sewer  Pipe  Co.^^  as  follows:  ''In  that  case  the  defend- 
ant who  sought  to  avoid  payment  for  the  goods  purchased 
by  him  under  contract,  had  no  connection  with  the  general 
business  or  operations  of  the  alleged  illegal  corporation 
that  sold  the  goods.  He  had  nothing  whatever  to  do  with 
the  formation  of  that  corporation,  and  could  not  partici- 
pate in  the  profits  of  its  business.  His  contract  was  to 
take  certain  goods  at  an  agreed  price,  nothing  more,  and 
was  not  in  itself  illegal,  nor  part  of,  nor  in  execution  of, 
any  general  plan  or  scheme  that  the  law  condemned.  The 
contract  of  purchase  was  wholly  collateral  to  and  inde- 
pendent of  the  agreement  under  which  the  combination 
had  been  previously  formed  by  others  in  Ohio.  It  was 
the  case  simply  of  a  corporation  that  dealt  with  an  entire 
stranger  to  its  management  and  operations  and  sold  goods 
that  it  owned  to  one  who  wished  to  buy  them.  In  short, 
the  defense  in  the  Connolly  case  was  that  the  plaintiff 
corporation,  although  owning  the  pipe  in  question  and 
having  authority  to  sell  and  pass  title  to  the  property, 
was  precluded  by  reason  alone  of  its  illegal  character, 
from  having  a  judgment  against  the  purchaser.  We  held 
that  that  defense  could  not  be  sustained  either  upon  the 
principles  of  the  common  law  or  under  the  Anti-Trust 
Act  of  Congress."  ^- 

L.  ed.  486,  29  Sup.  Ct.  280,  aff'g  148  Fed.  939,  78  C.  C.  A.  567.  See  also 
Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  247,  44  L.  ed. 
136,  20  Sup.  Ct.  96. 

">  Per  Mr.  Justice  Harlan. 

"  184  U.  S.  540,  545,  46  L.  ed.  679,  22  Sup.  Ct.  431. 

"Per  Mr.  Justice  Harlan,  who  further  said:  "The  case  now  before  us 

191 


§  158  SHERMAN   ANTI-TRUST  ACT — 

§  158.  Suit  by  Combination  for  Infringement  of  Patent 
— Illegality  of  Combination  as  Defense. 

The  mere  fact  that  a  company  may  be  a  party  to  an 
unlawful  combination  does  not  deprive  it  of  the  right  to 
sue  and  recover  damages  against  an  infringer  of  patents 
owned  by  it  or  to  bring  suit  if  it  believes  the  patents  are 
being  infringed.  ^^ 

The  fact  that  the  owner  of  a  patent  is  a  member  of  a 
combination  which  is  in  violation  of  the  Anti-Trust  Act 
confers  no  right  upon  a  third  person  to  infringe  such 
patent,  nor  is  the  owner  thereof  precluded  by  such  fact 
from  seeking  rehef  by  way  of  an  injunction  against  such 
an  infringement.^^ 

So  in  a  suit  for  an  infringement  of  a  patent  the  court 
granted  a  motion  to  strike  out  a  paragraph  of  an  answer 
which  alleged  that  the  complainant  was  a  party  to  an 
unlawful  conspiracy  which  tended  to  restrain  trade  and 
oppress  defendant  in  his  business.'^  And  in  another  case 
it  was  said  on  a  motion  for  a  preliminary  injunction  that 
the  charge,  if  established,  that  the  complainant  is  itself, 
or  is  a  member  of,  a  combination  in  violation  of  the  Federal 
Anti-Trust  Statute,  is  not  a  defense  available  in  an  action 
for  the  infringement  of  a  patent  and  fails  to  show  a  defect 
in  the  complainant's  title.  ^^ 

is  an  entirely  different  one.  The  Continental  Wall  Paper  Company  seeks, 
in  legal  effect,  the  aid  of  the  court  to  enforce  a  contract  for  the  sale  and 
purchase  of  goods,  which,  it  is  admitted  by  the  demurrer,  was  in  fact  and 
was  intended  by  the  parties  to  be  based  upon  agreements  that  were  and 
are  essential  parts  of  an  illegal  scheme.  *  *  *  if  judgment  be  given  for 
the  plaintiff  the  result,  beyond  all  question,  will  be  to  give  the  aid  of  the 
court  in  making  effective  the  illegal  agreements  that  constituted  the  for- 
bidden combination." 

'3  Virtue  v.  Creamery  Package  Mfg.  Co.,  179  Fed.  115,  102  C.  C.  A.  413; 
National  Foldmg  Box  &  Paper  Co.  v.  Robertson  (U.  S.  C.  C),  99  Fed.  985. 

'<  General  Electric  Co.  v.  Wise  (U.  S.  C.  C),  119  Fed.  922.  The  court 
said:  "It  is  difficult  to  understand  how  or  why  a  violation  of  the  Sherman 
Anti-Trust  law  by  this  complainant,  if  there  has  been  such  a  violation, 
confers  any  right  on  the  defendant  to  infringe  this  patent.  The  act  points 
out  the  penalties  for  its  violation,  and  it  is  not  understood  that  such  law 
denies  the  grantees  of  patents  the  protection  of  the  law  because  they  may 
be  violating  some  statute."    Per  Ray,  D.  J. 

'5  Johns-Pratt  Co.  v.  Sachs  Co.  (U.  S.  C.  C),  176  Fed.  738. 

"  Motion  Pictures  Patent  Co.  v.  Laemmle  (U.  S.  C.  C),  178  Fed.  104. 

192 


VIOLATIONS   AS   DEFENSE   TO   ACTION  §  159 

§  159.  Suit  by  Combination  for  Infringement  of  Trade- 
Mark  or  Copyright — Illegality  of  Combination  as  De- 
fense. 

One  who  has  infringed  a  trade-mark  cannot  invoke  as  a 
defense  to  liabihty  therefor  the  fact  that  the  owner  of  the 
trade-mark  has  violated  the  Sherman  Anti-Trust  Act.^^ 
So  in  a  suit  for  an  injunction  to  restrain  the  infringement 
of  a  trade-mark  the  defendant  cannot  avail  himself  of  the 
plea,  as  a  defense,  that  the  complainant  acquired  the  trade- 
mark as  the  result  of  a  conspiracy  with  the  manufacturer 
for  the  purpose  of  destroying  the  competition  between  the 
defendant  and  such  manufacturers,  which  is  in  violation 
of  the  Anti-Trust  Act.^^  And  in  a  suit  for  infringement 
of  a  copyright  it  is  no  defense  thereto  that  defendant  is  a 
member  of  a  combination  which  violates  the  Anti-Trust 
Act.  13 

See  also  Johns-Pratt  Co.  v.  Sachs  Co.  (U.  S.  C.  C),  176  Fed.  738;  National 
Folding  Box  &  Paper  Co.  (U.  S.  C.  C),  99  Fed.  985. 

"  Northwestern  Consol.  Mill  Co.  v.  Callam  &  Son  (U.  S.  C.  C),  177 
Fed.  786.  In  this  case  it  was  said  by  the  court:  "The  Sherman  act  has 
its  own  penalties  for  violations  of  any  of  its  provisions.  It  contains  noth- 
ing that  sanctions  the  argument  than  an  offender  against  it  shall  be  de- 
prived of  redress  for  a  civil  injury  on  the  plea  that  he  has  been  guilty  of 
an  infraction  of  that  act  which  gives  a  remedy  to  one  injured  in  his  busi- 
ness or  property  against  the  transgression  of  the  law,  and  does  not  suggest 
that  one  who  has  taken  the  property,  infringed  the  trade-mark  or  patent 
of  another,  or  refused  to  pay  debts  because  of  an  alleged  transgression  of 
the  Sherman  act  by  the  creditors,  can  make  that  act  as  a  defense  to  lia- 
bility either  in  suits  in  tort  or  contract."  Per  Swan,  D.  J.,  citing  Inde- 
pendent Baking  Powder  Co.  v.  Boorman  (U.  S.  C.  C),  130  Fed.  726; 
Connolly  v.  Union  Pipe  Co.,  184  U.  S.  540,  22  Sup.  Ct.  431,  46  L.  ed.  679. 

"  Independent  Baking  Powder  Co.  v.  Boorman  (U.  S.  C.  C),  130  Fed. 
726. 

"  Sentner  v.  Straus  (U.  S.  C.  C),  130  Fed.  389. 


13  193 


SHERMAN   ANTI-TRUST  ACT — 


CHAPTER  XIV 


SHERMAN  ANTI-TRUST  ACT — PROCEDURE  AND  DAMAGES 


160. 

Who   May   Sue — When   In- 
dividual  May — Injury  to 

§176 

"  Business  or  Property." 

177 

161. 

Who   May  Sue — Injunction 
—  Right  of  Individual  — 

Suit  by  Attorney-General. 

178 

162. 

Who    May    Sue— Right    of 

Stockholder — Creditor. 

179 

163. 

Who  May  Sue  —  Right  of 
Member  of  Combination. 

164. 

Who    May   Sue — Municipal 
Corporation  a  "Person." 

180 

165. 

Who  May  Sue — State  Not  a 

"Person"    or    "Corpora- 

181. 

tion." 

166. 

Who  May  Sue— Right  of  Re- 
ceiver. 

182. 

167. 

Time  of  Entering  into  Com- 
bination as  Affecting  Right 

183. 

to  Recover. 

184. 

168. 

Jurisdiction  of  Courts — Gen- 
erally. 

185. 

169. 

Jurisdiction — Parties — Sum- 
moning of. 

186. 

170. 

Jurisdiction — Parties — Sum- 

moning    of  —  Not     Re- 

187. 

stricted  by  Judiciary  Act. 

171. 

Jurisdiction  —  Exercise     of 
Not   Discretionary — Sum- 

188. 

moning  Parties. 

189. 

172. 

Jurisdiction  —  Extent      of 

Judgment. 

190. 

173. 

Sufficiency  of  Complaint  or 
Petition — General  Rules. 

174. 

Sufficiency   of   Complaint — 
Rules   in   Force   in   State 

191. 

Where  Action  Brought — 

192. 

Practice  Act. 

175. 

Sufficiency   of   Complaint — 
Particular  Cases. 

193. 

Sufficiency   of   Complaint — 

Duphcity. 
Sufficiency   of   Complaint — 

Joinder   of    Defendants — 

Election. 
Sufficiency  of  Indictment — 

General  Rules. 
Sufficiency  of  Indictment — 

Charging  Officers,  Agents 

or  Stockholders. 
Indictment    Charging    Con- 
spiracy —  Denial    Under 

General  Issue. 
Indictment  Not  Conclusive 

— Removal  Proceeding. 
Evidence — Admissibility  and 

Weight. 
Evidence — As    to    Intent — 

When  Essential. 
Evidence — Burden  of  Proof. 
Evidence  —  Presumption  in 

Respect  to  Combination. 
Evidence  —  Documents  — 

Witnesses  —  Power      of 

Court. 
Witness — Examination  of  a 

"  Proceeding." 
Damages  —  Recovery    of  — 

Generally. 
Damages  —  Nature  of   Ac- 
tion for  Jury  Trial. 
Damages — Action  for — Stat- 
ute   of     Limitations  —  A 

Civil  Remedy. 
Damages — Where    Payment 

of  Higher  Price  Compelled. 
Damages  —  Cannot  Be  Set 

off. 
Distribution    of    Assets    of 

Holding      Corporation  — 

Right  to  Return  of  Shares. 


194 


PROCEDURE    AND    DAMAGES  §§  160,  161 

§  160.  Who  May  Sue— When  Individual  May-  Injury 
to  "  Business  or  Property." 

When  the  combination  or  conspiracy  to  restrain  and 
monopohze  interstate  trade,  which  is  condemned  by  the 
statute,  is  estabhshed  an  injury  "done  to  the  business 
or  property"  of  "any  person,"  by  reason  thereof,  con- 
stitutes a  cause  of  action.  ^  And  a  person  whose  property 
is  diminished  by  a  payment  of  money  wrongfully  induced 
is  injured  in  his  property  within  the  meaning  of  the  pro- 
visions of  this  act.^  So  if  defendants  have  by  an  illegal 
agreement  and  combination,  in  violation  of  the  Anti-Trust 
Act,  arbitrarily  increased  the  price  of  a  commodity  to  the 
consumers,  the  plaintiff  amongst  others,  and  made  the 
prices  excessive  and  unreasonable  and  much  greater  than 
it  would  have  been  but  for  such  combination,  and  the 
plaintiff  was  compelled  to  pay  that  unreasonable  and 
excessive  price  and  more  than  its  actual  value  because 
of  the  illegal  agreement  or  combination,  he  is  clearly 
injured  in  his  property  thereby.^ 

All  that  is  necessary  to  support  an  action  by  an  indi- 
vidual under  this  act  is  that  his  business  or  property  shall 
have  been  in  some  way  injured  by  reason  of  the  illegal 
scheme.*  But  a  conspiracy  or  combination  though  them- 
selves unlawful  cannot  injure  any  person  either  in  his 
business  or  property  so  as  to  give  him  a  cause  of  action 
under  the  statute  unless  something  be  done  to  make  the 
combination  or  conspiracy  effective.^ 

§  161.  WhoMay  Sue— Injunction— Right  of  Individual 
— Suit  by  Attorney-General. 

By  violating  a  criminal  or  penal  statute  a  person,  either 

'  Ware-Kramer  Tobacco  Co.  v.  American  Tobacco  Co.  (U.  S.  C.  C.)i 
180  Fed.  160. 

'-  Chattanooga  Foundry  &  Pipe  Works  v.  Atlanta,  203  U.  S.  390,  51  L. 
ed.  241,  27  Sup.  Ct.  65. 

'  United  States  Tobacco  Co.  v.  American  Tobacco  Co.  (U.  S.  C.  C), 
163  Fed.  701. 

*  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

*  Monarch  Tobacco  Works  v,  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

195 


§  161  SHERMAN   ANTI-TRUST   ACT — 

natural  or  corporate,  does  not  render  itself  liable  to  be 
sued  bj'  a  private  citizen  unless  the  unlawful  conduct 
is  the  proximate  cause  of,  or  results  in,  some  special  injury 
to  the  business  or  property  of  the  person  bringing  the 
action.^  An  individual  injured  by  a  violation  of  the 
Anti-Trust  Act  cannot  sue  for  an  injunction  under  that 
act  as  such  remedy  is  available  to  the  government  only. 
His  only  remedy  is  an  action  for  threefold  damages,^ 

The  provision  of  the  Sherman  Anti-Trust  Act  was  to 
limit  direct  proceedings  in  equity,  to  prevent  and  restrain 
such  violations  of  the  Anti-Trust  Act  as  cause  injury  to 
the  general  public,  or  to  all  alike,  merely  from  the  suppres- 
sion of  competition  in  trade  and  commerce  among  the 
several  States,  and  with  foreign  nations,  to  those  instituted 
in  the  name  of  the  United  States  under  the  provision 
of  the  act  ^  by  district  attorneys  of  the  United  States, 
acting  under  the  direction  of  the  Attorney-General,  thus 
securing  the  enforcement  of  the  act  so  far  as  such  direct 
proceedings  in  equity  are  concerned,  according  to  some 
uniform  plan,  operative  throughout  the  entire  country.^ 
So  in  another  case  it  is  said:  ''It  has  been  many  times 
decided,  and  no  longer  admits  of  any  question  or  doubt, 
that  the  only  party  entitled  to  maintain  a  bill  in  equity 
for  injunctive  relief  for  violating  the  provisions  of  the 
Anti-Trust  Act  is  the  United  States  attorney,  at  the  in- 
stance of  the  Attorney-General."  ^° 

*  Ware-Kramer  Tobacco  Co.  v.  American  Tobacco  Co.  (U.  S.  C.  C), 
180  Fed.  160. 

^  National  Fireproofing  Co.  v.  Mason  Builders'  Assn.,  169  Fed.  259, 
94  C.  C.  A.  535. 

Suits  in  equity  or  injunction  suits  under  this  act  by  other  than  the 
government  are  not  authorized.  Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Miami  S.  S. 
Co.,  86  Fed.  407,  30  C.  C.  A.  142;  Greer,  Mills  &  Co.  v.  Stoller,  77  Fed.  1; 
Pidcock  V.  Harrington  (U.  S.  C.  C),  64  Fed.  821. 

*  Section  4. 

'  Minnesota  v.  Northern  Securities  Co.,  194  U.  S.  48,  48  L.  ed.  870,  24 
Sup.  Ct.  598. 

"  Metcalf  V.  American  School  Furniture  Co.  (U.  S.  C.  C),  122  Fed.  115, 
per  Hazel,  J.,  citing  Pidcock  v.  Harrington  (U.  S.  C.  C),  64  Fed.  821; 
Southern  Indiana  Expr.  Co.  v.  United  States  Expr.  Co.  (U.  S.  C.  C),  88 
Fed.  659;  Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  547,  22  Sup.  Ct. 
431,  46  L.  ed.  679. 

196 


PROCEDURE   AND   DAMAGES  §  162 

In  the  application  of  the  rule  that  a  private  citizen  is 
not  by  this  act  accorded  the  right  to  an  injunction,  it 
conscquentl}'  follows  that  in  such  a  proceeding  a  Federal 
court  cannot  acquire  jurisdiction  of  a  nonresident  defend- 
ant against  his  consent.  ^^ 

A  suit  brought  by  the  Attorney-General  of  the  United 
States  under  the  Sherman  Anti-Trust  Act  to  declare  a 
combination  of  individual  stockholders  of  competing 
railroad  lines  engaged  in  interstate  commerce  to  obtain 
control,  by  means  of  a  holding  corporation,  of  such  lines, 
is  not  an  interference  with  the  control  of  the  States  under 
which  the  railroad  companies  and  the  holding  company 
were,  respectively,  organized.  ^^ 

§  162.  Who  May  Sue— Right  of  Stockholder— Cred- 
itor. 

The  provision  of  the  act  allowing  a  person  injured  in 
his  business  or  property  by  anything  forbidden  or  de- 
clared to  be  unlawful  to  recover  damages  therefor  was  not 
intended  to  confer  upon  each  individual  stockholder  an 
individual  right  of  action  when  the  wrongs  sustained  by 
all  of  the  stockholders  of  a  corporation  could  be  equally 
well  and  far  more  economically  redressed  by  a  single  suit 
in  the  name  of  the  corporation.  It  was  not  the  purpose 
of  the  act  to  multiply  suits.  ^^ 

In  another  case,  however,  the  court  after  reviewing  several  decisions  said: 
"While  the  decisions  referred  to  are  entitled  to  great  respect,  they  do  not 
commend  themselves  to  my  judgment  so  far  as  they  deny  the  right  of  a 
private  party,  who  has  sustained  special  injury  by  the  violation  of  the  anti- 
trust act,  to  relief  by  injunction  under  the  general  equity  jurisdiction  of 
the  court."  Bigelow  v.  Calumet  &  Ilecla  Min.  Co.  (U.  S.  C.  C),  155  Fed. 
8G9,  877,  per  Knappen,  J.,  after  referring  to  the  following  cases:  Blindell 
V.  Hagan  (U.  S.  C.  C),  54  Fed.  40,  56  Fed.  696,  6  C.  C.  A.  86;  Pidcock  v. 
Harrington  (U.  S.  C.  C),  64  Fed.  821;  Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Miami 
S.  S.  Co.,  86  Fed.  407,  50  C.  C.  A.  142;  Southern  Indiana  Expr.  Co.  v.  United 
States  Expr.  Co.  (U.  S.  C.  C),  88  Fed.  659,  92  Fed.  1022,  35  C.  C.  A.  172; 
Metcalf  V.  American  School  Furn.  Co.  (U.  S.  C.  C),  108  Fed.  909,  113  Fed. 
1020,  35  C.  C.  A.  172. 

"  Greer,  Mills  &  Co.  v.  Stoller  (U.  S.  C.  C),  77  Fed.  1. 

»2  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
28  Sup.  Ct.  436. 

'» Loeb  V.  Eastman  Kodak  Co.,  183  Fed.  704,  106  C.  C.  A.  142;  Bishop 
v.  American  Preservers'  Co.  (U.  S.  C.  C),  105  Fed.  845. 

197 


§  162  SHERMAN   ANTI-TRUST  ACT — 

In  the  application,  therefore,  of  this  doctrine  it  has  been 
declared  that  neither  a  stockholder  nor  a  creditor  of  a 
corporation  who  claims  to  have  sustained  injury  by  rea- 
son of  an  unlawful  combination  can  maintain  a  suit  to 
recover  therefor  in  his  own  name  but  that  the  action 
should  be  brought  either  in  the  name  of  the  corporation 
or  of  its  trustee  in  bankruptcy.  ^^  And  in  an  action  by  a 
stockholder  of  a  corporation  against  another  corporation 
for  damages  in  which  it  was  alleged  that  the  latter  cor- 
poration had  secured  control  of  the  former  by  purchase 
of  its  shares  of  stock  and  had  managed  it  not  for  the  pur- 
pose of  developing  its  business  but  to  prevent  it  from 
doing  business  by  suppressing  and  smothering  competi- 
tion which  it  would  otherwise  cause  to  the  business  of 
the  defendant  until  the  company  had  gone  into  the  hands 
of  a  receiver;  that  by  the  exercise  of  such  control  the  de- 
fendant had  monopolized  such  interstate  commerce  and 
that  his  injury  w^as  the  rendering  worthless  his  shares  of 
stock,  it  was  held  that  the  declaration  did  not  set  forth 
any  injury  to  the  plaintiff  resulting  in  a  special  damage 
pecuHar  to  himself  and  distinguished  in  kind  from  that 
which  he  shared  with  other  stockholders,  and  that  the 
corporation  alone  or  its  receiver  could  maintain  the  ac- 
tion under  the  Anti-Trust  Act.^^ 

"  Loeb  V.  Eastman  Kodak  Co.,  183  Fed.  704,  106  C.  C.  A.  142. 

"  Ames  V.  American  Telephone  &  Telegraph  Co.  (U.  S.  C.  C),  166  Fed. 
820.  The  court  said:  "The  Sherman  Act  does  not  by  its  terms  affect  the 
question  whether  an  injury  is  in  legal  contemplation  an  injury  to  the  cor- 
poration or  an  injury  to  the  stockholder.  This  question  must  be  deter- 
mined upon  ordinary  principles  of  law.  There  can  be  little  doubt  that  the 
ordinary  principle  of  representation  of  the  stockholders  by  the  corporation 
is  as  applicable  to  a  violation  of  the  Sherman  Act  as  to  any  other  violation 
of  law.  There  is  no  indication  of  an  intention  of  Congress  to  subject  a 
defendant  to  independent  suits  by  a  multitude  of  stockholders  for  an  act 
for  which  the  statute  affords  redress  to  the  corporation  itself.  The  corpora- 
tion has  a  right  of  action  and  to  so  interpret  the  act  as  to  confer  a  right  of 
action  upon  the  stockholder  also,  upon  the  present  declaration  would  be  in 
effect  to  subject  the  defendant  not  merely  to  treble  damages  but  to  sextuple 
damages,  for  the  same  unlawful  act.  *  *  *  The  declaration  alleges  that 
the  cable  company  is  now  in  the  hands  of  a  receiver.  It  follows  that  upon 
recovery  of  damages  for  an  injury  to  the  corporation  the  fund  belongs  to 
the  receiver  for  application  to  the  obligations  of  the  corporation.  These 
obligations  take  precedence  over  the  interest  of  the  shareholder.     The 

198 


PROCEDURE   AND   DAMAGES  §  163 

In  another  case  where  the  plaintiff,  a  stockholder  in 
a  corporation,  brought  a  suit  for  equitable  relief  in  behalf 
of  herself  and  other  stockholders  to  set  aside  a  transfer 
by  the  majority  of  the  stockholders  of  the  corporate 
property,  alleging  a  conspiracy  in  restraint  of  trade  and 
commerce  and  also  seeking  to  recover  the  damages  al- 
lowed by  the  Anti-Trust  Act,  it  was  held  that  such  bill 
was  multifarious  since  the  damages  were  not  recoverable 
by  her  as  a  stockholder  but  as  an  individual,  while  the 
equitable  remedy  she  asked  for  would  enure  in  favor  of  all 
the  stockholders  if  granted.  ^^ 

In  a  later  decision  the  facts  of  the  case  are  referred  to  as 
being  substantially  different,  it  being  declared  that  in  the 
earlier  case  there  is  no  careful  consideration  of  the  question 
of  representation  of  the  stockholder  by  the  corporation 
in  suits  under  the  Sherman  Anti-Trust  Act;  that  the  de- 
cision is  confined  to  the  ground  of  multifariousness  and 
that  the  affirmance  of  the  decision  amounts  to  nothing 
more  than  an  affirmation  of  the  decision  that  the  claim  for 
triple  damages  under  the  act  could  not  be  joined  with  a 
stockholder's  bill.^^ 

§  163.  Who  May  Sue— Right  of  Member  of  Combina- 
tion. 

Where  a  combination  is  in  violation  of  the  Anti-Trust 
Act  a  court  of  equity  will  not  grant  rehef  by  way  of  injunc- 
tion to  protect  the  rights  of  a  member  of  such  combination 

prior  recovery  by  a  shareholder,  if  permitted  to  diminish  recovery  by  the 
receiver,  would  result  in  depriving  creditors  of  the  corporation,  if  there  are 
any,  of  the  assets  properly  belonging  to  them.  Moreover,  the  assets  of  the 
corporation  are  subject  to  disposal  by  proper  corporate  action,  and  the  in- 
dividual stockholder  has  no  rights  inconsistent  uath  this  right  of  the  cor- 
poration. *  *  *  The  plaintiff  does  not  contend  that  the  right  of  action 
for  treble  damages  is  given  to  the  stockholder  and  denied  to  the  corpora- 
tion. A  construction  of  the  act  which  makes  the  defendant  liable  to  sex- 
tuple damages  is  certainly  to  be  avoided.  The  asserted  right  of  the  stock- 
holder is  inconsistent  with  the  right  of  the  corporation  to  maintain  suit 
upon  the  facts  alleged  in  the  declaration."     Per  Brown,  J. 

>6  Metcalf  v.  American  School  Furniture  Co.  (U.  S.  C.  C),  108  Fed.  909, 
affirmed  113  Fed.  1020,  51  C.  C.  A.  r,\^9. 

"  Ames  v.  American  Telephone  li:  Telegraph  Co.  (U.  S.  C.  C),  166  Fed. 
820. 

199 


§§  164,165  SHERMAN   ANTI-TRUST  ACT — 

where  such  rights  exists  under  contracts  directly  connected 
with  the  object  and  purpose  of  such  unlawful  combina- 
tion. So  where  complainant,  a  railroad  company,  was  a 
member  of  a  combination  of  railroads  extending  through 
different  States,  the  object  of  which  was  to  prevent  com- 
petition, and  the  terms  of  the  agreement  between  the  mem- 
bers provided  for  the  poohngof  the  receipts  of  all  the  roads 
and  for  a  division  on  an  agreed  basis,  and  it  appeared  that 
special  rates  to  an  exposition  were  fixed  by  a  committee  of 
the  association  as  were  also  the  terms  of  the  tickets  upon 
which  the  suit  was  based  it  was  decided  that  the  com- 
plainant could  not  obtain  an  injunction  against  ticket 
brokers  restraining  them  from  dealing  in  such  tickets.  ^^ 

§  164.  Who  May  Sue — Municipal  Corporation  a 
"Person." 

A  municipal  corporation  may  be  entitled  to  maintain  a 
suit  as  a  person  injured,  within  the  meaning  of  this  act. 
So  where  a  municipal  corporation  is  maintaining  a  system 
of  waterworks,  charging  for  the  same  precisely  as  would  a 
private  corporation  engaged  in  a  like  business,  and  it  is 
injured  in  such  business  by  an  unlawful  combination 
within  the  meaning  of  the  Anti-Trust  Act  it  may  maintain 
a  suit  the  same  as  a  private  corporation  could.  And  the 
fact  that  the  profit  resulting  inures  to  the  public  does  not 
alter  the  fact  that  when  so  engaged  it  is  pro  hac  vice  a 
business  corporation.^^  So  in  this  connection  it  is  deter- 
mined that  a  city  is  a  person  within  the  meaning  of  the 
act  and  can  maintain  an  action  against  a  party  to  a  com- 
bination unlawful  under  the  act  by  reason  of  which  it  has 
been  forced  to  pay  a  price  for  an  article  above  what  it  is 
reasonably  worth.  ^° 

§  165.  Who  May  Sue— State  Not  a  "  Person  "  or 
"  Corporation." 

A  State  is  neither  a  "corporation"  nor  a  "person"  in  the 

18  Delaware,  L.  &  W.  R.  Co.  v.  Frank  (U.  S.  C.  C),  110  Fed.  689. 

'*  City  of  Atlanta  v.  Chattanooga  Foundry  &  Pipeworks,  127  Fed.  23, 
61  C.  C.  A.  387,  affirmed,  203  U.  S.  290,  27  Sup.  Ct.  6.5,  51  L.  ed.  241. 

20  Chattanooga  Foundry  &  Pipeworks  v.  Atlanta,  203  U.  S.  390,  51  L.  ed. 
241,  27  Sup.  Ct.  65. 

200 


li 


PROCEDURE   AND   DAMAGES  §  160 

sense  in  which  these  words  are  used  in  the  Anti-Trust  Act. 
This  conclusion  has  been  reached  in  a  case  where  it  was 
contended  that  there  was  a  violation  by  a  State  of  the 
Sherman  Anti-Trust  Act  by  declaring  and  asserting  in 
herself  the  monopoly  in  the  purchase  and  sale  of  intoxicat- 
ing liquors,  it  being  declared  that  by  such  act  the  State 
had  made  no  contract  nor  entered  into  any  combination 
or  conspiracy.  ^^  So  a  State  cannot  maintain  an  action  in 
equity  to  restrain  a  corporation  from  violating  the  provi- 
sions of  the  Sherman  Anti-Trust  Act  on  the  ground  that 
such  violation  by  decreasing  competition  would  depreciate 
the  value  of  its  public  lands  and  enhance  the  cost  of  main- 
taining its  public  institutions,  the  damages  resulting  from 
violations  being  remote  and  indirect  and  not  such  direct 
actual  injury  as  is  provided  for  in  such  act.^^  And  even  if 
the  State  were  a  "person"  within  the  meaning  of  the  act 
so  as  to  permit  one  to  sue  it  for  damages  thereunder  be- 
cause of  a  monopoly  by  it,  yet  in  such  a  case  no  relief 
could  be  had  without  the  State  being  a  party  and  this  is 
held  to  destroy  the  jurisdiction  of  the  Circuit  Court. ^^ 

§  166.  Who  May  Sue— Right  of  Receiver 

While  a  receiver  of  a  corporation  may  in  certain  cases 
properly  maintain  an  action  under  the  Sherman  Anti- 
Trust  Act  for  damages  resulting  to  such  corporation  as  the 
result  of  a  monopoly  or  combination  in  violation  of  the 
act,^^  yet  a  receiver  appointed  by  a  Circuit  Court  but  who 
is  not  vested  with  title  to  the  property  or  choses  in  action 
of  the  corporation  cannot  maintain  a  suit  under  the  Anti- 
Trust  Act  for  damages  in  favor  of  the  corporation.-^ 

21  Lowenstein  v.  Evans  (U.  S.  C.  C),  09  Fed.  90S. 

A  State  is  not  a  citizen  within  the  meaning  of  the  Constitution  or  the  acts 
of  Congress.  Minnesota  v.  Northern  Securities  Co.,  194  U.  S.  48,  48  L. 
ed.  870,  24  Sup.  Ct.  598,  citing  Postal  Tel.  Cable  Co.  v.  Alabama,  155  U.  S. 
482,  487,  39  L.  ed.  231,  15  Sup.  Ct.  192. 

"  Minnesota  v.  Northern  Securities  Co.,  194  U.  S.  48,  48  L.  ed.  870,  24 
Sup.  Ct.  598,  construing  §  7. 

"  Lowenstein  v.  Evans  (U.  S.  C.  C),  69  Fed.  908. 

"  Ames  V.  American  Telephone  &  Telegraph  Co.  (U.  S.  C.  C),  166  Fed. 
820. 

"  Edwards  v.  National  Window  Glass  Jobbers'  Assn.  (U.  S.  C.  C),  139 
Fed. 795. 

201 


§§  167,  168  SHERMAN   ANTI-TRUST  ACT — 

§  167.  Time  of  Entering  Into  Combination  as  Affecting 
Right  to  Recover. 

It  has  been  decided  that  acts  and  conduct  of  the  defend- 
ant in  which  plaintiff  could  not  have  had  an  interest,  it  not 
then  being  in  existence,  are  not  material,  being  regarded  as 
res  inter  alios  acta.-^  And  in  a  later  case  it  is  said  by  the 
court  that  it  was  of  the  opinion  that  this  act  gave  no 
right  of  action  to  one  who  is  not  deprived  of  his  existing 
profits,  trade  or  commerce  by  the  formation  or  action  of 
an  unlawful  combination  or  monopoly  but  merely  pre- 
vented from  embarking  upon  a  new  enterprise  by  the 
threatening  aspect  of  an  already  existing  monopoly  or 
combination.-^  In  a  more  recent  decision,  however,  it  is 
declared  that  whether  a  combination  was  entered  into 
before  or  after  a  plaintiff,  who  claims  to  be  injured  thereby, 
entered  into  business  is  immaterial  as  the  statute  applies 
to  continuing  combinations  and  it  is  as  unlawful  there- 
under to  prevent  a  person  from  engaging  in  business  as  it 
is  to  drive  a  person  out  of  business.  ^^ 

§  168.  Jurisdiction  of  Courts— Generally. 

The  fact  that  an  act  which  is  a  violation  of  the  Anti- 
Trust  Law  is  also  an  offense  against  the  law  of  a  State 
does  make  such  offense  solely  cognizable  in  the  courts  of 
the  United  States.  This  conclusion  is  based  upon  the 
doctrine  that  the  same  act  may  constitute  an  offense 
against  the  United  States  and  against  a  State,  subjecting 
the  guilty  party  to  punishment  under  the  laws  of  each  gov- 
ernment; and  may  embrace  one  or  more  offenses.  ^^  And 
though  the  action  under  the  statute  may  be  brought  in  a 
district  in  which  neither  plaintiff  nor  defendant  resides 
yet  if  the  complaint  is  so  framed  as  to  present  a  cause  of 

2^  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed. 774. 

^  American  Banana  Co.  v.  United  Fruit  Co.  (U.  S.  C.  C),  160  Fed.  184. 

28  Thomsen  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A. 
315,  rev'g  149  Fed.  933. 

M  Crossley  v.  California,  168  U.  S.  640,  42  L.  ed.  610,  18  Sup.  Ct.  242, 
citing  Cross  v.  North  Carolina,  132  U.  S.  131,  33  L.  ed.  287,  10  Sup.  Ct. 
47;  Teal  v.  Felton,  12  How.  (53  U.  S.)  28-1,  292,  13  L.  ed.  990. 

202 


PROCEDURE   AND   DAMAGES  §  169 

action  under  the  statute  a  defendant  if  "found"  in  such 
district  cannot  object  to  the  jurisdiction.^"  Under  section 
four  of  this  act  a  restraining  order  may  be  issued  by  the 
court  or  judge  without  notice  under  the  circumstances 
sanctioned  by  the  estabhshed  usages  of  equity  practice.'^ 

§  169.  Jurisdiction— Parties — Summoning  of. 

Congress  has  power  under  the  United  States  Consti- 
tution^- to  confer  upon  any  Federal  court  jurisdiction  to 
summon  the  proper  parties  to  a  suit  under  the  Anti-Trust 
Act,  wherever  residing  or  found  within  the  dominion  or 
nation,  to  a  hearing  and  decree  therein.^'  And  under  the 
provision  of  the  United  States  statutes  that  the  Supreme 
Court  and  the  Circuit  and  District  Courts  shall  ''have  power 
to  issue  all  writs  not  specifically  provided  for  by  the  stat- 
ute, which  may  be  necessary  for  the  exercise  of  their  re- 
spective jurisdiction"  ^'^  such  a  court  may,  in  a  prosecu- 
tion under  the  Anti-Trust  Act,  issue  process  to  compel 
defendants  who  are  citizens  of  another  State  than  the 
State  wherein  the  indictment  is  pending  to  appear  before 
it.^^    And  the  fact  that  more  of  the  defendants  may  reside 

^  Dueber  Watch  Case  Mfg.  Co.  v.  E.  Howard  Watch  &  Clock  Co.,  66 
Fed.  637,  14  C.  C.  A.  14,  55  Fed.  851. 

"  United  States  v.  Coal  Dealers'  Assn.  (U.  S.  C.  C),  85  Fed.  252. 

"  Art.  3,  §§  1,  2. 

"  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  152  Fed.  290.  The 
court  said:  "The  United  States  is  a  party  to  the  controversy  which  it  in- 
volves; and  the  Congress  had  ample  authority,  under  these  provisions  of 
the  Constitution,  to  confer  upon  this  or  upon  any  inferior  court  of  the  na- 
tion jurisdiction  of  this  suit  and  power  to  summon  the  proper  parties  to  it, 
wherever  residing  or  found  within  the  dominion  of  the  Union  to  a  hearing 
and  decree  therein.  United  States  v.  Union  Pacific  R.  Co.,  98  U.  S.  569, 
25  L.  ed.  143.  As  the  Congress  had  the  authority  to  enact  that  in  this, 
and  in  other  cases  of  this  class,  any  Circuit  Court  in  which  the  United 
States  might  bring  its  suit  might,  by  process  served  anywhere  in  the  United 
States,  lawfully  bring  into  it  all  the  parties  necessary  to  the  adjudication 
of  the  controversies  it  involved,  they  had  authority  to  empower  such  a 
court  to  bring  in  these  parties  whenever  in  its  opinion  the  ends  of  justice 
should  require  such  action,  because  the  whole  is  greater  than  any  of  its 
parts  and  includes  them  all."    Per  Sanborn,  J. 

"  Rev.  St.,  §  716  (U.  S.  Comp.  St.  1901,  p.  .580). 

"  United  States  v.  Virginia-Carolina  Chemical  Co.  (U.  S.  C.  C),  163  Fed. 
66.  It  was  contended  in  this  case  that  the  jurisdiction  must  already  exist 
in  order  for  writs  to  issue  under  this  power.     In  regard  to  this  the  court 

203 


§  170  SHERMAN   ANTI-TRUST  ACT — 

in  a  district  other  than  that  in  which  the  court  sits  is  not 
open  to  the  adjudication  or  consideration  of  the  court,  as 
the  jurisdiction  conferred  by  Congress  was  not  upon  the 
court  in  the  district  where  the  largest  number  of  defend- 
ants resided  but  upon  every  Circuit  Court  in  whose  dis- 
trict a  resident  defendant  could  be  found  and  served  with 
process.  Such  courts  were  not  granted  the  power  to  se- 
lect the  court  in  which  the  United  States  should  institute 
the  suit.^'' 

§  170.  Jurisdiction — Parties — Summoning  of— Not 
Restricted  by  Judiciary  Act. 

The  inhibition  of  the  judiciary  acts  that  "no  civil  suit 
shall  be  brought  before  either  of  said  courts  (the  Circuit 
and  District  Courts)  against  any  person  by  any  original 
process  or  proceeding  in  any  other  district  than  that 

said:  "If  by  this  is  meant  that  jurisdiction  must  exist  over  the  defendant, 
then  the  issuance  of  summons  would  be  useless;  but  if  it  is  meant  that 
jurisdiction  of  the  subject-matter  must  exist  before  summons  can  issue 
under  §  716,  Rev.  St.,  then  the  answer  is  that  that  is  precisely  the  condition 
in  this  case.  In  other  words,  the  issuance  of  the  summons  and  its  service 
is  but  one  step  amongst  others  that  is  necessary  to  enable  the  court  to 
exercise  its  jurisdiction  in  the  pending  case,  of  which  it  has  jurisdiction  by 
statute.  *  *  *  Is  it  not  reasonable  that,  while  Congress  was  devising  means 
by  which  defendants  in  such  civil  suits  might  be  served  with  process  and 
brought  before  the  courts,  it  also  considered  that  subject  in  relation  to 
defendants  in  criminal  cases?  Is  it  not  a  reasonable  conclusion  that  it 
inserted  the  clause  as  to  issuance  of  process  in  civil  cases  to  avoid  the  pro- 
vision of  the  removal  act  of  1888  and  that  it  omitted  to  insert  a  clause  as 
to  defendants  in  criminal  cases  because  that  was  then  provided  for  under 
§  716,  Rev.  St.,  and  further  legislation  on  that  subject  was  therefore  un- 
necessary. *  *  *  To  hold  otherwise,  it  seems,  would  necessarily  imply 
that  Congress  was  extremely  careless,  or  purposely  left  a  loop-hole  by  which 
such  defendants  could  violate  the  Sherman  Anti-Trust  Act  with  impunity 
and  escape  prosecution  and  punishment."    Per  McCall,  J. 

The  act  does  not  proscribe  the  time  or  the  manner  in  which  it  shall  be 
made  to  appear  to  the  court  that  other  parties  should  be  brought  before  it 
and,  in  the  absence  of  any  provision  of  this  nature,  the  requisite  appearance 
may  be  made  at  such  a  time  and  in  such  a  way  as  the  court,  in  the  exercise 
of  a  sound  judicial  discretion,  may  direct  or  permit.  United  States  v. 
Standard  Oil  Co.  (U.  S.  C.  C),  152  Fed.  290. 

36  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  152  Fed.  290.  The 
court  said:  "If  it  had  done  so  each  court  might  have  selected  another.  It 
left  the  defendant  free  to  commence  its  suit  in  any  Circuit  Court  in  which 
it  could  find  and  serve  a  resident  conspirator."    Per  Sanborn,  J. 

204 


PROCEDURE   AND    DAMAGES  §§  171,  J  72 

whereof  he  is  an  inhabitant"  '''  does  not  restrict  the  juris- 
diction of  the  Circuit  Court,  nor  its  power  to  bring  in 
parties  without  its  district,  in  cases  under  the  Sherman 
Anti-Trust  Act,  because  that  provision  is  inappHcable  to 
instances  in  which  exclusive  jurisdiction  over  particular 
cases,  or  classes  of  cases,  is  created  and  conferred  upon 
the  courts  of  the  United  States  by  special  acts  of  Con- 
gress. ^^ 

§  171.  Jurisdiction— Exercise  of  Not  Discretionary— 
Summoning  Parties. 

Power  being  conferred  by  Congress  upon  the  court  in 
suits  under  this  act  to  acquire  jurisdiction  of  the  subject- 
matter  and  of  the  parties,  both  resident  and  nonresident, 
the  exercise  of  such  power  is  not  discretionary  with  the 
court  when  demanded  by  a  complainant.  In  such  a  case 
the  duty  is  imposed  upon  the  court  to  summon  and  hear, 
before  decision,  not  only  every  indispensable  party,  but 
every  necessary  party  within  reach  of  its  process,  every 
party  who  has  an  interest  in  the  controversy,  and  who 
ought  to  be  made  a  party  to  the  suit,  in  order  that  the 
court  may  finally  adjudicate  the  whole  matter,  although 
if  he  were  not  amenable  to  process,  final  justice  might  be 
administered  between  the  other  parties  without  his 
presence.  ^^ 

§  172.  Jurisdiction— Extent  of  Judgment. 

The  fact  that  a  court  acquires  jurisdiction  by  reason 
of  the  fact  that  the  combination  covers  and  regulates 
commerce  which  is  interstate  gives  it  no  jurisdiction  over 

"  Judiciary  Acts  March  3,  1887,  c.  373,  24  Stat.  552,  and  Aug.  13,  1888, 
c.  866,  §  1,  25  Stat.  433  (U.  S.  Comp.  St.  1901,  p.  508). 

^  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  152  Fed.  290,  citing 
United  States  v.  Mooney,  116  U.  S.  106,  6  Sup.  Ct.  304,  29  L.  ed.  550; 
Van  Patten  v.  Chicago,  Milwaukee  &  St.  Paul  R.  Co.  (U.  S.  C.  C),  74 
Fed.  981,  985-988;  Atkins  v.  Disintegrating  Co.,  18  Wall.  (U.  S.),  272,  21 
L.  ed.  841;  In  re  Louisville  Underwriters,  134  U.  S.  488,  493,  10  Sup. 
Ct.  587,  33  L.  ed.  991;  In  re  Hohorst,  150  U.  S.  653,  662,  14  Sup.  Ct.  221, 
37  L.  ed.  1211. 

"  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  152  Fed.  290. 

205 


§  173  SHERMAN   ANTI-TRUST  ACT — 

that  part  of  the  combination  or  agreement  which  relates 
to  commerce  wholly  within  the  State.  Therefore  a  judg- 
ment perpetually  enjoining  defendants  from  maintaining 
a  combination  and  from  doing  any  business  thereunder 
is  too  broad  as  it  appUes  equally  to  commerce  which  is 
wholly  within  a  State  as  well  as  to  that  which  is  interstate 
or  international. ^° 

§  173.  Suflficiency  of  Complaint  or  Petition— General 
Rules. 

In  a  proceeding  to  recover  the  damages  provided  for 
by  the  act  it  is  said  that  the  petition  should  charge,  and 
that  is  all  that  is  required:  (1)  That  the  defendants  have 
done  one  or  more  of  the  forbidden  things;  (2)  that  by 
such  action  of  the  defendants,  the  plaintiff  has  been  in- 
jured in  its  business  or  property;  and  (3)  the  amount  or 
value  of  such  injury.  If  the  petition  contains  these  essen- 
tial averments  it  is  not  subject  to  an  exception  of  no  cause 
of  action  although  it  may  contain  surplusage  and  may 
specify  some  items  of  damages,  which  may  not  be  re- 
coverable.'*^   Again,  under  the  Anti-Trust  Act  it  is  decided 

«>  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96. 

*^  People's  Tobacco  Co.  v.  American  Tobacco  Co.,  170  Fed.  396,  95  C.  C. 
A.  566,  per  Shelby,  J.  The  petition  need  only  aver,  and  state  facts  to 
show,  that  the  defendants  have  committed  one  or  more  of  the  offenses 
condemned  by  the  first  and  second  sections  of  the  act,  that  the  plaintiff  ia 
a  person  injured  within  the  meaning  of  the  seventh  section,  and  the  amount 
of  damages  it  has  sustained  by  such  injury.  Ware-Kramer  Tobacco  Co. 
V.  American  Tobacco  Co.  (U.  S.  C.  C),  180  Fed.  160. 

Complaint  held  sufficient  under  Sherman  Anti-Trust  Act.  See  Hale  v. 
O'Connor  Coal  &  Supply  Co.  (U.  S.  C.  C),  181  Fed.  267  (wherein  the 
substantial  part  of  the  complaint  is  given) ;  Ware-Kramer  Tobacco  Co.  v. 
American  Tobacco  Co.  (U.  S.  C.  C),  180  Fed.  160;  People's  Tobacco 
Co.  v.  American  Tobacco  Co.,  170  Fed.  396,  95  C.  C.  A.  566  (wherein  peti- 
tion is  given);  Meeker  v.  Lehigh  Valley  R.  Co.,  183  Fed.  548,  106  C.  C.  A. 
94;  Thomsen  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A. 
315;  Pennsylvania  Sugar  R.  Co.  v.  American  Sugar  R.  Co.,  166  Fed.  254, 
92  C.  C.  A.  318;  Wheeler-Stenzel  Co.  v.  National  Window  Glass  Jobbers' 
Assn.,  152  Fed.  864,  81  C.  C.  A.  658;  Loewe  v.  Lawlor  (U.  S.  C.  C),  142 
Fed.  216,  208  U.  S.  274,  28  Sup.  Ct.  301,  52  L.  ed.  488  (in  the  latter  report 
the  complaint  is  given  in  the  margin) ;  Ellis  v.  Inman,  Poulsen  &  Co.,  131 
Fed.  182,  65  C.  C.  A.  488,  rev'g  124  Fed.  956,  and  stating  the  substantial 
averments  of  the  complaint. 

206 


PROCEDURE    AND    DAMAGES  §  174 

that  it  is  not  sufficient  to  frame  the  declaration  in  the 
words  of  the  statute  but  it  is  essential  that  the  substance 
of  the  contracts  in  restraint  of  trade  or  the  substantial 
facts  which  constitute  the  attempt  to  monopolize,  should 
be  set  forth  therein.'*-  Nor  in  order  to  state  a  cause  of 
action  for  damages  under  the  statute  is  it  necessary  to 
aver  an  injury  to  an  existing  business,  but  it  is  necessary 
to  state  facts  showing  an  intention  and  preparedness  to 
engage  in  business/^ 

Where  after  all  the  specific  charges  in  a  complaint,  there 
is  a  general  allegation  that  the  defendants  have  conspired 
with  one  another  to  monopohze  the  supply  of  a  certain 
specified  line  of  manufactured  articles  it  is  said  that  ''this 
general  allegationof  intent  covers  and  applies  to  all  the  spe- 
cific chargesin  the  bill,  whatever  maybe  thought  concerning 
the  proper  construction  of  the  statute,  a  bill  in  equity, 
is  not  to  be  read  and  construed  as  an  indictment  would 
have  been  read  and  construed  a  hundred  years  ago;  but  it 
is  to  be  taken  to  mean  what  it  fairly  conveys  to  a  dis- 
passionate reader,  by  a  fairly  exact  use  of  the  EngUsh 
language."  ** 

§  174.  Sufficiency  of  Complaint— Rules  in  Force  in 
State  Where  Action  Brought— ^Practice  Act. 

By  the  provision  of  the  practice  act,  it  is  required  that 
the  practice,  pleadings  and  forms  and  mode  of  proceeding 
in  civil  causes,  other  than  equity  and  admiralty  causes, 
shall  conform  as  near  as  may  be  to  the  practice,  pleadings 
and  forms  and  modes  of  proceeding  existing  at  the  time 
in  like  causes  in  the  courts  of  record  of  the  State,  within 
which  such  circuit  or  district  courts  are  held,  any  rule  of 

Com-plaint  held  insufficient.  Rice  v.  Standard  Oil  Co.  (U.  S.  C.  C),  134 
Fed.  464;  Dueber  Watch  Case  Mfg.  Co.  v.  E.  Howard  Watch  &  Clock 
Co.,  66  Fed.  637,  14  C.  C.  A.  14,  55  Fed.  851;  Bishop  v.  American  Pre- 
sen'ers'  Co.  (U.  S.  C.  C),  51  Fed.  272. 

«  Cilley  V.  United  Shoe  Mach.  Co.  (U.  S.  C.  C),  152  Fed.  726. 

"  American  Banana  Co.  v.  United  Fruit  Co.,  166  Fed.  261,  92  C.  C.  A. 
325,  aff'g  160  Fed.  184. 

*^  Ware-Kramer  Tobacco  Co.  v.  American  Tobacco  Co.,  180  Fed.  160  (U. 
S.  C.  C,  1910),  quoting  from  Mr.  Justice  Holmes,  in  Swift  v.  United  States, 
196  U.  S.  375,  25  Sup.  Ct.  276,  49  L.  ed.  518. 

207 


§  175  SHERMAN   ANTI-TRUST   ACT — 

court  to  the  contrary  notwithstanding.^^  So  in  an  action 
by  an  individual  to  recover  the  damages  provided  for  by 
the  act  the  sufficiency  of  the  petition  is  to  be  determined 
by  the  rules  in  force  in  the  State  where  it  is  brought  and 
it  need  not  state  the  facts  showing  a  right  of  action  with 
all  the  fullness  and  particularity  required  in  an  indict- 
ment charging  a  criminal  offense,  where  such  particularity 
is  not  required  in  that  State/^ 

Where  the  universal  practice  in  a  State  is  that  if  the 
damages  claimed  are  such  as  would  usually  or  naturally 
accompany  or  follow  or  be  included  in  the  result  of  the 
injuries  complained  of,  they  may  be  stated  and  claimed  in 
general  terms,  it  has  been  held  sufficient  to  assert  in  a 
petition  that  by  reason  of  the  alleged  unlawful  acts  of  the 
defendants  the  plaintiff  has  been  damaged  in  a  certain 
specified  sum.^^ 

§  175.  Sufficiency  of  Complaint — Particular  Cases. 

A  conspiracy  in  violation  of  the  Anti-Trust  Act  was 
held  to  be  sufficiently  charged  where  the  complaint  averred 
a  conspiracy  to  prevent  the  plaintiff  from  continuing  in 
its  business  of  sugar  refining  and  alleged  that  such  result 
was  accomplished  by  inducing  its  majority  stockholder 
to  pledge  a  majority  of  the  stock  as  security  for  a  loan, 
he  also  giving  to  the  defendants  the  voting  power  attached 
to  such  stock  which  the  defendants  exercised  to  elect  new 
directors  and  caused  such  directors  to  vote  that  the  plain- 
tiff should  do  no  business.  ^^  So  where  it  was  alleged  that 
the  plaintiff  had  erected  and  equipped  a  sugar  refinery,  and 
was  prepared  and  intended  to  engage  in  the  manufacture 

«  Section  914,  Rev.  Stat.  (U.  S.  Comp.  St.,  1901,  p.  684). 

<«  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774.  In  this  case  the  action  was  brought  before  a  Federal  court  sit- 
ting in  Kentucky  and  the  court  decided  as  above,  the  Code  of  that  State 
providing  that  the  petition  must  in  language  "as  concise  as  possible  consist- 
ent with  clearness  "  state  "  facts  which  constitute  a  cause  of  action."  The 
court  declared  that:  "by  this  rule  the  pleading  in  this  case  must  be  tested." 

"  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

*8  Pennsylvania  Sugar  Refining  Co.  v.  American  Sugar  Refining  Co.,  166 
Fed.  254,  92  C.  C.  A.  318,  rev'g  160  Fed.  144, 

208 


PROCEDURE   AND   DAMAGES  §§  176-178 

and  sale  of  sugar  when  it  was  prevented  from  so  doing  by 
certain  specified  acts  of  the  defendants,  it  was  decided 
that  the  complaint  was  not  demurrable.  ^^  But  a  pro- 
ceeding to  rescind  a  sale  of  the  company's  assets  to  another 
company  cannot  be  sustained  under  the  Sherman  Anti- 
Trust  Act  which  does  not  clearly  set  out  an  intent  to 
create  a  monopoly,  or  restrain  trade,  or  detail  facts  which 
practically  result  in  one  or  the  other.^° 

§  176.  Sufficiency  of  Complaint — Duplicity. 

Where  in  a  declaration  in  a  civil  suit  under  this  act  to 
recover  damages  it  is  charged  in  one  count  that  the  de- 
fendant entered  into  a  contract,  combination  and  con- 
spiracy such  charge  is  bad  for  duphcity.^^ 

§  177.  Sufficiency  of  Complaint —Joinder  of  Defend- 
ants— Election. 

Where  several  defendants  are  jointly  charged  in  a 
complaint  under  the  act  with  having  entered  into  each  of 
the  alleged  combinations  and  conspiracies  complained  of, 
the  fact  that  one  is  charged  with  doing  one  thing  and  one 
another  is  not  a  ground  for  requiring  an  election,  where 
all  of  the  acts  are  sufficiently  alleged  to  have  been  done 
in  pursuance  of  a  common  design.^- 

§  178.  Sufficiency  of  Indictment— General  Rules. 

As  to  the  sufficiency  of  the  indictment  it  is  said:  "We 
regard  it  as  well  settled  by  the  authorities  that  an  indict- 
ment, following  simply  the  language  of  the  act,  would  be 
wholly  insufficient,  for  the  reason  that  the  words  of  the 
statute  do  not  of  themselves  fully,  directly  and  clearly 
set  forth  all  the  elements  necessary  to  constitute  the 
ofifense  intended  to  be  punished."  ^^    So  in  the  Anti-Trust 

*'  Pennsylvania  Sugar  Refining  Co.  v.  American  Sugar  Refining  Co.,  166 
Fed.  254,  92  C.  C.  A.  318,  rev'g  160  Fed.  144. 

«>  Binney  v.  Cumberland  Ely  CoCfee  Co.  (U.  S.  C.  C),  183  Fed.  650. 

"  Rice  V.  Standard  Oil  Co.  (U.  S.  C.  C),  134  Fed.  464. 

"  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774. 

"  In  re  Greene  (U.  S.  C.  C),  52  Fed.  104,  per  Jackson,  J.    See  I'nited 

14  209 


§  179  SHERMAN   ANTI-TRUST   ACT — 

Law  the  word  "conspiracy  "  is  to  be  interpreted  independ- 
ently of  the  preceding  words,  and  an  indictment  thereunder 
should  describe  something  that  amounts  to  a  conspiracy 
under  the  act  conformably  to  the  rules  of  pleading  at 
common  law,  as  perhaps  modified  by  general  Federal 
statutes.^''  But  in  an  indictment  under  this  act  it  is  not 
necessary  to  allege  an  exact  time  as  that  of  the  formation 
of  the  combination,  it  being  sufficient  to  allege  with  the 
required  certainty  the  acts  rehed  on  to  establish  the 
offense,  as  showing  the  means  by  which  it  was  com- 
mitted.^^ And  the  existence  of  a  commerce  in  the  article 
need  not  be  alleged  since  neither  the  letter  of  the  statute 
nor  its  purpose  distinguishes  between  strangling  a  com- 
merce which  has  been  born  and  preventing  the  birth  of  a 
commerce  which  does  not  exist. ^^ 

§  179.  Sufficiency  of  Indictment — Charging  Officers, 
Agents  or  Stockholders. 

In  an  indictment  under  this  act  if  the  officer  or  agent 
of  a  corporation  charged  with  fault,  be  also  charged  with 
personal  participation,  direction  or  activity  therein,  both 
may  be  so  charged  jointly."  Where,  however,  individuals 
are  indicted  and  all  the  acts  and  matters  charged  as 
criminal  offenses  are  shown  by  the  face  of  the  indictment 
to  have  been  done  by  a  corporation  but  it  is  not  alleged 

States  V.  Nelson  (U.  S.  D.  C),  52  Fed.  646.  Compare  United  States  v. 
Patterson  (U.  S.  C.  C),  59  Fed.  280,  holding  that  it  is  not  necessary  that 
an  indictment  under  this  act  should  set  out  in  detail  the  operations  supposed 
to  constitute  interstate  commerce.  It  is  sufficient  to  use  the  language  of  the 
statute. 

Sufficiency  of  indictment  under  Sherman  Anti-Trust  Act.  See  United 
States  V.  Virginia-Carohna  Chemical  Co.  (U.  S.  C.  C),  163  Fed.  66;  United 
States  V.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed.  823;  In  re 
Greene  (U.  S.  C.  C),  52  Fed.  104;  In  re  Corning  (U.  S.  D.  C),  51  Fed.  205; 
United  States  v.  Greenhut  (U.  S.  D.  C),  50  Fed.  469. 

"  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 
823. 

"  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 
823. 

"  United  States  v.  Patterson  (U.  S.  C.  C),  59  Fed.  280. 

"  United  States  v.  MacAndrews  &  Forbes  Co.  (U.  S.  C.  C),  149  Fed. 
823. 

210 


PROCEDURE   AND   DAMAGES  §§  180,   181 

what  relation  they  have  to  such  corporation  or  that  their 
connection  therewith  is  other  than  that  of  mere  stock- 
holders, such  omission  constitutes  a  fatal  objection,  as 
the  stockholders  cannot  be  held  criminally  responsible 
for  the  corporation's  violation  of  the  statute.^^ 

§  180.  Indictment  Charging  Conspiracy— Denial  Un- 
der General  Issue. 

A  conspiracy  may  have  continuance  in  time,  and  where 
the  indictment  consistently  with  the  other  facts  alleges 
that  it  did  so  continue  to  the  date  of  fihng,  that  allegation 
must  be  denied  under  the  general  issue  and  not  by  a  special 
plea.  And  under  the  general  issue  all  defenses,  including 
the  defenses  that  the  conspiracy  was  ended  by  success, 
abandonment,  or  otherwise  more  than  three  years  before 
the  finding  of  the  indictment,  are  open.^^  And  though  the 
plea  of  the  statute  of  limitations  may  be  good  where  it 
confesses  and  avoids  all  that  the  indictment  avers,  it  is 
said  to  be  open  to  too  many  objections  and  difficulties  to 
be  encouraged  or  allowed  except  in  clear  cases.^° 

§  181.  IndictmentNot  Conclusive— Removal  Proceed- 
ing. 

While  in  a  removal  proceeding  under  the  United  States 
Revised  Statutes  ^^  an  indictment  under  the  Anti-Trust 
Act  constitutes  prima  facie  evidence  of  probable  cause  it  is 
not  conclusive,  and  evidence  offered  by  the  defendant 
tending  to  show  that  no  offense  triable  in  the  district  to 
which  removal  is  sought  had  been  conmiitted  is  admissible. 
And  the  exclusion  of  such  evidence  is  not  mere  error  but 
the  denial  of  a  right  secured  under  the  Federal  Constitu- 
tion.^-   And  in  a  case  in  the  Circuit  Court  where  an  apph- 

*»  In  rc  Greene  (U.  S.  C.  C),  52  Fed.  104. 

M  United  States  v.  Kissel,  218  U.  S.  601,  31  Sup.  Ct.  124,  54  L.  ed. 
1168,  rev'g  (U.  S.  C  C.)  173  Fed.  823. 

w  United  States  v.  Kissel,  218  U.  S.  601,  54  L.  ed.  1168,  31  Sup.  Ct. 
124,  rev'g  (U.  S.  C.  C),  173  Fed.  823. 

«i  Section  1014. 

«Tinsley  v.  Treat,  United  States  Marshal,  205  U.  S.  20,  51  L.  ed.  689, 
27  Sup.  Ct.  430.     The  court  said:  "It  has  been  repeatedly  held  that  in 

211 


§  182  SHERMAN   ANTI-TEUST  ACT — 

cation  had  been  made  for  the  removal  of  a  person  charged 
with  an  offense  under  this  act  it  was  said :  ''  It  admits  of  no 
question,  that  it  is  both  the  right  and  duty  of  this  court, 
upon  this  appHcation,  to  consider  and  determine  whether 
the  indictment  pending  against  the  petitioner  in  the  dis- 
trict of  Massachusetts  charges  either  a  criminal  offense 
or  one  that  comes  within  the  jurisdiction  of  that  court."  ®^ 

§  182.  Evidence — Admissibility  and  Weight. 

The  conspiracies  and  combinations  forbidden  by  the 
act  may  be  shown  otherwise  than  by  direct  and  positive 
testimony  of  definitively  formed  agreements.  The  evi- 
dence, however,  should  be  such  as  to  convince  the  mind 

such  cases  the  judge  exercises  something  more  than  a  mere  ministerial 
function,  involving  no  judicial  discretion.  He  must  look  into  the  indict- 
ment to  ascertain  whether  an  offense  against  the  United  States  is  charged, 
find  whether  there  was  probable  cause,  and  determine  whether  the  court 
to  which  the  accused  is  sought  to  be  removed  has  jurisdiction  of  the  same. 
'  The  hberty  of  the  citizen,  and  his  general  right  to  be  tried  in  a  tribunal  or 
forum  of  his  domicile,  imposes  upon  the  judge  the  duty  of  considering  and 
passing  upon  those  questions.'  Mr.  Justice  Jackson,  then  Circuit  Judge, 
Greene's  Case,  52  Fed.  104.  *  *  *  The  Constitution  provides  that  'The 
trial  of  all  crimes,  except  in  cases  of  impeachment,  shall  be  by  jury;  and 
such  trial  shall  be  held  in  the  State  where  said  crimes  shall  have  been  com- 
mitted' (Art.  Ill,  §2);  and  that  'In  all  criminal  prosecutions,  the  ac- 
cused shall  enjoy  the  right  to  a  speedy  and  pubUc  trial,  by  an  impartial 
jury  of  the  State  and  District  wherein  the  crime  shall  have  been  com- 
mitted' (Amendment  VI);  and  in  order  that  anyone  accused  shall  not  be 
deprived  of  this  constitutional  right,  the  judge  appUed  to  to  remove  him 
from  his  domicile  to  a  di.strict  in  another  State  must  find  that  there  ia 
probable  cause  for  believing  him  to  have  committed  the  alleged  offense 
and  in  such  other  district.  And  in  doing  this  his  decision  does  not  deter- 
mine the  question  of  guilt  any  more  than  his  view  that  the  indictment  ia 
enough  for  the  purpose  of  removal  definitely  determines  its  vaUdity. 
Appellant  was  entitled  to  the  judgment  of  the  District  Judge  as  to  the 
existence  of  probable  cause  on  the  evidence  that  might  have  been  adduced, 
and  even  if  the  District  Judge  had  thereupon  determined  that  probable 
cause  existed,  and  such  determination  could  not  be  revised  on  habeas 
corpus,  it  is  nevertheless  true  that  we  have  no  such  decision  here,  and  the 
order  of  removal  cannot  be  sustained  in  its  absence.  Nor  can  the  exclu- 
sion of  the  evidence  offered  be  treated  as  mere  error,  inasmuch  as  the 
ruling  involved  the  denial  of  a  right  secured  by  statute  under  the  Con- 
stitution. This  conclusion  is  fatal  to  the  order  and  warrant  of  removal, 
and  requires  a  reversal  of  the  judgment  below  and  the  discharge  of  ap- 
pellant." Per  Mr.  Chief  Justice  Fuller. 
«'  In  re  Greene  (U.  S.  C.  C),  52  Fed.  104,  per  Jackson,  J. 

212 


PROCEDURE   AND   DAMAGES  §  183 

of  the  tribunal  to  which  it  is  addressed  that  the  acts  de- 
nounced by  the  law  have  been  committed.^'' 

WTiere  parties  are  charged  with  a  violation  of  the  Anti- 
Trust  Act,  acts  of  theii's  and  the  effects  of  their  transac- 
tions in  the  conduct  of  their  business  prior  to  the  passage  of 
the  act  which  if  done  thereafter,  would  have  constituted 
a  violation  of  that  law,  are  competent  and  material  evi- 
dence of  the  purpose  and  probable  effect  of  their  similar 
transactions  in  that  business  since  that  date,  and  for  that 
purpose  they  may  be  considered.^-*  And  in  such  an  action 
the  books  of  different  defendants  forming  the  alleged  un- 
lawful combination  for  a  period  both  before  and  after  its 
formation  and  the  contracts  between  them  are  material 
and  relevant  evidence.*^®  But  a  letter  written  by  a  third 
person,  without  the  knowledge  of  a  defendant  and  without 
his  subsequent  sanction  or  approval,  is  not  admissible 
in  evidence  against  such  defendant  charged  with  con- 
spiracy, it  not  being  shown  that  such  person  was  in  the 
alleged  conspiracy  or  an  agent  of  the  defendant.^"  To 
vitiate  a  combination,  such  as  the  Sherman  Anti-Trust 
Act  condemns,  it  need  not  be  shown  that  such  combination, 
in  fact,  results,  or  will  result,  in  a  total  suppression  of  trade 
or  in  a  complete  monopoly,  but  it  is  only  essential  to  show 
that  by  its  necessary  operation  it  tends  to  restrain  inter- 
state or  international  trade  or  commerce,  or  tends  to  create 
a  monopoly  in  such  trade  or  commerce  and  to  deprive  the 
pubhc  of  the  advantages  that  flow  from  free  competi- 
tion.^^ 

§  183.  Evidence— As  to  Intent— When  Essential. 

W^ien  the  agreement  or  combination  in  question  does 
not  in  its  terms  provide  for  the  suppression  of  competi- 
tion or  the  creation  of  a  monopoly,  nor  bring  about  such 
a  result  as  a  necessary  legal  consequence,  but  requires 

"  United  States  v.  Reading  Co.  (U.  S.  C.  C),  183  Fed.  427,  454. 
«  United  States  v.  Standard  OU  Co.  (U.  S.  C.  C),  173  Fed.  177. 
«  Nelson  v.  United  States,  201  U.  S.  92,  50  L.  ed.  673,  26  Sup.  Ct.  58. 
«'  Consolidated  Grocery  Co.  v.  Hammond,  175  Fed.  641,  99  C.  C.  A.  195. 
«  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

213 


§  184  SHERMAN   ANTI-TRUST   ACT — 

further  acts  or  conduct  to  bring  about  such  an  unlawful 
result,  some  evidence  of  an  unlawful  intent  becomes  es- 
sential, that  the  court  may  see  that,  if  not  stopped,  a  pro- 
hibited restraint  is  likely  to  be  created. ^^  So  it  is  said  by 
Mr,  Justice  Holmes  that  "The  statute  gives  this  proceed- 
ing against  combinations  in  restraint  of  commerce  among 
the  States,  and  against  attempts  to  monopolize  the  same. 
Intent  is,  almost  essential  to  such  a  combination,  and  is 
essential  to  such  an  attempt.  Where  acts  are  not  sufficient 
in  themselves  to  produce  a  result  which  the  law  seeks  to 
prevent — for  instance  the  monopoly — but  require  further 
acts  in  addition  to  the  mere  forces  of  nature  to  bring  that 
result  to  pass,  an  intent  to  bring  it  to  pass  is  necessary  in 
order  to  produce  a  dangerous  probabiUty  that  it  will  hap- 
pen."'' But  when  the  intent  and  the  consequent  dangerous 
probability  exist,  this  statute,  like  many  others  and  like 
the  common  law  in  some  cases  directs  itself  against  the 
dangerous  probability  as  well  as  against  the  complete  re- 
sult." ^1 

§  184.  Evidence — Burden  of  Proof. 

One  who  claims  that  he  has  been  injured  by  an  illegal 
combination  in  restraint  of  trade  in  violation  of  the  Anti- 
Trust  Act  has  the  burden  of  proving  the  existence  of  such 
combination.^-  And  where  he  seeks  to  recover  damages 
caused  by  such  combination  the  burden  is  also  upon  him  to 
show  that  some  actual  damage  has  been  sustained  by  him 
in  consequence  of  such  combination  J^  And  every  violation 
of  the  Anti-Trust  Act  does  not  give  rise  to  a  cause  of  action 

6»  Bigelow  V.  Calumet  &  Hecla  Min.  Co.,  167  Fed.  721,  94  C.  C.  A. 
13,  aff'g  Bigelow  v.  Calumet  &  Hecla  Min.  Co.  (U.  S.  C.  C),  167  Fed. 
704. 

"">  Citing  Commonwealth  v.  Peaslee,  177  Mass.  267,  272,  59  N.  E.  55. 

"  Swift  Co.  V.  United  States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct. 
276,  quoted  in  Bigelow  v.  Calumet  &  Hecla  Min.  Co.,  167  Fed.  721,  94 
C.  C.  A.  13,  in  aff'g  Bigelow  v.  Calumet  &  Hecla  Min.  Co.  (U.  S.  C.  C), 
167  Fed.  704. 

"Loder  v.  Jayne  (U.  S.  C.  C),  142  Fed.  1010,  reversed  upon  other 
grounds  in  .Jayne  v.  Loder,  149  Fed.  21,  78  C.  C.  A.  653. 

"Loder  v.  Jayne  (U.  S.  C.  C),  142  Fed.  1010,  reversed  upon  other 
grounds  in  Jajme  v.  Loder,  149  Fed.  21,  78  C.  C.  A.  653. 

214 


PROCEDURE   AND   DAMAGES  §§  185,   180 

for  damages  thereunder,  but  a  plaintiff  to  recover  must 
show  that  he  has  sustained  damiage  by  the  violation. ^^ 

§  185.  Evidence— Presumption  in  Respect  to  Combi- 
nation. 

There  is  no  presumption  that  two  or  more  persons  who 
have  combined  to  conduct  interstate  or  international 
commerce  are  guilty  of  a  combination  in  restraint  of  that 
commerce.  There  is,  however,  a  legal  presumption  that 
each  of  the  defendants  is  innocent  until  he  is  proved  to  be 
guilty  beyond  a  reasonable  doubt.  The  burden  is  upon 
the  government  to  make  this  proof  and  evidence  of  facts 
that  are  as  consistent  with  innocence  as  with  guilt  is  insuffi- 
cient to  sustain  a  conviction.  Unless  there  is  substantial 
evidence  of  facts  which  exclude  every  other  hypothesis 
but  that  of  guilt,  it  is  the  duty  of  the  trial  court  to  instruct 
the  jury  to  return  a  verdict  for  the  accused:  and  where 
all  the  substantial  evidence  is  as  consistent  with  innocence 
as  with  guilt,  it  is  the  duty  of  the  appellate  court  to  reverse 
a  judgment  of  conviction. ^^  The  parties  to  a  contract, 
combination  or  conspiracy  are,  however,  presumed  to 
intend  the  inevitable  results  of  their  acts,  and  neither 
their  actual  intent  nor  the  reasonableness  of  the  restraint 
imposed  may  withdraw  it  from  the  denunciation  of  the 
statute.'^ 

§  186.  Evidence — Documents— Witnesses — Power  of 
Court. 

Officers  and  employees  of  corporations  cannot,  under 
the  Fourth  and  Fifth  Amendments,  refuse  to  testify  or 
produce  books  of  corporations  in  suits  against  the  corpora- 

'« Meeker  v.  Lehigh  Valley  R.  Co.,  183  Fed.  548,  (C.  C.  A.). 

"  Union  Pacific  Coal  Co.  v.  United  States,  173  Fed.  737,  97  C.  C.  A.  578. 
See  United  States  v.  American  Naval  Stores  Co.  (U.  S.  C.  C),  172  Fed.  455. 

Compare  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 
The  power  to  restrict  competition  in  interstate  and  international  com- 
merce vested  in  a  person  or  an  association  of  persons  by  a  contract  or 
combination,  is  indicative  of  its  character,  since  it  is  to  the  interest  of  the 
parties  that  such  a  power  should  be  exercised  and  the  presumption  is  that 
it  will  be. 

'•  United  States  v.  Standard  Oil  Co.  (U.  S.  C.  C),  173  Fed.  177. 

215 


§186  SHERMAN    ANTI-TRUST  ACT — 

tions  for  violations  of  the  Anti-Trust  Law  in  view  of  the 
immunity  given  by  the  Act  of  February  25,  1903."  And 
the  search  and  seizure  clause  of  the  Fourth  Amendment 
was  not  intended  to  interfere  with  the  power  of  courts  to 
compel  the  production  upon  a  trial  of  documentary  evi- 
dence through  a  subpoena  duces  tecum.^^  So  where  in  a 
suit  in  the  Circuit  Court  of  the  United  States  brought 
by  the  United  States  against  corporations  for  violations 
of  the  Anti-Trust  Act  a  witness  refused  to  answer  ques- 
tions or  submit  books  to  an  inspection  before  an  examiner 
appointed  by  the  court  on  the  ground  of  immateriaUty  and 
also  pleading  the  Fifth  Amendment  and  after  the  court 
had  overruled  the  objections  and  directed  him  to  answer 
he  again  refused  and  judgment  in  contempt  was  entered 
against  him,  it  was  decided  on  appeal  to  the  Supreme 
Court  that  questions  under  the  Constitution  of  the  United 
States  were  involved  and  that  that  court  had  jurisdiction 
of  an  appeal  direct  from  the  Circuit  Court. ^^ 

But  where  a  witness  refused  to  answer  questions  or 
produce  books  in  such  a  proceeding  on  the  same  ground 
and  entered  the  same  plea  and  the  court  merely  overruled 
the  objection  and  ordered  the  witness  to  answer  the  ques- 
tions and  produce  the  books,  and  an  appeal  was  taken  to 
the  Supreme  Court  it  was  decided  that  while  such  an  order 

"  Nelson  v.  United  States,  201  U.  S.  92,  50  L.  ed.  673,  26  Sup.  Ct.  358, 
following  Hale  v.  Henkel,  201  U.  S.  43,  50  L.  ed.  652,  26  Sup.  Ct.  370. 
See  Interstate  Commerce  Com.  v.  Baird,  194  U.  S.  25,  48  L.  ed.  860,  24 
Sup.  Ct.  563. 

The  immunity  granted  to  a  person  who  testifies  before  the  grand  jury  in 
regard  to  an  alleged  violation  of  the  Sherman  Act  does  not  extend  to  a 
prosecution  against  him  for  another  offense  where  there  is  no  evidence  that 
in  giving  such  testimony  the  witness  revealed  a  single  fact  which  will 
probably  be  necessary  in  establishing  his  guilt  that  cannot  be  obtained 
from  other  sources  and  was  not  known  or  in  the  possession  of  the  govern- 
ment.    United  States  v.  Heike  (U.  S.  C.  C),  175  Fed.  852. 

Documentary  evidence  in  the  shape  of  books  and  papers  of  corporations 
are  in  the  possession  of  the  officers  thereof,  who  cannot  refuse  to  produce 
them  on  the  ground  that  they  are  not  in  their  possession  or  under  their 
control.  Nelson  v.  United  States,  201  U.  S.  92,  50  L.  ed.  673,  26  Sup.  Ct. 
58.  See  Alexander  v.  United  States,  201  U.  S.  117,  50  L.  ed.  686,  26  Sup. 
Ct.  356. 

78  Hale  v.  Henkel,  201  U.  S.  43,  .50  L.  ed.  652,  26  Sup.  Ct.  370. 

"  Nelson  v.  United  States,  201  U.  S.  92,  50  L.  ed.  .673,  26  Sup.  Ct.  58. 

216 


PROCEDURE    AND    DAMAGES  §§  187,  188 

might  leave  the  witness  no  alternative  except  to  obey  or 
be  punished  for  contempt  it  was  interlocutory  in  the  prin- 
cipal suit  and  not  a  final  order  and  did  not  constitute  a 
practically  independent  proceeding  amounting  to  a  final 
judgment  and  that  an  appeal  would  not  lie  to  the  Supreme 
Court.s" 

§  187.  Witness — Examination  of  a  "  Proceeding." 
The  examination  of  a  witness  before  a  grand  jury  is  a 
"proceeding"  within  the  meaning  of  the  proviso  to  the 
general  appropriation  act  of  1903,  that  no  person  shall  be 
prosecuted  on  account  of  anything  which  he  may  testify  to 
in  any  proceeding  under  the  Anti-Trust  Law,  it  being 
declared  in  this  connection  that  the  word  should  receive  as 
wide  a  construction  as  is  necessary  to  'protect  the  witness 
in  his  disclosures.^^ 

§  188.  Damages — Recovery  of — Generally. 

Under  the  statute  in  order  to  recover  damages  a  plain- 
tiff must  have  been  injured  in  his  person  or  property  and 
the  injury  sustained  must  be  charged  in  the  complaint  by 
proper  averment.^- 

Actual  damages  which  will  sustain  a  judgment  can  only 
be  secured  and  must  be  established,  not  by  conjectures  or 
unwarranted  estimates  of  witnesses  but  by  facts  from  which 
their  existence  is  logically  and  legally  inferable.  Specula- 
tive, remote  or  contingent  damages  cannot  form  the  basis 

80  Alexander  v.  United  States,  201  U.  S.  117,  50  L.  ed.  686,  26  Sup.  Ct. 
356.  The  court  said,  per  Mr.  Justice  McKenna:  "In  a  certain  sense 
finality  can  be  asserted  of  the  orders  under  review,  so,  in  a  certain  sense, 
finahty  can  be  asserted  of  any  order  of  a  court.  And  such  an  order  may 
coerce  a  witness,  leaving  to  him  no  alternative  but  to  obey  or  be  punished. 
It  may  have  the  effect  and  the  same  characteristic  of  finahty  as  the  orders 
under  review,  but  from  such  a  ruling  it  will  not  be  contended  there  is  an 
appeal.  Let  the  court  go  further  and  punish  the  witness  for  contempt  of 
its  order,  then  arrives  a  right  of  review,  and  this  is  adequate  for  his  pro- 
tection without  unduly  impeding  the  progress  of  the  case.  Why  should 
greater  rights  be  given  a  witness  to  justify  his  contumacy  when  summoned 
before  an  examiner  than  when  summoned  before  a  court." 

»i  Hale  V.  Henkel,  201  U.  S.  43,  50  L.  ed.  652,  26  Sup.  Ct.  370. 

«»  Meeker  v.  Lehigh  Valley  R.  Co.  (U.  S.  C.  C),  162  Fed.  354. 

217 


§  189  SHERMAN   ANTI-TRUST  ACT — 

of  a  lawful  judgment.^^  And  there  is  held  to  be  no  cause 
of  action  under  the  Sherman  Anti-Trust  Act  for  damages 
sustained  by  the  payment  of  excessive,  unjust  or  unrea- 
sonable rates,  the  cause  of  action  for  such  damages  being 
declared  to  be  provided  for  by  the  act  to  regulate  com- 
merce.^^ 

Where  a  person  has  sustained  damages  as  the  result  of 
an  illegal  combination  in  violation  of  the  Anti-Trust  Act 
he  may  recover  damages  therefor  from  an  individual  mem- 
ber of  such  combination  without  regard  to  whether  there 
was  any  direct  contract  relation  between  him  and  such 
member.^^ 

§  189.  Damages— Nature  of  Action  for — Jury  Trial. 

The  action  for  damages  provided  for  by  the  Sherman 
Anti-Trust  Act  is  one  to  enforce  a  civil  remedy  for  a  private 
injury  and  is  in  its  nature  compensatory  and  not  an  action 
for  a  penalty,  nor  is  its  nature  changed  by  the  fact  that 
there  may  be  a  recovery  in  excess  of  the  actual  damages.^^ 
So  the  action  to  recover  damages  authorized  by  the  Sher- 
man x'\jiti-Trust  Act  is  held  to  be  an  action  at  law  and 
the  parties  are  held  to  be  entitled  to  a  jury  trial.^^ 

"  Central  Coal  &  Coke  Co.  v.  Hartman,  111  Fed.  96,  49  C.  C.  A.  244. 

"  Meeker  v.  Lehigh  Valley  R.  Co.  (U.  S.  C.  C),  162  Fed.  354;  American 
Union  Coal  Co.  v.  Pennsylvania  R.  Co.  (U.  S.  C.  C),  159  Fed.  278. 

^  City  of  Atlanta  v.  Chattanooga  Foundry  &  Pipeworks,  127  Fed.  23,  61 
C.  C.  A.  387,  aff'd  203  U.  S.  390,  27  Sup.  Ct.  65,  51  L.  ed.  241. 

**  City  of  Atlanta  v.  Chattanooga  Foundry  &  Pipeworks,  127  Fed.  23, 
61  C.  C.  A.  387,  aff'd  203  U.  S.  390,  51  L.  ed.  241,  27  Sup.  Ct.  65,  holding 
that  the  excess  so  recovered  is  in  the  nature  of  exemplary  damages.  The 
court  said:  "The  remedy  is  not  given  to  the  public,  for  no  one  may  bring 
the  action  save  the  person  'who  shall  be  injured,'  etc.,  and  the  recovery 
is  for  the  benefit  of  the  person  so  injured  and  suing.  It  is  not  reasonable 
to  construe  the  remedy  so  conferred  as  a  penal  action,  for  that  would  be 
to  add  to  the  punishment  by  fine  or  imprisonment  imposed  by  the  other 
sections  of  the  act  an  additional  punishment  by  way  of  pecuniary  penalty. 
The  plain  intent  is  to  compensate  the  person  injured.  True,  the  com- 
pensation is  to  be  three  times  the  damage  sustained.  But  this  enlarge- 
ment of  compensation  is  not  enough  to  constitute  the  action  a  penal  ac- 
tion." Per  Lurton,  J.,  citing  upon  this  question,  Campbell  v.  Haverhill, 
155  U.  S.  610,  15  Sup.  Ct.  217,  39  L.  cd.  280;  Woodward  v.  Alson,  12 
Heisk.  (Tenn.)  581;  Brady  v.  Daly,  175  U.  S.  148,  20  Sup.  Ct.  62,  44  L.  ed. 
109;  Huntington  v.  Attrill,  146  U.  S.  657,  13  Sup.  Ct.  224,  36  L.  ed.  1123. 

"  Meeker  v.  Lehigh  Valley  R.  Co.  (U.  S.  C.  C),  162  Fed.  354. 

218 


PROCEDURE  AND  DAMAGES  §§  190-192 

§  190.  Damages— Action  for— Statute  of  Limitations — 
A  Civil  Remedy. 

The  action  provided  for  by  the  Sherman  Anti-Trust 
Act  as  to  the  recovery  of  damages  is  governed  in  respect 
to  the  period  of  limitation  by  the  statutes  of  the  State  in 
which  the  action  is  brought  and  by  the  statutes  in  respect 
to  civil  remedies  and  not  those  in  respect  to  penalties.^ 

§  191.  Damages— Where  Payment  of  Higher  Price 
Compelled. 

Where  as  a  result  of  such  combinations  as  the  act 
makes  unlawful,  one  is  injured  by  being  compelled  to  pay 
a  higher  price  for  any  article  affected  thereby,  he  may 
recover  triple  the  amount  of  the  damages  sustained. ^^ 

The  difference  between  what  a  person  is  compelled  to 
pay  as  the  result  of  an  unlawful  combination  under  this 
act  and  the  reasonable  price  of  the  commodity  under 
natural  competitive  conditions  is  an  injury  to  his  business 
and  in  an  action  under  the  act  for  damages  his  recovery 
may  be  based  upon  such  difference.  The  excessive  price 
is  the  natural  and  intended  result  of  the  combination.^" 

§  192.  Damages— Cannot  Be  Set  off. 

In  order  to  recover  the  treble  damages  permitted  by 
the  Anti-Trust  Act  a  party  must  bring  a  direct  action  for 
that  purpose.  He  is  not  entitled  to  recover  such  dam- 
ages by  way  of  set-off  in  an  action  brought  by  the  illegal 
combination  to  recover  the  price  of  goods  sold  by  it 
to  such  party  under  special  contracts  having  no  direct 
connection  with  the  alleged  illegal  arrangement  or  com- 
bination.^^ 

«*  City  of  Atlanta  v.  Chattanooga  Foundry  &  Pipeworks,  127  Fed.  23,  61 
C.  C.  A.  387,  aff'd  203  U.  S.  390,  51  L.  ed.  241,  27  Sup.  Ct.  65. 

**  Monarch  Tobacco  Works  v.  American  Tobacco  Co.  (U.  S.  C.  C),  165 
Fed.  774,  citing  Chattanooga  Foundry  &  Pipeworka  v.  Atlanta,  203  U.  S. 
390,  51  L.  ed.  241,  27  Sup.  Ct.  65. 

*>  City  of  Atlanta  v.  Chattanooga  Foundrj'  &  Pipeworks,  127  Fed.  23, 
61  C.  C.  A.  387,  aff'd  203  U.  S.  390,  27  Sup.  Ct.  65,  51  L.  ed.  241. 

"  Connolly  v.  ITnion  Sewer  Pipe  Co.,  184  U.  S.  540,  46  L.  ed.  679,  22 
Sup.  Ct.  431,  aff'g  99  Fed.  354. 

219 


§193  SHERMAN   ANTI-TRUST   ACT — 

§  193.  Distribution  of  Assets  of    Holding   Corpora- 
tion— Right  to  Return  of  Shares. 

After  the  affirmance  of  the  decision  in  the  Northern 
Seciuities  Case  ^^  a  resolution  was  adopted  by  the  corpora- 
tion to  reduce  its  capital  stock  and  to  distribute  the  sur- 
plus of  assets  created  by  the  reduction  and  consisting  of 
shares  of  the  constituent  companies  ratably  among  its 
stockholders.  Objection  to  such  distribution  was  made 
by  complainants  on  the  ground  that  the  stock  in  one  of 
the  companies  which  they  had  delivered  to  the  Securities 
Company  had  not  been  delivered  in  pursuance  of  an 
absolute  sale  but  to  be  held  in  trust;  that  they  were  en- 
titled to  have  their  stock  returned  to  them;  that  the 
decree  in  the  government  suit  practically  so  adjudicated 
and  that  as  they  had  acted  in  good  faith,  believing  that 
the  original  contract  was  not  within  the  provisions  of  the 
Anti-Trust  Act,  the  doctrine  of  pari  deUcto  did  not  apply. 
The  Supreme  Court,  however,  determined  that  the  pro- 
visions in  the  original  decree  as  to  the  return  of  the  shares 
of  stock  transferred  were  merely  permissive  and  not  an 
adjudication  that  the  vendors  were,  as  a  matter  of  right, 
entitled  to  have  their  original  shares  returned  to  them 
and  that  the  rigor  of  the  rule  that  property  delivered  under 
an  executed  illegal  contract  cannot  be  recovered  back 
by  any  party  in  pari  delicto  cannot  be  relaxed  by  the 
courts  where  no  special  considerations  of  equity,  justice 
or  public  policy  are  disclosed  by  the  record,  and  that  the 
question  of  the  good  faith  of  the  parties  was  not  material. 
A  decree  in  this  case  ordering  the  return  of  the  original 
shares  was  therefore  refused  on  the  ground  that  it  not  only 
would  be  inequitable  but  would  tend  to  smother  competi- 
tion and  thus  contravene  the  object  of  the  Sherman  law 
and  the  purposes  for  which  the  suit  was  brought  by  the 
government.  ^^ 

92 193  U.  S.  197,  48  L.  ed.  679,  24  Sup.  Ct.  436. 

"  Harriman  v.  Northern  Securities  Co.,  197  U.  S.  244,  49  L.  ed.  739,  25 
Sup.  Ct.  493. 


220 


POOLING   OF   FREIGHTS,    ETC. 


§194 


CHAPTER  XV 


INTERSTATE   COMMERCE   ACT — POOLING   OF  FREIGHTS,   ETC. 


§  194.  Pooling  of  Freights  or  Divi-      §  199.  Pooling  of  Ocean  or  Water 


sion  of  Earnings  Prohib- 
ited— Interstate  Commerce 
Act. 

195.  Poohng        of        Freights — 

"Freights"  Defined. 

196.  Pooling     of     Freights— Na- 

ture and  Scope  of  Stat- 
ute. 

197.  What  Constitutes  "Pooling 

of  Freights." 

198.  What  Does  Not  Constitute 

"Pooling  of  Freights." 


200. 


201. 


Freights  Not  Within  Stat- 
ute or  Within  Jurisdiction 
of  Interstate  Commerce 
Commission. 


to     Prevent 

Carriage     of 

Destination 

—    Interstate 


Combinations 

Continuous 

Freight     to 

Prohibited 

Commerce  Act. 
Interstate     Commerce     Act 

Not      Inconsistent      with 

Sherman   Anti-Trust  Act. 


§  194.  Pooling  of  Freights  or  Division  of  Earnings 
Prohibited — Interstate  Commerce  Act. 

The  Interstate  Commerce  Act  provides:  ''That  it  shall 
be  unlawful  for  any  common  carrier  subject  to  the  pro- 
visions of  this  act  to  enter  into  any  contract,  agreement, 
or  combination  with  any  other  common  carrier  or  car- 
riers for  the  pooling  of  freights  of  different  and  competing 
railroads,  or  to  divide  between  them  the  aggregate  or 
net  proceeds  of  the  earnings  of  such  railroads,  or  any 
portion  thereof;  and  in  any  case  of  an  agreement  for  the 
pooling  of  freights  as  aforesaid,  each  day  of  its  contin- 
uance shall  be  deemed  a  separate  offense.^" 

'  Act  Feb.  4,  1887,  chap.  104,  §  5,  24  Stat.  380,  U.  S.  Comp.  Stat.,  1901, 
p.  3156.  See  Transportation  of  Immigrants,  In  re,  10  Inters.  C.  C.  R.  13 
(pooling  arrangements  for  division  of  west-bound  immigrant  traffic);  Con- 
solidated Forwarding  Co.  v.  Southern  Pacific  Co.,  9  Inters.  C.  C.  R.  182 
(pooling  of  or  division  of  earnings,  etc.,  questions  retained);  Freight 
Bureau  v.  Cincinnati,  New  Orleans  &  Texas  Pacific  Ry.  Co.,  6  Inters. 
C.  C.  R.  195,  198  (case  of  agreement  tantamount  to  pooling  freights  or 
division  of  earnings);  Duncan  v.  Atchison,  Topeka  &  Santa  Fo  Rd.  Co., 
6  Inters.  C.  C.  R.  85  (not  an  agreement,  etc.,  for  pooling  freights  or  divi- 
sion of  earnings);  Independent  Refiners'  Assoc,  etc.,  v.  Western  New  York 

221 


§  195  INTERSTATE    COMMERCE   ACT — 

§  195.  Pooling  of  Freights—"  Freights  "  Defined.^ 

"The  meaning  which  said  defendant  attaches  to  the 
word  'freights'  is,  in  my  opinion, also  wrong.  This  meaning 
is  expressed  thus:  'The  word  "freights"  in  this  clause 
means,  not  the  commodity  or  traffic  carried,  but  the 
receipts  or  compensation  for  the  carriage  thereof.  It 
cannot  evidently  be  given  both  meanings.  If  it  meant 
only  the  commodity  carried,  it  would  not  include  pas- 
senger business.  If,  on  the  other  hand,  it  was  meant  to 
include  the  receipts,  it  would  also  include  compensation 
derived  from  passenger  carriage.'  The  obvious  answer 
to  this  is  that  the  word  'freights'  was  not  intended  to 
include  passenger  traffic.  Such  traffic,  in  the  nature  of 
things  cannot  be  pooled,  because  its  routing  depends 
ultimately  upon  the  will  of  the  passenger.  Again,  passen- 
ger traffic  is  included  in  the  prohibition  against  the  con- 
ventional division  of  earnings;  and  if  the  word  'freights' 
were  given  the  meaning  defendant  claims  for  it,  then  the 
first  prohibition  of  the  section,  the  one  against  pooling 
freights,  would  be  entirely  useless,  since  its  purpose 
would  be  fully  accomplished  by  the  prohibition  against 
division  of  earnings.  On  the  other  hand,  the  pooling  of 
freights,  in  the  sense  of  distributing  the  commodities  to 
be  transported,  among  the  various  carriers  who  are  to 
perform  the  service,  is  not  reached  by  a  prohibition  against 
the  division  of  earnings.  Defendant  quotes  several  au- 
thorities to  the  effect  that  the  word  'freight'  means  the 
price  to  be  paid  for  the  carriage  of  goods.  There  can 
be  no  controversy  but  that  the  word,  under  certain  cir- 
cumstances is  susceptible  of  that  meaning.  Indeed,  both 
the  Century  Dictionary  and  Webster's  Dictionary  include 
it  among  their  definitions,  although  the  first  definition 
given  by  the  Century  Dictionary  is  this:  '(1)  The  cargo, 

&  Pennsylvania  Rd.  Co.,  5  Inters.  C.  C.  R.  415  (carrier  by  rail  and  carrier 
by  pipe  line;  agreement  not  within  prohibitions  of  section  five);  Express 
Companies,  In  the  Matter  of,  1  Inters.  C.  C.  11.  349  (status  of  express 
companies  under  section  five). 

Competing  line  defined,  see  §  19,  herein. 

2  Under  Act  Feb.  4,  1887,  chap.  104,  §  5,  24  Stat.  380,  U.  S.  Comp.  Stat., 
1901,  p.  3156. 

222 


POOLING    OF   FREIGHTS,    ETC.  §  195 

or  any  part  of  the  cargo  of  a  ship;  lading;  that  which 
is  carried  by  water;  in  the  United  States  and  Canada, 
in  general  anything  carried  for  pay  either  by  water  or 
by  land;  the  lading  of  a  ship,  canal  boat,  railroad  car, 
wagon,'  etc.  And  the  first  definition  given  by  Webster 
is  substantially  the  same:  '(1)  That  with  which  anything 
is  fraught  or  laden  for  transportation;  lading;  cargo, 
especially  of  a  ship;  also  of  a  car  on  a  railway,  or  the 
like;  as  a  freight  of  cotton;  a  full  freight;  freight  will  be 
paid  for  by  the  ton.'  Defendant  rightfully  says  that  the 
meaning  to  be  ascribed  to  the  word  in  any  given  case 
depends  upon  the  context,  and  illustrates  its  statement 
as  follows :  '  Thus  in  the  sixth  section,  the  phrase  is 
"in  every  depot  *  *  *  of  such  carrier  where  passen- 
gers or  freight,  respectively,  are  received  for  trans- 
portation." There  the  word  "freight,"  in  connection 
with  the  words  "are  received  for  transportation,"  would 
mean  the  commodity  carried.  But  in  that  sense  it 
would  not  include  passengers,  and  the  result  would 
then  follow  that  an  agreement  for  pooling  the  com- 
modities carried  if  "freight"  were  so  used,  would  be 
prohibited,  while  an  agreement  for  pooling  of  passenger 
traffic  would  not  be.'  Said  illustration  is  apt,  and  the 
deduction  therefrom  in  harmony  with  what  I  have  al- 
ready shown,  that  passengers  cannot,  like  commodities, 
be  pooled  for  transportation,  and  hence  passenger  traffic 
is  included  in  the  prohibition  against  division  of  earnings, 
not  in  the  prohibition  against  freight  pools.  Defendant 
further  says,  in  the  same  connection:  'Again,  the  word 
"freight,"  when  intended  to  mean  the  traffic  or  commod- 
ities carried,  is  comprehensive  in  its  scope,  and  the 
singular,  instead  of  the  plural — "freights" — should  be 
properly  used  in  that  connection.'  This  argument  is 
refuted  by  the  commerce  act  itself  which  in  section 
seven,'  uses  the  plural  '  freights ',  in  the  very  connection 
in  which  defendant  asserts  the  singular,  'freight,'  should 
be  used;  said  last  named  section  being  as  follows:    '  That 

'  Act  Feb.  14,  1887,  chap.  104,  24  Stat.  382,  U.  S.  Comp.  Stat.,  1901, 
p.  3159. 

223 


§  196  INTEKSTATE   COMMERCE   ACT — 

it  shall  be  unlawful  *  *  *  to  prevent  *  *  *  the  carriage 
of  freights  from  being  continuous;  *  *  *  and  no  break 
of  bulk  shall  prevent  the  carriage  of  freights  from  being/ 
etc.  It  should  be  borne  in  mind  that  railroads  may  pool 
their  freights — that  is,  the  commodities  they  carry — in 
two  ways :  First,  by  distributing  the  commodities  between 
themselves  for  carriage;  second,  by  dividing  among  them- 
selves their  aggregate  earnings  on  the  commodities  car- 
ried. Obviously  a  prohibition  against  division  of  earn- 
ings does  not  include  the  first  class  of  freight  pools,  and 
this  explains  why  section  five  of  the  commerce  law,^ 
although  adopting  some  of  the  features  of  section  two 
of  the  Reagan  bill,  *  *  *  omits  the  words  'or  to  pool 
the  freights,*  which  were  contained  in  said  section  two, 
and  for  the  words  '  bj''  dividing,'  also  contained  in  said 
section  two,  substitutes  the  words  'or  to  divide,'  thus 
showing  that  it  is  the  purpose  of  the  conomerce  law  to 
prohibit,  not  only  earnings  pools,  but  also  traffic  pools."  ^ 

§  196.  Pooling  of  Freights— Nature  and  Scope  of 
Statute. 

By  the  Interstate  Conomerce  Act  ^  Congress  adopting 
a  rule  of  public  policy  prohibited  pooling  contracts  or 
contracts  for  the  pooling  of  freights  between  common 
carriers  engaged  in  interstate  or  international  commerce, 
but  this  was  limited  in  its  scope  to  different  and  competing 
railroads;  it  prohibited  contracts  that  thus  destroyed 
competition;  it  did  not  prohibit  all  contracts  that  in  any 

*  24  Stat.  380,  U.  S.  Comp.  Stat.,  1901,  p.  3156. 

*  Interstate  Commerce  Commission  v.  Southern  Pacific  Co.  (U.  S.  C.  C), 
132  Fed.  829,  838,  839,  per  Wellborn,  Dist.  J.;  case  is  reversed  in  Southern 
Pacific  Co.  V.  Interstate  Commerce  Commission,  200  U.  S.  536,  50  L.  ed. 
585,  26  Sup.  Ct.  330. 

Freight  defined,  see  The  Norman  Prince  (U.  S.  D.  C),  185  Fed.  169; 
John  J.  Sesnon  Co.  v.  United  States  (U.  S.  C.  C.  A.),  182  Fed.  573,  105 
C.  C.  A.  Ill  ("freight  handled");  for  other  definitions,  see  Vol.  4,  Words 
and  Phrases,  pp.  2973  et  seq. 

As  to  meaning  of  "freight"  in  policies  of  marine  insurance,  see  Joyce  on 
Insurance,  §§  1723,  1724. 

"Pooling  Contracts"  defined,  see  §  10,  herein. 

» Act  of  Feb.  4,  1887,  chap.  104,  §  5,  U.  S.  Comp.  Stat.,  1901,  p.  3159. 

224 


POOLING   OF   FKEIGHTS,    ETC.  §  197 

way  restricted  or  regulated  competition,  and  the  gen- 
eral provisions  of  the  above  act  establish  beyond  cavil 
that  from  its  date  the  public  policy  of  the  nation  was 
that  competition  between  railroad  companies  engaged  in 
interstate  commerce  should  not  go  wholly  unrestricted.'' 

§  197.  What  Constitutes  "  Pooling  of  Freights." 
Any  arrangement,  oral  or  otherwise,  or  combination, 
which  has  for  its  purpose  and  eventuates  in  the  pooling 
of  freights  of  different  and  competing  railroads,  comes 
within  the  inhibition  of  the  act  to  regulate  commerce.^ 
Where  a  contract  was  entered  into  between  railroad  com- 
panies, and  its  evident  purpose  was  to  stifle  all  competi- 
tion for  the  purpose  of  raising  rates  and  by  its  terms  all 
of  the  roads  were  to  be  operated  as  to  through  traffic, 
''as  they  should  be  if  operated  by  one  corporation  which 
owned  all  of  them,"  and  the  contract  provided  two  modes 
of  pooling,  one  by  actual  division  of  the  traffic  and  the 
other  by  a  division  of  the  gross  earnings,  and  the  traffic 
one  having  been  divided  a  suit  was  brought  to  enforce 
the  second  method  of  the  pool,  viz.,  a  division  of  the  gross 
earnings,  or  in  other  words,  a  pooling  of  the  earnings, 
it  was  held  that  the  contract  was  contrary  to  public 
policy  and  void;  also  that  the  illegality  tainted  the  whole 
agreement  and  neither  of  the  parties  could  successfully 
maintain  an  action  thereon  even  though  the  illegal  con- 
tract had  been  performed  by  one  party.^ 

^  United  States  v.  Trans-Missouri  Freight  Association,  58  Fed.  58,  66, 
75,  7  C.  C.  A.  15,  per  Sanborn,  Cir.  J.,  see  166  U.  S.  290,  41  L.  ed.  1007,  17 
Sup.  Ct.  540. 

«  Pooling  of  Freights,  In  re  (U.  S.  D.  C),  115  Fed.  588,  §  5  of  Act  of  Feb. 
4,  1887. 

'  Chicago,  Milwaukee  &  St.  Paul  Ry.  Co.  v.  Wabash,  St.  Louis  &  Pacific 
Ry.  Co.,  61  Fed.  993,  9  C.  C.  A.  659.  The  court  said,  per  Caldwell,  Cir. 
J.  (at  pp.  998,  999),  "Courts  will  not  lend  their  aid  to  enforce  the  per- 
formance of  a  contract  which  is  contrary  to  pubhc  policy  or  the  law  of  the 
land  but  will  leave  the  parties  in  the  plight  their  own  illegal  action  has 
placed  them,"  citing:  Central  Transportation  Co.  v.  Pullman's  Palace 
Car  Co.,  139  U.  S.  24,  11  Sup.  Ct.  478,  35  L.  ed.  55;  Gibbs  v.  Consolidated 
Gas  Co.  of  Bait.,  130  U.  S.  396,  9  Sup.  Ct.  553,  32  L.  ed.  979;  Texas  & 
Pacific  Ry.  Co.  v.  Southern  Pacific  Ry.  Co.,  41  La.  Ann.  970,  6  So.  888; 
Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  St.  173;  Hooker  v.  Van- 

15  225 


§  198  INTERSTATE   COMMERCE   ACT — 

§  198.  What  Does  Not  Constitute  "  Pooling  of 
Freights." 

The  fact  that  an  initial  carrier,  in  order  to  break  up  the 
practice  of  rebating  by  the  connecting  carrier,  promises 
them  fair  treatment  and  carries  out  the  promise  by  giv- 
ing them  certain  percentages  of  its  guaranteed  through 
rate  business  does  not  amount  to  a  pooUng  of  freights 
within  the  meaning  of  the  Interstate  Commerce  Act. 
In  the  case  so  holding  it  appeared  that  the  Southern 
Pacific  and  other  railroads  published  a  guaranteed  through 
rate  on  citrous  fruits  from  California  to  the  Atlantic 
seaboard.  The  shippers  availing  of  this  rate  routed  the 
goods  themselves  from  the  terminals  of  the  initial  car- 
riers and  illegally  obtained  rebates  for  the  routing  from 
the  connecting  carriers.  To  prevent  this — and  the  action 
was  successful — the  initial  carriers  republished  the  rate, 
reserving  the  right  to  route  the  goods  beyond  their  own 
terminals.  On  complaint  of  shippers  the  Interstate 
Commerce  Commission  ordered  the  initial  carriers  to 
desist  from  enforcing  the  new  rule,  holding  it  violated 
section  three  of  the  Interstate  Commerce  Act  by  sub- 
jecting the  shippers  to  undue  disadvantage.  The  Circuit 
Court  sustained  the  commission,  but  on  the  ground  that 
the  routing  by  the  carrier  amounted  to  a  pooling  of 
freights  and  violated  section  five  of  the  above  act.  It 
was  also  held,  in  addition  to  what  is  above  stated,  that: 

(a)  As  the  general  purpose  of  the  act  was  to  facilitate 
commerce  and  prevent  discrimination  it  would  not  be 
construed  so  as  to  make  illegal  a  salutary  rule  to  prevent 
the  violation  of  the  act  in  regard  to  obtaining  rebates. 

(b)  The  question  of  joint  through  rates  was,  under  the 
act,  one  of  agreement  between  the  companies  and  under 
their  control,  and  nothing  in  the  act  prevented  an  initial 

derwater,  4  Denio  (N.  Y.),  349,  and  disapproving  as  "unsound  in  principle," 
etc.,  Central  Trust  Co.  v.  Ohio  Cent.  R.  Co.  (U.  S.  C.  C),  23  P^ed.  306. 
Compare  Nashua  &  Lowell  Rd.  Corp.  v.  Boston  &  Lowell  Rd.  Corp.  (U.  S. 
C.  C),  19  Fed.  804. 

Pooling  and  traffic  arrangement  held  void  as  against  connecting  lines  dis- 
criminated against,  see  Missouri  Pacific  Ry.  Co.  v.  Texas  &  Pacific  Ry. 
Co.  (U.  S.  C.  C),  30  Fed.  2. 

226 


POOLING   OF   FREIGHTS,    ETC.  §  109 

carrier  guaranteeing  a  through  rate  to  reserve  in  its  pub- 
hshed  notice  thereof  the  right  to  route  the  goods  beyond 
its  own  terminal,  (c)  A  carrier  need  not  contract  to  carry 
goods  beyond  its  own  Hne,  or  make  a  through  rate;  if  it 
agreed  so  to  do  it  might  do  so  by  such  Hnes  as  it  chose 
and  upon  such  reasonable  terms,  not  violative  of  the  law, 
as  it  could  agree  upon,  and  this  right  did  not  depend  upon 
whether  it  agreed  to  be  liable  for  default  of  the  connecting 
carrier,  (d)  A  reservation  applicable  to  a  single  business 
by  the  initial  carrier,  guaranteeing  a  through  rate,  of  the 
right  to  route  goods  beyond  its  own  terminal  did  not  amount 
to  an  unlawful  discrimination  within  the  prohibition  of 
the  act  if  the  business  was  of  a  special  nature,  like  a  fruit 
business,  having  nothing  in  common  with  other  freight.'" 

§  199.  Pooling  of  Ocean  or  Water  Freights  Not 
Within  Statute  or  Within  Jurisdiction  of  Interstate 
Commerce  Commission. 

The  pooling  of  ocean  freights  or  of  water  freights  of 
any  character  is  not  within  the  purview  of  section  five 
of  the  Commerce  Act,  for  the  act  prohibits  pooling  only 
as  to  railroads,  and  the  pooling  of  traffic  by  a  water  car- 
rier is  a  matter  over  which  the  Interstate  Commerce 
Commission  has  no  jurisdiction. '^ 

'"  Southern  Pacific  Co.  v.  Interstate  Commerce  Commission,  200  U.  S. 
536,  50  L.  ed.  585,  26  Sup.  Ct.  330,  rev'g  Interstate  Commerce  Commis- 
sion V.  Southern  Pacific  Co.  (U.  S.  C.  C),  132  Fed.  829.  In  the  court  be- 
low it  was  held  that  where  it  appears  from  the  findings  of  the  Interstate 
Commerce  Commission  that  the  traffic  of  railroad  carriers  is  pooled  between 
the  connecting  lines  of  defendants,  and  that  the  rule  which  reserves  to  the 
initial  carrier  the  right  of  routing  is  one  of  the  essential  means  to  said  pool- 
ing arrangement  and  was  so  intended  by  the  carriers,  said  rule  and  practice 
are  violative  of  the  fifth  section  of  the  Interstate  Commerce  Act;  and  it  is 
no  justification  of  said  rule  and  practice  that  they  are  designed  to  prevent 
and  do  prevent,  unlawful  rebates  from  connecting  lines  to  shippers.  Pool- 
ing and  rebates  are  both  within  the  prohibitions  of  the  Interstate  Com- 
merce Act,  and  one  cannot  be  employed  as  a  preventive  of  the  other.  In- 
terstate Commerce  Commission  v.  Southern  Pacific  Co.  (U.  S.  C.  C),  123 
Fed.  597;  s.  c.  (U.  S.  C.  C),  132  Fed.  829,  847,  reversed  in  Southern  Pacific 
Co.  v.  Interstate  Commerce  Commission,  200  U.  S.  536,  50  L.  ed.  585,  26 
Sup.  Ct.  330. 

"  Cosmopolitan  Shipping  Co.  v.  Hamburg-American  Packet  Co.,  13 
inter.  Coram.  Rep.  266. 

227 


§  200  INTERSTATE    COMMERCE   ACT — 

§  200.  Combinations  to  Prevent  Continuous  Carriage 
of  Freight  to  Destination  Prohibited— Interstate  Com- 
merce Act. 

The  Interstate  Commerce  Act  also  provides:  ''That 
it  shall  be  unlawful  for  any  common  carrier  subject  to 
the  provisions  of  this  act  to  enter  into  any  combination, 
contract,  or  agreement,  expressed  or  implied,  to  prevent, 
by  change  of  time  schedule,  carriage  in  different  cars, 
or  by  other  means  or  devices,  the  carriage  of  freights 
from  being  continuous  from  the  place  of  shipment  to  the 
place  of  destination;  and  no  break  of  bulk,  stoppage,  or 
interruption  made  by  such  common  carrier  shall  prevent 
the  carriage  of  freights  from  being  and  being  treated  as 
one  continuous  passage  from  the  place  of  shipment  to 
the  place  of  destination,  unless  such  break,  stoppage,  or 
interruption  was  made  in  good  faith  for  some  necessary 
purpose,  and  without  any  intent  to  avoid  or  unnecessarily 
interrupt  such  continuous  carriage  or  to  evade  any  of 
the  pro\dsions  of  this  act."  ^"^ 


"  Act  Feb.  4,  1887,  chap.  104,  §  7,  24  Stat.  382,  U.  S.  Comp.  Stat.,  1901, 
p.  3159. 

"Pooling  Contracts"  defined,  see  §  10,  herein. 

Section  seven  (above  given)  and  section  three  construed  together,  see  Ken- 
tucky &  Indiana  Bridge  Co.  v.  Louisville  &  Nashville  Rd.  Co.  (U.  S.  C.  C), 
37  Fed.  567,  621. 

Law  requires  foreign  carriers  from  or  into  the  United  States  to  conform  to 
same  regulations  as  govern  domestic  carriers  for  a  continuous  carriage  or 
shipment.  Grand  Trunk  Ry.  Co.  of  Canada,  In  re  Investigation  of,  3 
Inters.  C.  C.  R.  89. 

Liability  cannot  he  escaped  by  carriers  by  breaking  haul  in  two  and  calling 
themselves  carriers  on  separate  ends  of  line,  and  hold  out  to  public  as  a 
through  line.    Brady  v.  Pennsylvania  Rd.  Co.,  2  Inters.  C.  C.  R.  131. 

What  constitutes  continuous  shipment  and  interstate  commerce,  although 
different  and  independent  agencies  are  employed  in  transporting  the  com- 
modity, see  Cutting  v.  Florida  Ry.  &  Nav.  Co.  (U.  S.  C.  C),  46  Fed.  641, 
citing  The  Daniel  Ball,  10  Wall.  (77  U.  S.),  557,  19  L.  ed.  999,  and  cases 
recognizing  the  doctrine  therein  stated. 

Liability  for  violation  of  the  above  Interstate  Commerce  Act,  see  Act  of 
Feb.  4,  1887,  chap.  104,  §  8,  24  Stat.  382,  U.  S.  Comp.  Stat.,  1901,  p.  3159. 
See  also  Supp.,  1909,  U.  S.  Comp.  Stat.,  p.  1135.  See  Atlantic  Coast  Line 
Rd.  Co.  V.  Riverside  Mills,  219  U.  S.  186,  55  L.  ed.  — ,  31  Sup.  Ct.  164; 
case  affirms  168  Fed.  987,  990. 

Persons  damaged  may  make  complaint  to  Commission  or  sue  personally, 

228 


POOLING    OF   FREIGHTS,    ETC.  §  201 

As  to  section  seven  above  given  of  the  Interstate  Com- 
merce Act,  it  is  no  violation  thereof  for  a  railroad  com- 
pany to  enter  into  contracts  with  other  companies  for 
the  establishment  of  through  routes  and  through  rates, 
for  the  continuous  carriage  of  interstate  traffic.  Such 
contracts  are  in  nowise  inconsistent  with  the  things 
forbidden  by  said  section.^' 

§  201 .  Interstate  Commerce  Act  Not  Inconsistent  with 
Sherman  Anti-Trust  Act. 

The  Interstate  Commerce  Act  ^'*  is  not  inconsistent 
^nth  the  Sherman  Anti-Trust  Act  ^^  as  it  does  not  confer 
upon  competing  railroad  companies  power  to  enter  into 
a  contract  in  restraint  of  trade  and  commerce."' 

see  Act  of  Feb.  4,  1887,  chap.  104,  §  9,  24  Stat.  382,  U.  S.  Comp.  Stat.,  1901, 
p.  3159;  see  also  Supp.,  1909,  U.  S.  Comp.  Stat.,  p.  1135. 

Penalty  for  violalion  of  above  Interstate  Commerce  Act,  see  Act  Feb.  4, 
1887,  chap.  104,  §  10,  24  Stat.  382;  Act  March  2,  1889,  chap.  382,  25  Stat. 
857,  U.  S.  Comp.  Stat.,  1901,  p.  3160.  See  also  Supp.,  1909,  U.  S.  Comp. 
Stat.,  p.  1135. 

"  Part  of  syllabus  in  Kentucky  &  Indiana  Bridge  Co.  v.  Louisville  & 
Na.shville  Rd.  Co.  (U.  S.  C.  C),  37  Fed.  567,  620. 

i^Act  Feb.  4,  1887,  chap.  104,  24  Stat.  382,  U.  S.  Comp.  Stat.,  1901, 
p.  3159. 

1*  See  §  13,  herein. 

1^  United  States  v.  Trans-Missouri  Freight  Association,  166  U.  S.  290, 
41  L.  ed.  1007,  17  Sup.  Ct.  540.  The  court,  per  Mr.  Justice  Fcckhara 
{Id.,  314,  315),  said:  "In  our  opinion,  the  Commerce  Act  does  not  author- 
ize an  agreement  of  this  nature.  It  may  not  in  terms  prohibit,  but  it  is 
far  from  conferring  either  directly  or  by  implication  any  authority  to  make 
it.  If  the  agreement  be  legal  it  does  not  owe  its  validity  to  any  provision 
of  the  Commerce  Act,  and  if  illegal  it  is  not  made  so  by  that  act.  The 
fifth  section  prohibits  what  is  termed  'pooling,'  but  there  is  no  express 
provision  in  the  act  prohibiting  the  maintenance  of  traffic  rates  among 
competing  roads  by  making  such  an  agreement  as  this,  nor  is  there  any 
provision  which  permits  it.  Prior  to  the  passage  of  the  act  the  companies 
had  sometimes  endeavored  to  regulate  competition  and  to  maintain  rates 
by  pooUng  arrangements,  and  in  the  act  that  kind  of  an  arrangement  was 
forbidden.  After  its  passage  other  devices  were  resorted  to  for  the  purpose 
of  curbing  competition  and  maintaining  rates.  The  general  nature  of  a 
contract  like  the  one  before  us  is  not  mentioned  in  or  provided  for  by  the 
act.  The  provisions  of  that  act  look  to  the  prevention  of  discrimination, 
to  the  furnishing  of  equal  facilities  for  the  interchange  of  traflic,  to  the 
rate  of  compensation  for  what  is  termed  the  long  and  the  short  haul,  to 
the  attainment  of  a  continuous  passage  from  the  point  of  shipment  to  the 
point  of  destination,  at  a  known  and  publisheil  schedule,  and,  in  the  Ian- 

229 


§  201  INTERSTATE    COMMERCE   ACT 

guage  of  counsel  for  defendants,  'without  reference  to  the  location  of  these 
points  or  the  linos  over  which  it  is  necessary  for  the  traffic  to  pass/  to  pro- 
curing uniformity  of  rates  charged  by  each  company  to  its  patrons,  and 
to  other  objects  of  a  similar  nature.  The  act  was  not  directed  to  the  secur- 
ing of  uniformity  of  rates  to  be  charged  by  competing  companies,  nor  was 
there  any  provision  therein  as  to  maximum  or  minimum  of  rates.  Com- 
peting and  non-connecting  roads  are  not  authorized  by  this  statute  to 
make  an  agreement  like  this  one.  As  the  Commerce  Act  does  not  authorize 
this  agreement,  argument  against  a  repeal  by  implication,  of  the  pro- 
visions of  the  act  which  it  is  alleged  grant  such  authority,  becomes  in- 
effective. There  is  no  repeal  in  the  case,  and  both  statutes  may  stand,  aa 
neither  is  inconsistent  with  the  other.  It  is  plain,  also,  that  an  amendment 
of  the  Commerce  Act  would  not  be  an  appropriate  method  of  enacting  the 
legislation  contained  in  the  Trust  Act,  for  the  reason  that  the  latter  act 
includes  other  subjects  in  addition  to  the  contracts  of  or  combination 
among  railroads,  and  is  addressed  to  the  prohibition  of  other  contracts 
besides  those  relating  to  transportation.  The  omission,  therefore,  to 
amend  the  Commerce  Act  furnishes  no  reason  for  claiming  that  the  later 
statute  does  not  apply  to  railroad  transportation."  This  case  was  followed 
(the  agreements  being  substantially  the  same  in  both  cases)  in  United 
States  V.  Joint  Traffic  Association,  171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct. 
25,  which  reversed  89  Fed.  1020,  32  C.  C.  A.  491,  and  (U.  S.  C.  C.)  76  Fed. 
895,  which  considered  section  five  of  the  Interstate  Commerce  Act. 


230 


FEDERAL   CONSTITUTION 


CHAPTER  XVI 


CONSTITUTIONAL   LAW — FEDERAL   CONSTITUTION 


202.  Preliminary  Statement. 

203.  Constitution    and    Laws    of 

United     States     Supreme 

Law  of  Land — Application       §  214. 

to  Combinations,   Trusts, 

etc.  215. 

204.  Constitutional   Vestment  of 

Powers  in  Congress. 

205.  Commerce  Clause  of  Consti-         216. 

tution — Power     of     Con- 
gress. 

206.  Purpose  of  Vestment  in  Con- 

gress of  Power  to  Regulate         217. 
Commerce. 

207.  Regulation   of   Commerce — 

Extent     of      Interference 
with  Private  Contracts  or         218. 
Combinations — Interstate 
and       Intrastate       Com- 
merce. 

208.  Obligation       of       Contract 

Clause  Not  a  Limitation         219. 
on  Congress. 

209.  Impairment  of  Obligation  of 

Contracts— Whether  State         220. 
Constitution  a  "Law." 

210.  Impairment  of  Obligation  of 

Contracts     —      Whether         221. 
"Law"    Applies   Only   to 
State    Legislative    Enact- 
ments. 

211.  Impairment  of  Obligation  of         222. 

Contracts — Whether   Mu- 
nicipal Ordinance  a"  Law." 

212.  Impairment  of  Obligation  of 

Contracts— Word    "Law"         223. 
Does  Not  Apply  to  Judi- 
cial Decisions,  etc.,  Unless. 

213.  Obligation       of       Contract 


Clause  Refers  to  Subse- 
quently Enacted  "Law" 
of  State. 

Same  Subject — Change  of 
Remedy  or  Procedure. 

Nature  of  Laws  Prohibited 
by  ObUgation  of  Contract 
Clause. 

Nature  of  Contracts  Em- 
braced by  Obligation  of 
Contract  Clause  —  Be- 
tween What  Parties. 

Nature  of  Contracts — Obli- 
gation of  Contract  Clause 
Embraces  Implied  and  Ex- 
press Contracts. 

Obhgation  of  Contracts — 
Legal  and  Legislative  Con- 
tracts —  Construction  of 
Contract — Authority  of 
Federal  Supreme  Court. 

Bridges — Exclusive  Grant  or 
Privilege — Impairment  of 
Contract  Obligation. 

Ferry — Exclusive  Grant — 
Impairment  of  Contract 
Obligation. 

Railroad  Charter — Provision 
Against  Competing  Lines 
— Impairment  of  Contract 
Obligation. 

Telephone  Compan3-'s  Ex- 
clusive Grant  —  Impair- 
ment of  Contract  Obhga- 
tion. 

Electric  Lighting  —  Exclu- 
sive Grant  or  Privilege — 
Impairment  of  Contract 
Obligation. 

231 


§§  202,  203 


CONSTITUTIONAL   LAW — 


224.  Exclusive  Right  to  Supply- 
Gas — Impairment  of  Con- 
tract Obligation. 

Water  Companies — Exclu- 
sive Contracts,  Grants  or 
Privileges — Impairment  of 
Contract  Obligation. 

Powers  Reserved  to  the 
States. 

Fifth  Amendment  Generally. 

Fourteenth         Amendment 
Generally. 
229.  Fourteenth      Amendment — 
No  State  to  Abridge  Priv- 
ileges or  Immunities. 

Fourteenth  Amendment — 
Due  Process  Clause — 
Fifth  Amendment. 

Liberty  to,  or  Freedom  of 
Contract  Generally — 

Fourteenth  Amendment — 
Fifth  Amendment. 
232.  Liberty  to,   or  Freedom  of 
Contract         Continued — 
Power  of  Government  to 


225. 


226. 

227. 
228. 


230. 


231. 


Restrict,  Regulate  or  Con- 
trol. 
§  233.  Liberty  to,  or  Freedom  of 
Contract  Continued — 
Power  of  Congress  Under 
Commerce  Clause  to  Re- 
strict, etc. 

234.  Liberty  to,   or  Freedom  of 

Contract  Continued — 
PoUce  Power  of  States. 

235.  Liberty   to,   or  Freedom  of 

Contract  Continued — 
Standard  Oil  Company's 
Case. 

236.  Liberty  to,   or  Freedom  of 

Contract  Continued — 
State  Statutes  Prohibiting 
Combinations,  etc. — In- 
stances. 

237.  F'ourteenth      Amendment — 

Equal  Protection  of  the 
Laws. 

238.  Same     Subject — Power     of 

Congress  and  of  States. 


§  202.  Preliminary  Statement. 

We  shall  consider  in  this  chapter  only  certain  provi- 
sions of  the  Constitution  of  the  United  States  which 
have  been  before  the  courts  in  determining  the  lawful 
rights  of  parties  therein  as  well  as  the  validity  of  national 
and  State  prohibitions  in  cases  of  alleged  monopolies, 
trusts,  pools,  and  other  claimed  unlawful  combinations, 
contracts  in  restraint  of  trade  or  restrictions  upon  compe- 
tition which  are  inimical  to  the  public  welfare  or  to 
public  policy. 


§  203.  Constitution  and  Laws  of 
preme  Law  of  Land— Application 
Trusts,  etc. 

The  Constitution  of  the  United 
stitutional  laws  are  the  supreme  law 
upon   the  judges  in  every   State.  ^ 

1  Hoase  v.  Mayes,  219  U.  S.  270,  55  L.  ed. 
affirms  227  Mo.  617;  Northern  Securities  Co.  v. 

232 


United  States  Su- 
to    Combinations, 

States  and  its  con- 
of  the  land  binding 
Every   corporation 

— ,  31  Sup.  Ct.  234,  case 
,  United  States,  193  U.  S. 


FEDERAL   CONSTITUTION  §  203 

created  by  a  State  is,  therefore,  subject  to  the  supreme 
law  of  the  land,  so  that  if  a  State  gives  a  charter  to  a 
corporation  and  the  obtaining  of  such  charter  is  in  fact 
pursuant  to  a  combination  under  which  it  becomes  the 
holder  of  stocks  of  the  shareholders  in  competing,  parallel 

197,  344,  48  L.  ed.  679,  24  Sup.  Ct.  436,  per  Mr.  Justice  Harlan;  Siebold, 
Ex  parte,  100  U.  S.  371,  395,  39S,  399,  25  L.  ed.  717,  per  Mr.  Justice  Brad- 
ley; Bank  of  Commerce  v.  New  York  City,  2  Black  (67  U.  S.),  620,  632, 
633,  17  L.  ed.  451,  per  Mr.  Justice  Nelson;  Dodge  v.  Woolsey,  18  How. 
(59  U.  S.)  331,  347,  15  L.  ed.  401,  per  Mr.  Justice  Wayne;  Cohens  v.  Vir- 
ginia, 6  Wheat.  (19  U.  S.)  264,  381,  5  L.  ed.  257,  per  Mr.  Chief  Justice 
Marshall. 

The  government  of  the  Union,  though  limited  in  its  powers,  is  supreme 
within  its  sphere  of  action;  and  its  laws  when  made  in  pursuance  of  the 
Constitution,  form  the  supreme  law  of  the  land.  M'Culloch  v.  State  of 
Maryland,  4  Wheat.  (17  U.  S.)  316,  4  L.  ed.  579. 

The  Constitution  of  the  United  States  is,  within  the  scope  of  its  provi- 
sions, the  supreme  law  of  the  land,  and  State  courts  and  legislatures  are 
bound  by  it  as  well  as  by  the  interpretation  put  upon  its  provisions  by 
the  Federal  court  of  last  resort.  State  v.  Cudahy  Packing  Co.,  33  Mont. 
179,  82  Pac.  834. 

The  Constitution  of  the  United  States  provides  (Art.  VI,  par.  2):  "This 
Constitution  and  the  laws  of  the  United  States,  which  shall  be  made  in 
pursuance  thereof,  and  all  treaties  made,  or  which  shall  be  made,  under 
the  authority  of  the  United  States,  shall  be  the  supreme  law  of  the  land; 
and  the  judges  in  every  State  shall  be  bound  thereby,  anything  in  the 
constitution  or  laws  of  any  State  to  the  contrary  notwithstanding."  Ap- 
phed  by  Mr.  Chief  Justice  Waite  in  Pensacola  Teleg.  Co.  v.  Western 
Union  Teleg.  Co.,  96  U.  S.  1,  24  L.  ed.  708,  1  Am.  Elec.  Cas.  253.  See  hst 
of  citations  in  Vol.  1,  U.  S.  Comp.  Stat.,  1901,  under  this  article  of  the 
Constitution,  and  also  in  9  Fed.  Stat.  Ann.,  pp.  218  et  seq. 

"The  Constitution  is  the  fundamental  law  of  the  United  States.  By  it 
the  people  have  created  a  government,  defined  its  powers,  prescribed  their 
limits,  distributed  them  among  the  different  departments,  and  directed, 
in  general,  the  manner  of  their  exercise."  The  court  quotes  the  above 
constitutional  provision  and  says:  "Not  every  act  of  Congress,  then,  is  to 
be  regarded  as  the  supreme  law  of  the  land;  nor  is  it  by  every  act  of  Con- 
gress that  the  judges  are  bound.  This  cliaracter  and  this  force  belong  only 
to  such  acts  as  are  'made  in  pursuance  of  the  Constitution.'  \Vhen,  there- 
fore, a  case  arises  for  judicial  determination,  and  the  decision  depend.s 
upon  the  alleged  inconsistency  of  a  legislative  provision  with  the  funda- 
mental law,  it  is  the  plain  duty  of  the  court  to  compare  the  act  with  the 
Constitution,  and  if  the  former  cannot,  upon  a  fair  construction,  be  recon- 
ciled with  the  latter,  to  give  effect  to  the  Constitution  rather  than  the 
statute."  Hepburn  v.  Griswold,  8  Wall.  (75  U.  S.)  603,  611,  9  L.  ed.  513, 
per  Chief  Justice  Chase. 

"Law  of  the  land,"  see  Wichita  Electric  Co.  v.  Hinckley  (Tex.  Civ.  .\pp., 
1910),  131  S.  W.  1192. 

233 


§§  204,  205  CONSTITUTIONAL   LAW — 

railroad  companies  engaged  in  interstate  commerce  in 
other  States,  whereby  competition  between  the  respec- 
tive roads  of  those  companies  is  to  be  destroyed  and  the 
commerce  carried  on  over  them  restrained  by  suppress- 
ing, competition  and  a  trust  or  combination  in  restraint 
of  trade  is  created  thereby,  Congress  is  not  prevented, 
by  the  fact  that  the  corporations  or  some  of  them  are 
State  corporations,  from  exerting  its  power  under  the 
Constitution;  no  State  can  give  a  corporation  under  its 
laws  authority  to  restrain  interstate  or  international 
commerce  or  to  create  a  trust  or  combination  in  restraint 
of  trade  against  the  will  of  the  nation  as  lawfully  expressed 
by  Congress.^ 

§  204.  Constitutional  Vestment  of  Powers  in  Congress. 

The  Constitution  of  the  United  States  vests  all  legis- 
lative power  therein  granted  in  Congress,^  and  no  depart- 
ment of  the  government  of  the  United  States  has  any 
other  powers  than  those  delegated  to  it  by  the  people 
through  the  Constitution.  "All  the  legislative  power 
granted  by  the  Constitution  belongs  to  Congress,  but  it 
has  no  legislative  power  which  is  not  thus  granted."  ^ 

§  205.  Commerce  Clause  of  Constitution — Power  of 
Congress. 

The  Constitution  of  the  United  States  specifically  and 
exclusively  confers  upon  Congress  the  power  to  regulate 
commerce  with  foreign  nations,  and  among  the  several 
States,  and  with  the  Indian  tribes;  ^  and  this  power  is 
complete  and  unrestricted  except  by  limitations  in  the 
Constitution  itself.^    By  virtue  also  of  the  same  power 

2  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  344,  48  L.  ed. 
679,  24  Sup.  Ct.  436. 

5  Const.  U.  S.,  Art.  1,  §  1. 

*  Hepburn  v.  Griswold,  8  Wall.  (75  U.  S.)  603,  611,  9  L.  ed.  513,  per 
Mr.  Chief  Justice  Chase,  see  §§  267,  269,  270,  herein. 

«  Const.  U.  S.,  Art.  1,  §  8,  see  §§  16,  270,  herein. 

Right  to  regulate  interstate  commerce  is  exclusively  vested  in  Congress. 
Southern  Railway  Co.  v.  King,  217  U.  S.  524,  54  L.  ed.  868,  30  Sup.  Ct. 
594,  case  affirms  160  Fed.  332,  87  C.  C.  A.  284. 

« Louisville  &  Nashville  Rd.  Co.  v.  Mottley,  219  U.  S.  467,  31  Sup.  Ct. 

234 


FEDERAL   CONSTITUTION  §  200 

Congress  had  authority  to  enact  the  Sherman  Anti- 
Trust  Act,^  and  it  may  protect  the  freedom  of  interstate 
commerce  by  any  means  that  are  appropriate  and  that 
are  lawful  and  not  prohibited  by  the  Constitution.^ 

§  20G.  Purpose  of  Vestment  in  Congress  of  Power  to 
Regulate  Commerce. 

The  power  to  regulate  commerce  among  the  several 
States  was  vested  in  Congress  in  order  to  secure  equality 
and  freedom  in  commercial  intercourse  against  discrim- 
inating State  legislation.^  In  matters  of  foreign  and 
interstate  commerce  there  are  no  State  lines;  in  such 
commerce,  instead  of  the  States,  a  new  power  appears 
and  a  new  welfare,  a  welfare  which  transcends  that  of 
any  State.  The  welfare  of  the  United  States  is  consti- 
tuted of  the  welfare  of  all  the  States,  and  that  of  the 
States  is  made  greater  by  mutual  division  of  their  re- 
sources. This  is  also  the  purpose  and  the  result  of  the 
commerce  clause  of  the  Constitution.^*^ 

265,  55  L.  ed. ,  caae  reverses  133  Ky.  652, 118  S.  W.  982.    See  §§  267-270, 

herein. 

Subject  to  such  restrictions  as  are  imposed  by  the  Constitution  upon 
the  exercise  of  all  power,  the  power  of  Congress  over  interstate  and  inter- 
national commerce  is  as  full  and  complete  as  is  the  power  of  any  State  over 
its  domestic  commerce.  Northern  Securities  Co.  v.  United  States,  193 
U.  S.  197,  24  Sup.  Ct.  436,  48  L.  ed.  679. 

The  power  of  Congress  is  as  absolute  over  interstate  as  it  is  over  foreign  com- 
merce. Western  Union  Teleg.  Co.  v.  Kansas,  216  U.  S.  1,  54  L.  ed.  355, 
30  Sup.  Ct.  190,  case  reverses  State  ex  rel.  Coleman  v.  Western  Union 
Teleg.  Co.,  75  Kan.  609,  90  Pac.  299. 

Power  to  regulate  commerce  between  the  States  is  absolute,  except  as  limited 
by  other  provisions  of  the  Constitution.     Atlantic  Coast  Line  Rd.  Co.  v. 

Riverside  Mills,  219  U.  S.  186,  55  L.  ed. ,  31  Sup.  Ct.  164,  aff'g  168  Fed. 

987,  990. 

^  See  §  13,  herein. 

8  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436.    Cited  in  Atlantic  Coast  Line  Rd.  Co.  v.  Riverside  Mills, 

219  U.  S.  186,  202,  55  L.  ed. ,  31  Sup.  Ct.  164  (to  the  point  that  the 

power  to  regulate  extends  to  and  embraces  contracts  in  restraint  of  trade 
between  the  States),  which  also  cites  (to  same  point)  Addyston  Pipe  &  Steel 
Co.  v.  United  States,  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  ed.  136.  See 
§  206,  herein. 

» RaUroad  Co.  v.  Richmond,  19  Wall.  (86  U.  S.)  584,  22  L.  ed.  173. 

"Oklahoma  v.  Kansas  Natural  Gas  Co.,  221  U.  S.  229,  55  L.  ed.  , 

235 


§  207  CONSTITUTIONAL   LAW — 

§  207.  Regulation  of  Commerce — Extent  of  Interfer- 
ence with  Private  Contracts  or  Combinations — Inter- 
state and  Intrastate  Commerce. 

The  power  of  Congress  to  act  in  regard  to  matters 
delegated  to  it  is  not  hampered  by  contracts  made  in 
regard  to  such  matters  by  individuals;  but  contracts 
of  that  nature  are  made  subject  to  the  possibility  that 
even  if  valid  when  made  Congress  may  by  exercising  its 
power  render  them  invalid;  and  said  power  extends  to 
rendering  impossible  the  enforcement  by  suit  of  contracts 
between  carriers  and  shippers  although  valid  when 
made.^^  It  is  also  held,  however,  that  it  was  not  intended 
that  the  power  of  Congress  to  regulate  commerce  should 
be  exercised  so  as  to  interfere  with  private  contracts 
not  designed  at  the  time  they  were  made  to  create  im- 

31  Sup.  Ct.  ,  case  affirms  Kansas  Natural  Gas  Co.  v.  Haskell  (U.  S. 

C.  C),  172  Fed.  545.  One  of  the  allegations  in  this  case  (which  involved 
the  constitutionality  of  a  statute  of  Oklahoma  restricting  interstate  com- 
merce in  oil  and  natural  gas)  was:  "That  the  use  of  the  highways  is  a  por- 
tion of  the  public  property,  and  the  same  should  be  confined  to  those  who 
supply  all  alike  who  may  seek  to  be  served,  and  because  of  its  nature  and 
extent  and  because  of  the  enormous  amount  of  capital  needed  to  make 
practical  investments  tends  to  create  monopolies.  The  business  of  gas 
transportation  is  a  public  business  in  interstate  trade,  over  which  Congress 
has  never  legislated,  and  to  pertnit  complainant  to  carry  out  its  said  attempt 
and  intent  to  monopolize  the  natural  gas  of  the  State  and  transport  it  away 
without  regulation  by  the  State  laws  over  and  across  the  State's  highways 
would  he  to  devote  public  property  to  private  and  exclusive  use  against  the 
principles  of  the  Constitution  of  this  State  and  of  the  United  States,  and 
deprive  the  intending  purchasers  of  natural  gas  in  this  State  from  all 
supply  whatsoever."  A  final  decree  was  entered  below  declaring  that  the 
statute  in  question  "is  unreasonable,  unconstitutional,  invalid  and  void, 
and  of  no  force  and  effect  whatever "  and  a  perpetual  injunction  was 
awarded  against  its  enforcement.  "  The  basis  of  the  decree  of  the  court 
was  that  expressed  in  its  opinion  ruling  upon  the  demurrers,  to  wit,  that 
the  statute  of  Oklahoma  was  prohibitive  of  interstate  commerce  in  natural 
gas,  and  in  consequence  was  a  violation  of  the  commerce  clause  of  the 
Constitution  of  the  United  States,  and  that  being,  as  the  court  said,  its 
dominant  purpose,  it  would,  if  enforced  against  complainants,  'invade 
their  rights  as  guaranteed  by  the  Fourteenth  Amendment  of  the  National 
Constitution'  and  also  the  Constitution  of  the  State.  Kansas  Natural  Gas 
Co.  V.  Haskell,  172  Fed.  545."  Mem.,  Italics  in  above  quotation  are  the 
author's.  The  question  of  monopoly  was  not,  however,  discussed  in  the 
opinion  of  the  Supreme  Court. 

"  Louisville  &  Nashville  Rd.  Co.  v.  Mottley,  219  U.  S.  467,  55  L.  ed. 
,  31  Sup.  Ct.  265,  case  reverses  133  Ky.  652,  118  S.  W.  982. 

236 


FEDERAL   CONSTITUTION  §  208 

pediments  to  such  intercourse.'-  But  Congress  has  no 
jurisdiction  over  combinations  or  agreements  so  far  as 
they  relate  to  a  restraint  of  trade  or  commerce  whicli 
is  wholly  within  a  State;  nor  does  it  acquire  any  juris- 
diction over  that  part  of  a  combination  or  agreement 
which  relates  to  commerce  wholly  within  a  State,  by 
reason  of  the  fact  that  the  combination  also  covers  and 
regulates  commerce  which  is  interstate.  Congress  may, 
however,  under  the  commerce  clause  of  the  Constitution 
enact  such  legislation  as  shall  declare  void  and  prohibit 
the  performance  of  any  contract  between  individuals  or 
corporations  where  the  natural  and  direct  effect  of  such 
a  contract  shall  be,  when  carried  out,  to  directly  and  not 
as  a  mere  incident  to  other  and  innocent  purposes,  regu- 
late to  any  extent  interstate  or  foreign  commerce. '' 
Again,  the  protection  of  the  commerce  clause  extends 
beyond  the  strict  lines  of  contract,  and  inseparable  inci- 
dents of  a  transaction  of  interstate  commerce  based  on 
contract  are  also  interstate  commerce.'^ 

§  208.  Obligation  of  Contract  Clause  Not  a  Limitation 
on  Congress. 

The  prohibition  of  the  Constitution  of  the  United 
States  that  no  State  shall  pass  any  law  impairing  the  ob- 
ligation of  contracts  '^  is  held  not  to  constitute  a  limitation 
upon  the  powers  of  Congress  but  only  upon  the  States.'^ 

»  Railroad  Co.  v.  Richmond,  19  Wall.  (86  U.  S.)  584,  22  L.  ed.  173. 
See  also  Kentucky  &  Indiana  Bridge  Co.  v.  Louisville  &  Nashville  Rd. 
Co.  (U.  S.  C.  C),  37  Fed.  567. 

"  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  1,  44  L.  ed.  136, 
20  Sup.  Ct.  96.    But  compare  "Appendix  A,"  herein. 

"  Dozier  v.  Alabama,  218  U.  S.  124,  54  L.  ed.  965,  30  Sup.  Ct.  649,  re- 
versing 154  Ala.  83. 

That  "commerce"  in  Federal  Constitution  comprehemls  all  of  the  inter- 
course between  the  parties,  ordinarily  involved,  etc,  see  §  16,  herein. 

1^  Const.  U.  S.,  Art.  I,  §  10,  cl.  1.    See  Joyce  on  Franchises,  §§  301-340. 

Contract  impairment  clause — validity  of  Mississippi  Anti-Trust  Statute, 
§5022  (4437).  See  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433, 
54  L.  ed.  826,  30  Sup.  Ct.  695.  See  chaps.  22  et  seq.,  herein  on  State 
statutes. 

"  Ansley  v.  Ainsworth,  4  Ind.  Ty.  508,  69  S.  W.  884.  Compare,  how- 
ever, Hopkins  v.  Jones,  22  Ind.  310;  Territory  v.  Reyburn,  1  Kan.  551. 

237 


§§  209-211  CONSTITUTIONAL   LAW — 

§  209.  Impairment  of  Obligation  of  Contracts— 
Whether  State  Constitution  a  "  Law." 

This  prohibition  of  the  Federal  Constitution  is  held 
to  apply  to  the  Constitution  as  well  as  to  the  laws  of 
each  State.  ^^  But  it  is  also  decided  that  the  Constitution 
of  a  State  cannot  impair  the  obligation  of  a  contract;  ^^ 
and  that  a  State  Constitution  is  not  a  contract  within 
this  constitutional  provision.  ^^ 

§  210.  Impairment  of  Obligation  of  Contracts — 
Whether  "  Law  "  Applies  only  to  State  Legislative  Enact- 
ments. 

Notwithstanding  the  decisions  given  under  the  above 
section  it  is  also  decided  that  this  constitutional  provi- 
sion applies  only  to  legislative  enactments  of  the  States;  ^ 
that  it  is  aimed  at  the  legislative  power  of  the  State.  ^^ 

§  211.  Impairment  of  Obligation  of  Contracts— 
Whether  Municipal  Ordinance  a  "  Law." 

A  municipal  ordinance  not  passed  under  legislative 
authority  is  not  a  law  of  the  State  within  the  meaning 
of  the  obligation  of  contract  clause  of  the  Federal  Con- 
stitution."   But  where  a  city  is  empowered  by  statute 

"  New  Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650,  29  L.  ed. 
516,  6  Sup.  Ct.  252;  Railroad  Co.  v.  McClure,  10  Wall.  (77  U.  S.)  511,  19 
L.  ed.  997  (a  Constitution  of  a  State  admitted  in  this  case  to  be  a  "law" 
within  the  impairment  of  obligation  clause),  cited  in  Turner  v.  Wilkes 
County  Commrs.,  17.3  U.  S.  461,  464,  19  Sup.  Ct.  464,  43  L.  ed.  465;  Cen- 
tral Land  Co.  v.  Laidley,  159  U.  S.  103,  112,  16  Sup.  Ct.  80,  40  L.  ed.  91; 
Shreveport  v.  Cole,  129  U.  S.  36,  42,  32  L.  ed.  589,  9  Sup.  Ct.  210;  New 
Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650,  673,  29  L.  ed.  516, 
6  Sup.  Ct.  252;  Louisiana  v.  Jumel,  107  U.  S.  711,  760,  27  L.  ed.  448,  2 
Sup.  Ct.  128  (in  dissenting  opinion). 

This  provision  has  reference  only  to  the  laws,  that  is,  to  the  constitutional 
provisions  or  to  the  legislative  enactments,  of  a  State.  Hanford  v.  Davies, 
163  U.  S.  273,  16  Sup.  Ct.  1051,  41  L.  ed.  157. 

'8  Moultrie  County  v.  Rockingham  Ten-Cent  Savings  Bank,  92  U.  S. 
631,  23  L.  ed.  631. 

"  Church  V.  Kelsey,  121  U.  S.  282,  7  Sup.  Ct.  897,  30  L.  ed.  960. 

20  Weber  v.  Rogan,  188  U.  S.  10,  23  Sup.  Ct.  263,  47  L.  ed.  363. 

"  New  Orleans  Water  Works  Co.  v.  Louisiana  Sugar  Ref.  Co.,  125  U. 
S.  18,  8  Sup.  Ct.  741,  31  L.  ed.  607. 

22  Hamilton  Gas  Light  Co.  v.  Hamilton  City,  146  U.  S.  258,  36  L.  ed. 
963. 

238 


FEDERAL   CONSTITUTION  §  212 

to  grant  exclusive  franchises  and  to  contract  for  a  water 
supply  its  enactments  are  passed  in  a  legislative  capacity 
and  constitute  State  laws  under  the  obligation  of  con- 
tract clause.  2^ 

§  212.  Impairment  of  Obligation  of  Contracts— Word 
"  Law  "  Does  Not  Apply  to  Judicial  Decisions,  etc.,  Un- 
less.24 

Generally  stated  this  constitutional  provision  is  not 
aimed  at  the  decisions  of  the  State  courts,  or  acts  of 
executive -"or  administrative  boards  or  officers,  or  doings 
of  corporations  or  individuals.-''  That  is,  it  has  no  refer- 
ence to  judicial  decisions  or  the  acts  of  State  tribunals 
or  officers  under  statutes  in  force  at  the  time  of  the  mak- 
ing of  the  contract,  the  obligation  of  which  is  alleged  to 
have  been  impaired.-®  Or  to  state  the  rule  as  qualified 
or  limited,  said  constitutional  provision  has  no  reference 
to  judicial  decisions,  or  judgment  of  the  highest  court  of 
a  State,  unless  by  its  terms  or  necessary  operation  it 
gives  effect  to  some  provision  of  the  State  Constitution, 
or  some  legislative  enactment  of  the  State  claimed  to 
impair  the  contract  in  question.-^ 

2'  American  Waterworks  &  Guarantee  Co.  v.  Home  Water  Co.  (U.  S. 
C.  C),  115  Fed.  171. 

2*  See  Joyce  on  Franchises,  §  306. 

**  New  Orleans  Water  Works  Co.  v.  Louisiana  Sugar  Ref.  Co.,  125  U. 
S.  18,  8  Sup.  Ct.  741,  31  L.  ed.  607. 

»  Hanford  v.  Davies,  163  U.  S.  273,  16  Sup.  Ct.  1051,  41  L.  ed.  157, 
followed  in  Weber  v.  Rogan,  188  U.  S.  10,  23  Sup.  Ct.  263,  47  L.  ed.  363. 

"  Lehigh  Water  Co.  v.  Easton,  121  U.  S.  388,  7  Sup.  Ct.  916,  30  L.  ed. 
1059. 

When  judicial  decisions  do  not  impair  obligation  of  contract,  see  Baltzer 
V.  North  Carolina,  161  U.  S.  240,  40  L.  ed.  684,  16  Sup.  Ct.  502;  Olcott  v. 
Supervisors,  16  Wall.  (83  U.  S.),  678,  21  L.  ed.  382;  City  v.  Lamson,  9 
Wall.  (76  U.  S.)  477,  19  L.  ed.  725;  Chicago  v.  Sheldon,  9  Wall.  (76  U.  S.) 
50,  19  L.  ed.  594;  Thomas  v.  Lee  County,  3  Wall.  (70  U.  S.)  327,  18  L.  ed. 
177;  Havemeyer  v.  Iowa  County,  3  Wall.  (70  U.  S.)  294,  18  L.  ed.  38; 
Ohio  Life  Ins.  &  Trust  Co.  v.  Debolt,  16  How.  (57  U.  S.)  416,  14  L.  ed. 
997. 

When  prior  construction  of  statute  is  changed  by  judicial  decision,  obliga- 
tion of  contract  not  impaired,  see  King  v.  Phoenix  Ins.  Co.  of  Brooklyn,  195 
Mo.  290,  92  S.  W.  892. 

When  change  of  judicial  decision  does  not  impair  obligation  of  contract, 
see  Swaneon  v.  City  of  Ottumwa,  131  Iowa,  540,  106  N.  W.  9. 

239 


§§  213,  214  CONSTITUTIONAL   LAW — 

§  213.  Obligation  of  Contract  Clause  Refers  to  Sub- 
sequently Enacted  "  Law  "  of  State. 

The  contract  clause  of  the  Federal  Constitution  neces- 
sarily'' has  reference  only  to  a  statute  of  a  State  enacted 
after  .the  making  of  the  particular  contract  in  suit  whose 
obligation  is  alleged  to  have  been  impaired. ^^  So  where 
the  statute  in  question  was  in  effect  when  the  contract 
was  made  there  is  no  impairment.  ^^  But  an  anti- trust 
State  statute,  applying  to  carrying  on  thereafter  of  prior 
formed  trusts,  has  been  held  not  to  impair  the  obligation 
of  contract.^" 

§  214.  Same  Subject— Change  of  Remedy  or  Pro- 
cedure. 

In  an  early  case  in  the  Federal  Supreme  Court  it  is  held 
that  the  obligation  of  a  contract  consists  in  its  binding 
force  on  the  party  who  makes  it;  that  this  depends  upon 
the  laws  in  existence  when  it  is  made;  that  these  are  nec- 
essarily referred  to  in  all  contracts,  and  form  a  part  of 
them  as  the  measure  of  the  obligation  to  perform  them  by 
the  one  party,  and  the  right  acquired  by  the  other;  hence 
any  law  which  in  its  operation  amounts  to  a  denial  or  ob- 
struction of  the  rights  accruing  by  a  contract,  though 
professing  to  act  only  on  the  remedy,  is  directly  obnoxious 
to  the  prohibition  of  the  Constitution.^^     In  a  later  case 

28  Oshkosh  Waterworks  Co.  v.  Oshkosh,  187  U.  S.  437,  47  L.  ed.  249,  23 
Sup.  Ct.  234;  Lehigh  Water  Co.  v.  Easton,  121  U.  S.  388,  7  Sup.  Ct.  916, 
30  L.  ed.  1059. 

29  Blackstone  v.  Miller,  188  U.  S.  189,  47  L.  ed.  439,  23  Sup.  Ct.  277, 
aff'g  Blackstone's  Estate,  In  re,  171  N.  Y.  682,  64  N.  E.  1118. 

30  State  V.  Missouri,  K.  &  T.  R.  Co.  of  Texas,  99  Tex.  516,  91  S.  W.  214, 
Acts  of  1903,  p.  119,  chap.  94.  See  chaps.  22  et  seq.,  herein,  on  State  Anti- 
Trust  Statutes.    See  §  207,  herein. 

'•  McCracken  v.  Hayward,  2  How.  (43  U.  S.)  608,  11  L.  ed.  397,  cited  in 
Virginia  Coupon  Cases  (Poindexter  v.  Greenhow),  114  U.  S.  270,  304,  29 
L.  ed.  185,  6  Sup.  Ct.  903;  Connecticut  Mutual  Life  Ins.  Co.  v.  Cushman, 
108  U.  S.  51,  65,  2  Sup.  Ct.  236,  27  L.  ed.  648;  Antoni  v.  Greenhow,  107  U. 
S.  769,  795,  810,  2  SUp.  Ct.  91,  27  L.  ed.  468;  Louisiana  v.  Jumel,  107  U.  S. 
711,  7.50,  2  Sup.  Ct.  128,  27  L.  ed.  448;  Pritchard  v.  Norton,  106  U.  S.  124, 
132,  1  Sup.  Ct.  102,  27  L.  ed.  104;  Daniels  v.  Tearney,  102  U.  S.  415,  419, 
26  L.  ed.  187;  Curran  v.  Arkansas,  15  How.  (56  U.  S.)  304,  310,  14  L.  ed. 
705;  West  River  Bridge  Co.  v.  Dix,  6  How.  (47  U.  S.)  507,  540,  12  L.  ed. 

240 


FEDERAL   CONSTITUTION  §  214 

in  the  same  court  it  is  also  determined  that  the  ideas  of 
the  validity  of  a  contract  and  of  the  remedy  to  enforce 
it  are  inseparable;  and  both  are  parts  of  the  obHgation 
which  is  guaranteed  by  the  Constitution  against  the  in- 
vasion.^^  Again,  in  a  still  later  case  it  is  decided  that 
the  remedy  subsisting  in  a  State  when  and  where  a 
contract  is  made,  and  is  to  be  performed,  is  a  part 
of  its  obligation;  and  any  subsequent  law  of  the  State, 
which  so  affects  that  remedy  as  substantially  to  im- 
pair and  lessen  the  value  of  the  contract  is  forbidden 
by  the  Federal  Constitution,  and,  therefore,  void."  But 
under  a  subsequent  decision  in  that  court  it  is  stated 
that  the  rule  is  that  while,  in  a  general  sense,  the  laws 
in  force  at  the  time  a  contract  is  made  enter  into  its 
obligation,  parties  have  no  vested  right  in  the  particular 
remedies  or  modes  of  procedure  then  existing.  The  legis- 
lature may  not  withdraw  all  remedies,  and  thus,  in 
effect,  destroy  the  contract,  nor  impose  such  new  restric- 

535;  Planters'  Bank  v.  Sharp,  6  How.  (47  U.  S.)  301,  328,  330,  332,  12  L. 
ed.  447. 

Compare  §  207,  herein. 

The  laws  which  exist  at  the  time  of  the  making  a  contract,  and  in  the  place 
where  it  is  made  and  to  be  performed,  enter  into  and  make  part  of  it,  This 
embraces  those  laws  alike  which  affect  its  validity,  construction,  discharge 
and  enforcement.  Walker  v.  Whitehead,  16  WaU.  (83  U.  S.)  314,  21  L.  ed. 
357.    See  this  case  in  note  33,  below. 

«  White  V.  Hard,  13  Wall.  (80  U.  S.)  646,  20  L.  ed.  685.  Compare  §  207, 
herein. 

"  Edwards  v.  Kearzey,  96  U.  S.  595,  24  L.  ed.  793  (citing  at  p.  601): 
McCrackon  v.  Hayward,  2  How.  (43  U.  S.)  608,  11  L.  ed.  397,  above  con- 
sidered, cited  in  Denny  v.  Bennett,  128  U.  S.  489,  494,  9  Sup.  Ct.  134,  32 
L.  ed.  491;  Scibert  v.  Lewis,  122  U.  S.  284,  294,  30  L.  ed.  1161,  7  Sup.  Ct. 
1190;  Mobile  v.  Watson,  116  U.  S.  289,  305,  6  Sup.  Ct.  398,  29  L.  ed.  620; 
Connecticut  Mutual  Life  Ins.  Co.  v.  Cuahman,  108  U.  S.  51,  65,  2  Sup.  Ct. 
236,  27  L.  ed.  648;  Antoni  v.  Greenhow,  107  U.  S.  769,  798,  2  Sup.  Ct.  91, 
27  L.  ed.  468;  Louisiana  v.  Jumel,  107  U.  S.  711,  750,  27  L.  ed.  448,  2  Sup. 
Ct.  128;  Ivring  v.  Missouri,  107  U.  S.  221,  233,  27  L.  ed.  506,  2  Sup.  Ct. 
443;  Daniels  v.  Teamey,  102  U.  S.  415,  419,  26  L.  ed.  187;  Brine  v.  Insur- 
ance Co.,  96  U.  S.  627,  637,  24  L.  ed.  858;  Low  v.  Blackford,  87  Fed.  406; 
Jones  V.  Great  South  Fireproof  Hotel  Co.,  86  Fed.  387;  The  Vigilancia,  73 
Fed.  457.    See  §  207,  herein. 

The  remedy  or  means  of  enforcing  a  contract  is  part  of  that  obligation  of  a 
contract  which  the  Constitution  protects  against  being  impaired  by  any 
law  passed  by  a  State.  Walker  v.  Whitehead,  16  Wall.  (83  U.  S.)  3\i,  21 
L.  ed.  357. 

16  241 


§§  215,  216  CONSTITUTIONAL   LAW — 

tions  or  conditions  as  would  materially  delay  or  embarrass 
the  enforcement  of  rights  under  the  contract,  according 
to  the  course  of  justice  as  established  when  the  contract 
was  made.  Neither  could  be  done  without  impairing  the 
obligation  of  the  contract.  But  the  legislature  may  change 
existing  remedies  or  modes  of  procedure,  without  impair- 
ing the  obligation  of  contracts,  if  a  substantial  or  efficacious 
remedy  remains  or  is  provided,  by  means  of  which  a  party 
can  enforce  his  rights  under  the  contract.^'* 

§  215.  Nature  of  Laws  Prohibited  by  Obligation  of 
Contract  Clause. 

The  Constitution  intended  to  prohibit  all  such  laws 
impairing  the  obligation  of  contracts  as  interpolate  some 
new  term  or  condition,  foreign  to  the  original  contract.^^ 
Nor  does  the  invalidity  of  the  State  law,  as  impairing 
the  obligation  of  contracts,  depend  upon  the  extent  of 
the  change  which  the  law  effects  in  the  contract.  Any 
deviation  from  its  terms,  by  postponing  or  accelerating 
the  period  of  its  performance,  imposing  conditions  not  ex- 
pressed in  the  contract,  or  dispensing  with  the  perform- 
ance of  those  which  are  expressed,  however  minute  or 
apparently  immaterial  in  their  effect  upon  the  contract 
impairs  its  obligation. ^^ 

§  216.  Nature  of  Contracts  Embraced  by  Obligation 
of  Contract  Clause— Between  What  Parties. 

This  prohibition  embraces  all  contracts,  executed  or 
executory,  between  private  individuals,  or  a  State  and 
individuals  or  corporations,  or  between  the  States  them- 

"  Oshkosh  Water  Co.  v.  Oshkosh,  187  U.  S.  437,  47  L.  ed.  249,  23  Sup. 
Ct.  234. 

When  change  of  remedy  doen  not  imipair  contract  obligation,  see  Sims  v. 
Steadman,  62  S.  C.  300,  40  S.  E.  677. 

Enlargement  oj  remedies  of  creditors  of  corporation  does  not  impair  contract 
obligation.     Converse  v.  /Etna  National  Bk.,  79  Conn.  163,  64  Atl.  341. 

When  change  of  reynedy  impairs  contract  obligation,  see  Thompson  v. 
Cobb,  95  Tex.  140,  6.5  S.  W.  1090. 

"  West  River  Bridge  Co.  v.  Dix,  6  How.  (47  U.  S.)  301,  12  L.  ed.  447. 

'6  Green  v.  Biddle,  8  Wheat.  (21  U.  S.)  1,  5  L.  ed.  547. 

242 


FEDERAL   CONSTITUTION  §  217 

selves.^'  It  is  held,  however,  that  the  Federal  Consti- 
tution is  not  to  be  construed  as  intended  to  restrict  the 
States  in  the  regulation  of  their  civil  institutions  adopted 
for  internal  government,  and  the  constitutional  provision 
forbidding  the  States  from  impairing  the  obligation  of 
contracts  is  not  to  be  understood  to  embrace  other  con- 
tracts than  those  which  respect  property  or  some  object 
of  value  and  confer  rights  which  may  be  asserted  in  a 
court  of  justice. ^^  But  this  clause  does  not  protect 
ultra  vires  contracts;  ^^  nor  does  it  give  validity  to  con- 
tracts that  are  properly  prohibited  by  statute; ''°  and  a 
simple  breach  of  contract  by  a  municipality  does  not 
amount  to  an  act  impairing  the  obligation  of  the  con- 
tract."^ 

§  217.  Nature  of  Contracts — Obligation  of  Contract 
Clause  Embraces  Implied  and  Express  Contracts. 

This  constitutional  provision  applies  to  and  embraces 
implied  as  well  as  express  contracts."^  In  a  case  in  the 
Federal  Supreme  Court  it  appeared  that  by  a  State 
statute  cities  therein  might  erect  and  operate  their  own 
electric  light  plants,  or  they  might  grant  to  persons  or 
corporations  permission  to  erect  and  operate  such  plants 
for  not  exceeding  a  period  of  twenty  years.  A  certain  city, 
by  ordinance  adopted  subsequent  to  the  statute,  granted 
such  right  for  twenty  years  to  a  corporation  which  erected, 
operated  and  continued  to  operate  the  plant.  The  ordi- 
nance conferred  rights,  exacted  obligations,  fixed  rates 
and  provided  for  its  written  acceptance  and  the  corpo- 
ration so  accepted  it.    By  a  later  ordinance  the  city  pro- 

•^  Green  v.  Biddle,  8  Wheat.  (21  U.  S.)  1,  5  L.  ed.  547. 

"  Dartmouth  College  v.  Woodward,  4  Wheat.  (17  U.  S.)  518,  4  L.  ed. 
620,  per  the  court. 

"Westminster  Water  Co.  v.  City  of  Westminster,  98  Md.  551,  56  Atl. 
990. 

«  Griffith  V.  Connecticut,  218  U.  S.  563,  54  L.  ed.  1151,  30  Sup.  Ct.  134, 
case  affirms  83  Conn.  1. 

*'  Shawnee  Sewerage  &  Drainage  Co.  v.  Stearns,  220  U.  S.  462,  55  L.  ed. 
— ,  31  Sup.  Ct. . 

"Fisk  V.  Jefferson  Police  Jury,  116  U.  S.  131,  29  L.  ed.  587,  6  Sup.  Ct. 
329. 

243 


§  218  CONSTITUTIONAL   LAW — 

vided  for  the  issue  of  bonds  to  build  its  own  plant.  In 
an  action  brought  by  the  light  company  to  restrain  the 
erection  of  the  plant  during  the  continuance  of  the  twenty- 
year  term,  on  the  ground  that  the  ordinance  violated  the 
Federal  Constitution  in  that  it  impaired  the  obligation 
of  the  contract  existing  under  the  ordinance  granting 
the  franchise,  it  was  held  that  as  such  ordinance  did  not 
provide  that  the  city  would  not  erect  its  own  plant  no 
such  provision  could  be  implied.  It  was  also  decided  that 
the  fact  that  cities  could  elect  under  the  above  statute 
either  to  erect  their  own  plants  or  grant  franchises,  could 
not  in  case  of  their  election  to  grant  the  franchise  be 
considered  as  an  implied  contract  not  to  erect  their  own 
jDlants  during  the  period  for  which  the  franchise  was 
granted.  ^^ 

§  218.  Obligation  of  Contracts— Legal  and  Legislative 
Contracts — Construction  of  Contract  ^Authority  of  Fed- 
eral Supreme  Court. 

Before  the  Federal  Supreme  Court  can  be  asked  to 
determine  whether  a  statute  has  impaired  the  obligation 
of  a  contract,  it  must  be  made  to  appear  that  there  was 
a  legal  contract  subject  to  impairment,  and  some  ground 
to  believe  that  it  has  been  impaired."*^  And  that  court 
determines  for  itself  whether  an  act  of  a  State  legislature 
amounts  to  a  contract  within  the  impairment  of  obliga- 
tion clause.  ^^  So  whether  an  alleged  contract  arises  from 
State  legislation,  or  by  agreement  with  the  agents  of  a 
State,  by  its  authority,  or  by  stipulation  between  indi- 

«  Joplin,  City  of,  v.  Southwest  Missouri  Light  Co.,  191  U.  S.  150,  48 
L.  ed.  127,  24  Sup.  Ct.  43,  rev'g  Southwestern  Missouri  Light  Co.  v.  City 
of  Joplin  (U.  S.  C.  C),  113  Fed.  817. 

**  New  Orleans  v.  New  Orleans  Water  Works  Co.,  142  U.  S.  79,  35  L. 
ed.  943,  12  Sup.  Ct.  142. 

*'  Sullivan  v.  Texas,  207  U.  S.  416,  28  Sup.  Ct.  215,  52  L.  ed.  274,  afT'g 
95  S.  W.  645. 

The  doctrine  that  the  Federal  Supreme  Court  possesses  paramount  authority 
when  reviewing  the  final  judgment  of  a  State  court  upholding  a  State  enact- 
ment alleged  to  be  in  violation  of  the  contract  clause  of  the  Constitution, 
to  determine  for  itself  the  existence  or  nonexistence  of  the  contract  set  up, 
and  whether  its  obligation  has  been  impaired  by  the  State  enactment,  haa 
been  affirm<id  in  numerous  other  cases.  Douglas  v.  Kentucky,  168  U,  S. 
488,  502,  42  L.  ed.  553,  18  Sup.  Ct.  199. 

244 


FEDERAL   CONSTITUTION  §  219 

viduals  exclusively,  the  Federal  Supreme  Court  will  upon 
its  own  judgment  and  independently  of  the  adjudica- 
tion of  the  State  court,  decide  whether  there  exists  a  con- 
tract within  the  protection  of  the  Constitution  of  the 
United  States.'*^  Again,  although  decisions  of  the  highest 
court  of  a  State  are  not  binding  on  the  Supreme  Court 
of  the  United  States  in  determining  whether  a  contract 
was  made  by  legislative  action  of  that  State  which  is 
entitled  to  protection  under  the  impairment  of  obligation 
clause  of  the  Federal  Constitution,  the  said  Supreme  Court 
will  consider  the  decisions  of  the  State  court  on  the  point 
in  question.''^ 

§  219.  Bridges— Exclusive  Grant  or  Privilege— Im- 
pairment of  Contract  Obligation. 

In  the  well-known  Charles  River  Bridge  case  it  was 
held  that  there  was  no  exclusive  privilege  given  to  the 
proprietors  of  the  bridge  over  the  waters  of  Charles  River 
above  or  below  their  bridge;  no  right  to  erect  another 
bridge  themselves,  nor  to  prevent  others  from  erecting 
one;  no  engagement  from  the  State,  that  another  should 
not  be  erected;  and  no  understanding  not  to  sanction 
competition,  nor  to  make  improvements  that  might 
diminish  the  amount  of  its  income.  That  upon  all  these 
subjects  the  charter  was  silent;  and  nothing  was  said 
in  it  about  a  line  of  travel  in  which  they  were  to  have 
exclusive  privileges,  and  that  no  words  were  used,  from 
which  an  intention  to  grant  any  of  these  rights  could 
be  inferred.  ^^ 

«  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115  U.  S.  683,  29  L.  ed.  510, 
6  Sup.  Ct.  265. 

"  Blair  v.  City  of  Chicago,  201  U.  S.  400,  26  Sup.  Ct.  427,  50  L.  ed.  801, 
rev'g  Covin  v.  City  of  Chicago  (U.  S.  C.  C),  132  Fed.  848,  a  case  con- 
cerning the  extension  of  a  street  railway  franchise  and  the  effect  of  a 
subsequent  general  statute  limiting  the  time  within  which  a  franchise 
could  be  granted,  also  holding  that  a  repeal  of  a  statute  cannot  operate  to 
impair  the  obhgation  of  contracts  in  existence  at  the  time  of  enactment  of 
said  statute  whereby  grants  to  street  railroad  companies,  as  to  the  nature 
of  the  motive  power  used,  were  ratified. 

"Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  9  L. 
ed.  773.    The  question  of  impairment  of  obligation  of  contracts  and  vested 

245 


§§  220,  221  CONSTITUTIONAL   LAW — 

A  State  statute,  by  which  the  State  gave  power  to 
certain  commissioners  to  contract  with  any  persons  for 
the  building  of  a  bridge  over  a  certain  river,  and  by  the 
same  statute  enacted  that  the  "said  contract  should  be 
valid  on  the  parties  contracting  as  well  as  on  the  State" 
enacting  the  statute;  and  that  it  should  not  be  ''lawful" 
for  any  person  or  persons  whatsoever  to  erect  ''any  other 
bridge  over  or  across  the  said  river  for  ninety-nine  years," 
is  a  contract,  whose  obligation  the  State  can  pass  no 
law  to  impair.''^ 

§  220.  Ferry— Exclusive  Grant— Impairment  of  Con- 
tract Obligation. 

In  case  of  a  ferry  franchise  under  a  statute  of  exclusion 
of  other  ferries  within  a  limited  distance  and  which  is 
also  an  act  of  general  legislation  it  is  held  that  it  is  sub- 
ject to  repeal  by  the  legislature;  that  its  hands  were 
not  tied  and  that  it  was  not  prevented  from  authorizing 
another  ferry  within  the  limited  distance  whenever  in  its 
judgment  it  saw  fit.^° 

§  221.  Railroad  Charter— Provision  Against  Compet- 
ing Lines — Impairment  of  Contract  Obligation. 

Where  a  State  legislature  incorporates  the  stockhold- 
ers of  a  railroad  and  pledges  itself  in  the  charter  not  to 
allow  competing  lines,  its  subsequent  incorporation  of 
another  railroad,  authorizing  it  to  cross  the  track  of  the 
other  and  continue  its  road  to  one  of  its  termini,  does  not 
impair  the  obligation  of  the  contract  with  the  first  com- 
pany; nor  is  the  obligation  of  contract  impaired  by 
crossing  the  road.^^ 

rights  was  raised.  See  Ohio  Life  Ins.  &  Trust  Co.  v.  Debolt,  16  How.  (57 
U.  S.)  416,  442,  14  L.  ed.  997,  1008.  See  Joyce  on  Franchises,  §§  4,  15,  22, 
138,  257,  258,  311. 

«  Bridge  Proprietors  v.  Hoboken  Company,  1  Wall.  (68  U.  S.)  116,  17 
L.  ed.  571. 

«>  Williams  v.  Wingo,  177  U.  S.  601,  20  Sup.  Ct.  793,  44  L.  ed.  905.  See 
also  Wheeling  &  Belmont  Bridge  Co.  v.  Wheeling  Bridge  Co.,  138  U.  S. 
287,  11  Sup.  Ct.  301,  .34  L.  ed.  967.    See  Joyce  on  Franchises,  §§  15,  311. 

"  Richmond,  Fredericksburg  &  Potomac  Rd.  Co.  v.  Louisa  Rd.  Co.,  13 
How.  (54  U.  S.)  71,  14  L.  ed.  75. 

246 


FEDERAL   CONSTITUTION  §§  222,  223 

§  222.  Telephone  Company's  Exclusive  Grant— Im- 
pairment of  Contract  Obligation. 

The  acceptance  of  a  special  act  giving  a  telephone 
company  the  exclusive  right  to  the  use  of  streets  for  its 
purposes  for  a  term  of  years  does  not  operate  to  divest 
the  company  of  its  vested  rights  under  a  general  statute 
to  exercise  its  franchises  after  its  exclusive  grant  has 
terminated,  nor  can  it  be  deprived  thereof  by  legislative 
action  of  the  State  or  city.^^ 

§  223.  Electric  Lighting— Exclusive  Grant  or  Privi- 
lege—Impairment of  Contract  Obligation. 

If  a  town  council  has  no  power,  either  under  its  charter 
or  under  the  general  statute  law  governing  towns  and 
cities,  to  grant  an  exclusive  franchise  for  a  term  of  years 
to  a  private  corporation  to  use  its  streets  for  the  convers- 
ance of  electricity  for  public  use  in  the  city,  such  exclu- 
sive grant  is  void  and  not  a  valid  contract  protected  by 
the  obligation  of  contract  clause  of  the  Constitution; 
and  such  exclusive  grant  does  not  prevent  the  town  from 
granting  to  another  corporation  within  the  term  the 
privilege  to  occupy  its  streets  for  the  same  purpose.  ^^ 
And  although,  while  private  persons  are  operating  elec- 
tric lighting  plants  for  public  and  private  use,  under  a 
grant  of  exclusive  franchises  with  a  number  of  unexpired 
years'  duration,  an  ordinance  is  passed,  by  virtue  of  a 
statute  empowering  cities  to  purchase,  erect  and  main- 
tain such  plants,  whereby  the  issue  of  bonds  for  that 
purpose  is  authorized,  still  there  is  no  impairment  of  the 
obligation  of  contract.^''    If  the  exclusive  right  of  occu- 

"  Abbott  V.  City  of  Duluth,  104  Fed.  833,  aff'd  117  Fed.  137.  See  Joyce 
on  Franchises,  §§  311,  314. 

"  Clarksburg  Electric  Light  Co.  v.  City  of  Clarksburg,  47  W.  Va.  739, 
50  L.  R.  A.  142,  35  S.  E.  994,  7  Am.  Elcc.  Cas.  25.  See  Water,  Light  &  Gas 
Co.  V.  Hutchinson,  207  U.  S.  385,  28  Sup.  Ct.  135,  52  L.  ed.  257,  noted 
under  §  225,  herein. 

"  State  ex  rel.  Town  of  Canton  v.  Allen,  178  Mo.  555,  77  S.  W.  868, 
under  Fed.  Const.,  Art.  I,  §  10,  cl.  1,  and  Mo.  Const.,  Art.  2,  §  15;  Rev. 
Stat.  Mo.,  1899,  §  G275.  See  Joplin,  City  of,  v.  Southwest  Missouri  Light 
Co.,  191  U.  S.  150,  48  L.  ed.  127,  24  Sup.  Ct.  43,  rev'g  Southwestern 
Missouri  Light  Co.  v.  City  of  Joplin  (U.  S.  C.  C),  113  Fed.  817.  Consid- 
ered under  §  217,  herein. 

247 


§§  224,  225  CONSTITUTIONAL   LAW — 

pation  of  city  streets  is  granted,  on  certain  conditions, 
to  an  electric  light  plant,  by  a  citj''  ordinance,  as  where 
it  is  not  obligated  to  furnish  light  until  it  can  make  a 
certain  per  cent  profit,  the  grantee  must  begin  prepara- 
tions for  erecting  such  plant,  that  is,  something  must  be 
done,  before  it  can  avail  itself  of  the  protection  against 
the  impairment  of  obligation  of  contract  provision  of  the 
Constitution." 

§  224.  Exclusive  Right  to  Supply  Gas— Impairment  of 
Contract  Obligation. 

A  legislative  grant  of  an  exclusive  right  to  supply  gas 
to  a  municipality  and  its  inhabitants,  through  pipes  and 
mains  laid  in  the  public  streets,  and  upon  condition  of 
the  perfomiance  of  a  public  service  by  the  grantee,  is 
the  grant  of  a  franchise  vested  in  the  State,  in  considera- 
tion of  the  performance  of  a  public  service,  and  after  per- 
formance by  the  grantee,  is  a  contract  protected  by  the 
Constitution  of  the  United  States  against  State  legislation 
to  impair  it.^^  But  contract  rights,  arising  from  an  ex- 
clusive right  to  supply  gas  to  a  city  and  its  inhabitants 
are  not  impaired  by  charges  against  the  gas  company 
occasioned  by  a  necessary  public  improvement,  such  as 
a  drainage  system  undertaken  by  a  municipality  under 
statutory  authority." 

§  225.  Water  Companies— Exclusive  Contracts, Grants 
or  Privileges — Impairment  of  Contract  Obligation. 

A  contract  made  by  a  borough  with  a  water  company 

When  grant  by  city  to  electric  light  company  cannot  be  changed  or  abrogated; 
a  question  of  obligation  of  contract.  Seo  Hot  Springs  Electric  Light  Co.  v. 
City  of  Hot  Springs,  70  Ark.  .300,  67  S.  W.  76L 

"  Capital  City  Light  &  Fuel  Co.  v.  City  of  Tallahassee,  42  Fla.  462,  28 
So.  810;  case  affirmed  in  186  U.  S.  401,  22  Sup.  Ct.  866,  46  L.  ed.  1219. 
Laws  of  Fla.,  chap.  4000,  Act  Fla.,  May  27,  1899,  empowered  city  to  con- 
struct and  maintain  its  own  electric  light  plant. 

«  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115  U.  S.  683,  29  L.  ed.  510, 
6  Sup.  Ct.  265;  New  Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S. 
650,  29  L.  ed.  516,  6  Sup.  Ct.  2.52. 

"  New  Orleans  Gas  Light  Co.  v.  Drainage  Commission,  111  La.  838,  35 
So.  929;  case  affirmed,  197  U.  S.  453,  49  L.  ed.  831,  25  Sup.  Ct.  471. 

248 


FEDERAL   CONSTITUTION  §  225 

for  supplying  the  borough  and  its  citizens  with  water 
for  certain  purposes  cannot  lawfully  be  impaired  by  the 
erection  by  the  borough  of  its  own  waterworks;  a  statute 
empowering  the  same  is  unconstitutional  when  it  tends 
to  the  avoidance  or  violation  of  existing  contracts.^* 
But  a  contract  with  a  municipal  corporation,  whereby 
the  corporation  grants  to  the  contractor  the  sole  privi- 
lege of  supplying  the  municipality  with  water  from  a 
designated  source  for  a  term  of  years,  is  not  impaired, 
within  the  meaning  of  the  contract  clause  of  the  Con- 
stitution, by  a  grant  to  another  party  of  a  privilege  to 
supply  it  with  water  from  a  different  source.^'  And  where 
a  water  company  acquires  no  contract  right,  either  ex- 
press or  implied,  or  any  exclusive  privilege  of  using  the 
streets  of  a  village  for  supplying  it  with  water,  but  simply, 
by  compliance  with  a  statute,  acquires  the  right  to  be 
a  corporation  and  the  authority  to  lay  its  ^pipes  in  the 
streets  of  a  village  for  a  certain  time  and  there  is  nothing 
after  the  expiration  of  that  period  upon  which  to  base 
an  implied  contract,  there  exists  no  right  to  be  protected 
by  the  Federal  Constitution.*'"  Again,  where  a  city,  by 
ordinance,  in  express  terms  and  for  consideration  received 
granted  exclusive  rights  and  privileges  to  a  company, 

^  Potter  County  Water  Co.  v.  Austin  Borough,  206  Pa.  St.  297,  55  Atl. 
991. 

Obligation  of  contract — Grant  of  exclusive  municipal  water  franchise  pro- 
tected. See  New  Orleans  Water-Works  Co.  v.  Rivers,  115  U.  S.  674,  29  L. 
ed.  525,  6  Sup.  Ct.  273  (following  115  U.  S.  650,  683,  cited  under  §224, 
herein),  followed  in  St.  Tammany  Water  Works  v.  New  Orleans  Water 
Works,  120  U.  S.  64,  7  Sup.  Ct.  405,  30  L.  ed.  563,  which  is  followed  and 
cited  in  Walla  Walla  v.  Walla  Walla  Water  Co.,  172  U.  S.  1,  9,  43  L.  ed. 
341,  19  Sup.  Ct.  19,  77;  cited  in  New  Orleans  Water  Works  v.  New  Or- 
leans, 164  U.  S.  471,  475,  41  L.  ed.  518,  17  Sup.  Ct.  161;  Pearsall  v.  Great 
Northern  Ry.  Co.,  161  U.  S.  646,  663,  16  Sup.  Ct.  705,  40  L.  ed.  838;  dis- 
tinguished in  New  Orleans  Water  Works  Co.  v.  Louisiana  Sugar  Ref.  Co., 
125  U.  S.  18,  32,  8  Sup.  Ct.  741,  31  L.  ed.  607. 

"Stein  V.  Bienville  Water  Supply  Co.,  141  U.  S.  67,  35  L.  ed.  622,  11 
Sup.  Ct.  892. 

Obligation  of  contract;  regulation  of  water  rates  not  void;  ordinances  of 
municipal  corporation.  See  Owensboro  v.  Owensboro  Water  Works  Co., 
191  U.  S.  358,  48  L.  ed.  217,  24  Sup.  Ct.  82. 

^  Skaneateles  Water  Works  Co.  v.  Skaneateles,  184  U.  S.  354,  22  Sup. 
Ct.  400,  46  L.  ed.  585. 

249 


§  225  CONSTITUTIONAL   LAW — 

for  a  certain  term,  to  supply  it  and  its  inhabitants  with 
water;  with  electric  current  for  electric  light  and  power 
and  for  all  other  purposes  for  which  said  current  could 
be  used  except  power  for  the  operation  of  street  railways, 
and  it  was  claimed  that  there  was  a  contract  between 
the  city  and  the  complainant,  the  obligation  of  which 
the  city  had  impaired,  it  was  held  that  as  the  city  had 
no  power  expressly  conferred  upon  it  to  grant  exclusive 
franchises,  the  exclusive  features  of  an  ordinance  grant- 
ing such  a  franchise  were  in  valid.  ^^  In  a  case  in  the 
Federal  Supreme  Court  a  bill  was  brought  by  a  trustee 
under  a  mortgage  made  by  a  waterworks  company 
upon  its  plant  to  secure  an  issue  of  bonds,  to  enjoin  the 
municipal  authorities  from  constructing  and  operating  a 
municipal  water  system,  thereby  impairing  the  obligation 
of  a  contract  between  the  city  and  the  waterworks  com- 
pany granting  to  the  latter  for  a  term  of  thirty  years  an 
exclusive  right  to  maintain  a  waterworks  system  in  the 
streets  of  the  city.  The  bill,  in  substance,  averred,  and 
the  answer  admitted,  that  the  city  had  procured  from 
the  legislature  authority  to  construct  and  operate  a  mu- 
nicipal water  plant  and  to  issue  the  bonds  of  the  city 
for  that  purpose,  and  that  in  pursuance  of  this  legislative 
authority  ordinances  had  been  passed  providing  for  the 
construction  of  such  waterworks  and  for  the  issuance 
of  bonds  to  provide  the  means,  and  that  notice  of  that 
purpose,  and  that  the  city  no  longer  regarded  the  con- 
tract with  the  waterworks  company  as  binding  or  obli- 
gatory had  been  given. 

The  material  defenses  set  up  were,  first,  that  the  city 
had  no  power  to  make  an  exclusive  contract;  second, 
that  the  contract  for  rental  of  hydrants  created  an  aggre- 
gate indebtedness  prohibited  by  the  Constitution  of  the 
State;  and,  third,  that  the  waterworks  company  had 
not  kept  its  contract  in  respect  of  the  character 
or  capacity  of  the  plant  it  was  to  provide  and  main- 
tain,   and    had    failed    in    its    obligation   to  furnish   a 

«i  Water,  Light  &  Gas  Co.  v.  Hutchinson,  207  U.  S.  385,  28  Sup.  Ct.  135, 
52  L.  ed.  — ,  aff'g  144  Fed.  256. 
250 


FEDERAL   CONSTITUTION  §  225 

constant  and  abundant  supply  of  pure  and  wholesome 
water,  thus  compelling  the  municipality  to  construct  a 
system  of  its  own  for  the  protection  of  the  health  and 
property  of  its  inhabitants.  These  defenses  were  relied 
upon  in  the  answer  of  the  city  as  a  defense  against  the 
injunction  sought  by  the  complainant  and  were  made 
the  subject  of  a  cross  bill  against  the  complainant  and 
the  water  works  company,  praying  relief  against  the 
contract  as  having  been  first  broken  by  the  company. 
Prior  to  the  filing  of  this  bill  the  same  complainant  had 
filed  its  original  bill  in  the  same  court  against  the  water- 
works company,  praying  a  foreclosure  of  the  mortgage, 
a  default  having  occurred.  It  was  held  that:  (a)  To 
furnish  an  ample  supply  of  pure  and  wholesome  water 
is  the  highest  police  duty  resting  on  a  municipality, 
(b)  One  contracting  to  furnish  a  municipality  with  an 
ample  supply  of  pure  water  must  at  all  times  maintain 
his  ability  to  meet  the  requirements  of  the  contract, 
and  a  continuous  supply  of  water  is  a  vital  part  of  the 
contract,  (c)  The  maxim  that  he  who  seeks  equity  must 
do  equity  applies  to  one  affirmatively  seeking  relief.  It 
does  not  vest  a  court  of  equity  with  power  to  impose  on 
a  defendant  terms  as  a  condition  for  dismissing  the  bill 
where  plaintiff  wholly  fails  to  prove  his  case,  even  if 
defendant  has  filed  a  cross  bill  for  defensive  relief,  (d) 
Where  a  water  company  has  wholly  failed  to  live  up 
to  its  contract  and  the  municipality  has  determined  by 
ordinance  to  erect  its  own  plant,  a  court  of  equity  can- 
not, in  a  suit  brought  by  the  water  company  to  restrain 
the  municipality  on  the  ground  of  impairment  of  contract, 
require  the  municipality  to  purchase  any  part  of  the 
plaintiff's  plant  as  a  condition  for  dismissing  the  bill. 
(e)  The  enforcement  of  a  municipal  ordinance  will  not 
be  enjoined  as  impairing  the  obligation  of  an  existing 
contract  at  the  instance  of  a  complainant  who  fails  to 
show  that  the  contract  has  been  complied  with,  (f)  A 
mortgagee  of  contract  rights  has  no  greater  right  to  re- 
strain the  enforcement  of  an  ordinance  on  the  ground 
that  it  impairs  the  obligation  of  the  contract  than  has 

251 


§226  CONSTITUTIONAL   LAW — 

the  contracting  party  himself,  (g)  When  the  breach 
justifies  the  abrogation  of  a  contract  otherwise  protected 
by  the  contract  clause  of  the  Federal  Constitution  con- 
siderations of  hardship,  and  the  interests  of  creditors 
cannot  prevail  to  set  up  and  enforce  that  contract  against 
the  party  having  the  right  to  treat  the  contract  as  ended. 
(h)  Where  the  contractor  under  a  municipal  water  supply 
contract  wholly  fails  to  furnish  an  adequate  supply  of 
pure  water  according  to  the  contract  the  municipality 
has  no  adequate  remedy  at  law;  it  may  treat  the  con- 
tract as  ended  and  a  court  of  equity  may  enforce  such 
rescission.^^ 

§  226.  Powers  Reserved  to  the  States.^^ 
The  manifest  purpose  of  the  Tenth  Amendment  to 
the  Federal  Constitution  is  to  put  beyond  dispute  the 
proposition  that  all  powers  not  granted  are  reserved  to 
the  people.''^  It  is  declared  that  it  is  a  familiar  rule  of 
construction  of  the  Constitution  of  the  Union,  that  the 
sovereign  powers  vested  in  the  State  governments  by 
their  respective  Constitutions,  remained  unaltered  and 
unimpaired,  except  so  far  as  they  were  granted  to  the 
government  of  the  United  States;  and  that  the  inten- 
tion of  the  framers  of  the  Constitution  in  this  respect 
might  not  be  misunderstood,  this  rule  of  interpretation 
is  expressly  declared  in  the  tenth  article  of  the  amend- 
ments as  follows:  "The  powers  not  delegated  to  the 
United  States  by  the  Constitution,  nor  prohibited  by 
it  to  the  States,  are  reserved  to  the  States,  respectively, 
or  to  the  people.^^  The  government  of  the  United  States, 
therefore,  can  claim  no  powers  which  are  not  granted 
to  it  by  the  Constitution,  and  the  powers  actually  granted 

«2  Columbus  V.  Mercantile  Trust  &  Deposit  Co.  of  Bait.,  218  U.  S.  645, 
31  Sup.  Ct.  105,  54  L.  ed.  1193. 

6' See  §271,  herein. 

"  Kansas  v.  Colorado,  206  U.  S.  46,  51  L.  ed.  956,  27  Sup.  Ct.  655; 
South  Carolina  v.  United  States,  199  U.  S.  437,  50  L.  ed.  261,  26  Sup.  Ct. 
110. 

«» Const.  U.  S.,  Amdt.  Art.  X. 

252 


FEDERAL   CONSTITUTION  §§  227,  228 

must  be  such  as  are  expressly  given,  or  given  by  neces- 
sary implication.®^ 

§  227.  Fifth  Amendment  Generally. 

The  first  eight  articles  of  the  Federal  Constitution 
have  reference  to  the  powers  exercised  by  the  government 
of  the  United  States  and  not  those  of  the  States.®^  The 
Fifth  Amendment  operates  exclusively  in  restriction  of 
Federal  power,  is  a  limitation  on  Congress,  and  has  no 
application  to  the  States.^^ 

§  228.  Fourteenth  Amendment  Generally. 

The  Fourteenth  Amendment  to  the  Constitution  of  the 
United  States  is  prohibitory  upon  the  States  only,  and 
the  legislation  authorized  to  be  adopted  by  Congress  for 

6«  Collector,  The,  v.  Day,  11  Wall.  (78  U.  S.)  113,  124,  20  L.  ed.  122, 
per  Mr.  Justice  Nelson. 

As  to  this  provision  of  the  Constitution,  see  also  Northern  Securities 
Co.  V.  United  States,  193  U.  S.  197,  344,  48  L.  ed.  679,  24  Sup.  Ct.  436, 
per  Mr.  Justice  Harlan. 

"While  undoubtedly  the  United  States  as  a  nation  has  all  the  powers 
which  inhere  in  any  nation.  Congress  is  not  authorized  in  all  things  to 
act  for  the  nation,  and  too  httle  effect  has  been  given  to  the  Tenth  Article 
of  the  Amendments  to  the  Constitution,  that  "the  powers  not  delegated 
to  the  United  States  by  the  Constitution,  nor  prohibited  by  it  to  the 
States,  are  reserved  to  the  States  respectively,  or  to  the  people.  The 
powers  the  people  have  given  to  the  general  government  are  named  in  the 
Constitution,  and  all  not  there  named,  either  expressly  or  by  implication, 
are  reserved  to  the  people  and  can  be  exercised  only  by  them,  or  upon 
further  grants  from  them."  Turner  v.  Williams,  194  U.  S.  279,  295,  48 
L.  ed.  979,  24  Sup.  Ct.  719,  per  Mr.  Justice  Brewer  in  concurring  opinion. 

«'  Lloyd  v.  Dolhson,  194  U.  S.  445,  48  L.  ed.  1062,  24  Sup.  Ct.  703. 

The  privileges  and  immunities  of  citizens  of  the  United  Stales  do  not  Jieces- 
sarily  include  all  the  rights  jrrotected  by  the  first  eight  amendments  to  the 
Federal  Constitution  against  the  powers  of  the  Federal  Government. 
Maxwell  v.  Dow,  176  U.  S.  581,  44  L.  ed.  507,  20  Sup.  Ct.  448,  494. 

M  Barrett  v.  State  (Ind.,  1911),  93  N.  E.  543,  citing  Capital  City  Dairy 
Co.  v.  Ohio,  183  U.  S.  238,  22  Sup.  Ct.  120,  46  L.  ed.  171  (operates  solely 
on  the  national  government  and  not  on  the  States);  Thorington  v.  Mont- 
gomery, 147  U.  S.  490,  13  Sup.  Ct.  394,  37  L.  ed.  252  (operates  exclusively 
in  restriction  of  Federal  power,  and  has  no  application  to  the  States); 
Barron  v.  Baltimore,  7  Pet.  (32  U.  S.)  243,  8  L.  ed.  672  (is  intended  solely 
as  a  Umitation  on  the  exercise  of  power  by  the  Federal  government,  and 
is  not  applicable  to  the  legislation  of  the  States).  See  also  Perdue  v. 
State,  134  Ga.  300,  67  S.  E.  SIO. 

253 


§  229  CONSTITUTIONAL   LAW— 

enforcing  it  is  not  direct  legislation  on  the  matter  re- 
specting which  the  States  are  prohibited  from  making 
or  enforcing  certain  laws,  or  doing  certain  acts,  but  is 
corrective  legislation,  such  as  may  be  necessary  or  proper 
for  counteracting  and  redressing  the  effect  of  such  laws 
or  acts.^^  The  prohibitions  of  this  amendment  also 
refer  to  all  the  instrumentalities  of  the  State,  to  its  legis- 
lative, executive  and  judicial  authorities,  and  whoever, 
by  virtue  of  a  public  position  under  a  State  government, 
deprives  another  of  any  right  protected  by  that  amend- 
ment against  deprivation  by  the  State,  violates  the 
constitutional  inhibition;  and  as  he  acts  in  the  State's 
name  and  is  clothed  with  the  State's  power,  his  act  is 
that  of  the  State.^*^  The  broad  words  of  the  Fourteenth 
Amendment  are  not,  however,  to  be  pushed  to  a  drily 
logical  extreme,  and  the  courts  will  be  slow  to  strike 
down  as  unconstitutional  legislation  of  the  States  enacted 
under  the  police  power."  ^ 

§  229.  Fourteenth  Amendment — No  State  to  Abridge 
Privileges  or  Immunities. 

The  privileges  and  immunities  of  citizens  of  the  United 
States,  which,  under  the  Fourteenth  Amendment  to  its 
Constitution,   no  State  can  abridge,"  are  those  which 

«3  Civil  Rights  Cases,  109  U.  S.  3,  27  L.  ed.  835,  3  Sup.  Ct.  18.  See 
Holden  v.  Hardy,  169  U.  S.  366,  42  L.  ed.  780,  18  Sup.  Ct.  383;  Green  v. 
Elbert,  63  Fed.  309,  11  C.  C.  A.  207. 

™  Chicago,  Burlington  &  Quincy  Rd.  Co.  v.  Chicago,  166  U.  S.  226,  14 
L.  ed.  979,  17  Sup.  Ct.  581. 

"  Noble  State  Bank  v.  Haskell,  219  U.  S.  104,  55  L.  ed.  ,  31  Sup. 

Ct.  299.  The  court,  per  Mr.  Justice  Holmes,  said:  "We  must  be  cautious 
about  pressing  the  broad  words  of  the  Fourteenth  Amendment  to  a  drily 
logical  extreme.  Many  laws  which  it  would  be  vain  to  ask  the  court  to 
overthrow  could  be  shown,  easily  enough,  to  transgress  a  scholastic  in- 
terpretation of  one  or  another  of  the  great  guarantees  in  the  Bill  of  Rights. 
They  more  or  less  limit  the  liberty  of  the  individual  or  they  diminish 
property  to  a  certain  extent.  We  have  few  scientifically  certain  criteria 
of  legislation,  and  as  it  often  is  difficult  to  mark  the  line  where  what  is 
called  the  police  power  of  the  States  is  Umited  by  the  Constitution  of  the 
United  States,  judges  should  be  slow  to  read  into  the  latter  a  nolunms 
mutare  as  against  the  law-making  power."    Id.,  110. 

'*  Privileges  and  immunities  clause  of  Constitution:  "  No  State  shall  make 
or  enforce  any  law  which  shall  abridge  the  privileges  or  immunities  of 

254 


FEDERAL   CONSTITUTION  §  230 

arise  out  of  the  nature  and  essential  character  of  the 
national  government,  the  provisions  of  its  Constitution 
or  its  laws  and  treaties  made  in  pursuance  thereof,  and 
it  is  these  which  are  placed  under  the  protection  of 
Congress  by  this  amendment."  These  privileges  or  im- 
munities are  not  abridged  by  a  State  enactment  pro- 
hibiting monopolies,  etc.,  for  certain  purposes  upon  pen- 
alty of  a  revocation  of  a  foreign  corporation's  certificate 
of  authority  in  case  of  a  violation  of  the  statute.'^'* 

§  230.  Fourteenth  Amendment — Due  Process  Clause 
— Fifth  Amendment. 

Due  process  of  law  within  the  meaning  of  the  Con- 
stitution of  the  United  States  ^^  is  secured  when  the  laws 

citizens  of  the  United  States."  Const.  U.  S.,  Art.  XIV,  §  1.  See  9  Fed. 
Stat.  Ann.,  pp.  392  et  seq.  and  cases  there  noted. 

"  Slaughtcr-House  Cases,  16  Wall.  (83  U.  S.)  36,  19  L.  ed.  915. 

">*  Attorney  General  v.  A.  Booth  &  Co.,  143  Mich.  89,  12  Det.  Leg.  N. 
991,  106  N.  W.  868;  Laws  of  Mich.,  1899,  p.  409,  No.  255.  E.xamine  Com- 
monwealth V.  International  Harvester  Co.,  131  Ky.  551,  115  S.  W.  703, 
131  Ky.  768,  115  S.  W.  755.  Compare  Gage  v.  State,  24  Ohio  Civ.  Ct.  R. 
724. 

As  to  grant  of  exclusive  rights  or  privileges  see  Slaughter-House  Cases, 
16  Wall.  (83  U.  S.)  36,  19  L.  ed.  915. 

''^  Due  process  clause,  Fourteenth  Amendment:  "Nor  shall  any  State  de- 
prive any  person  of  life,  liberty,  or  property,  without  due  process  of  law." 
Const.  U.  S.,  Art.  XIV,  §  1.  See  Joyce  on  Franchises,  §§  297-299;  9  Fed. 
Stat.  Annot.,  pp.  416  et  seq.  See  Hammond  Packing  Co.  v.  Arkansas, 
212  U.  S.  322,  29  Sup.  Ct.  370,  53  L.  ed.  530;  aff'g  81  Ark.  519,  100  S.  W. 
407  (not  taken  without  due  process);  Connolly  v.  Union  Sewer  Pipe  Co., 
184  U.  S.  540,  559,  46  L.  ed.  679,  22  Sup.  Ct.  431  (a  case  of  alleged  illegal 
combination) ;  United  States  v.  New  York,  New  Haven  &  Hartford  R.  Co. 
(U.  S.  C.  C),  165  Fed.  742;  People  v.  Dickerson  164  (Mich.,  148),  17  Det. 
Leg.  N.  1044,  129  N.  W.  199. 

Origin  and  history  oj  this  provision.  See  Davidson  v.  New  Orleans,  96 
U.  S.  97,  24  L.  ed.  616. 

Due  process  defined.    See  Allyn,  Appeal  of,  81  Conn.  534,  71  Atl.  794. 

Construction  of  this  clarise — review  of  leading  cases.  Sec  Marchant  v. 
Pennsylvania  R.  Co.,  153  U.  S.  380,  38  L.  ed,  751,  14  Sup.  Ct.  894. 

Exclusive  privilege  to  supply  water — Z)i/e  process  clause.  See  Ivnoxville 
Water  Co.  v.  Knoxvillc,  189  U.  S.  434,  47  L.  ed.  887,  23  Sup.  Ct.  537. 

Constitutionality  of  Anti-Trust  Statutes  under  due  process  clause.  See 
Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  8G,  53  L.  ed.  417,  29  Sup.  Ct.  220 
(not  denied);  aff'g  48  Tex.  Civ.  App.  162,  106  S.  W.  918;  Knight  &  Jillson 
Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823  (clause  not  violated) ;  State  ex  rel. 

255 


§  231  CONSTITUTIONAL   LAW — 

operate  upon  all  alike  and  no  one  is  subject  to  partial  or 
arbitrary  exercise  of  powers  of  government.^^  State 
regulations  of  fire  insurance  companies  intended  to  pro- 
tect the  public  against  the  evils  arising  from  combinations 
of  those  engaged  in  such  business,  and  to  substitute  com- 
petition for  monopoly,  said  regulations  having  a  real 
and  substantial  relation  to  that  end  without  being  essen- 
tially arbitrary,  do  not  deprive  the  insurance  companies 
of  their  property  without  due  process  of  law  nor  deny 
them  the  equal  protection  of  the  laws."  Where  the 
highest  court  of  a  State  has  held  that  an  anti-trust  statute 
has  been  violated  by  an  agreement  which  amounts  to  a 
restraint  of  trade,  the  only  question  for  the  Federal 
Supreme  Court  is  whether  such  statute  so  unreasonably 
abridges  freedom  of  contract  as  to  amount  to  a  depriva- 
tion of  property  without  due  process  of  law  within  the 
meaning  of  the  Fourteenth  Amendment. ^^ 

§  231.  Liberty  to,  or  Freedom  of  Contract  Generally 
— Fourteenth  Amendment — Fifth  Amendment. 

The  Federal  Constitution  secures  liberty  to,  or  freedom 
of  contract. ^^     Both  a  liberty  and  a  property  right  are 

Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902,  all  considered  else- 
where herein. 

Due  process  clause — Fifth  Amendment:  "No  person  shall  *  *  *  be  de- 
prived of  life,  liberty  or  property,  without  due  process  of  law."  Const. 
U.  S.,  Art.  V.  See  9  Fed.  Stat.  Annot.,  pp.  288  et  seq.  See  also  §§  231-235, 
herein. 

^«  Caldwell  v.  Texas,  137  U.  S.  692,  34  L.  ed.  816,  11  Sup.  Ct.  224. 

"  German  AlUance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  55  L.  ed. ,  31  Sup. 

Ct.  246;  Ala.  Code,  1896,  §§  2619,  2620,  as  amended;  Code  1907,  §§  4954, 
4955,  held  constitutional. 

'8  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  54  L.  ed.  826,  30 
Sup.  Ct.  695;  Code  Miss.,  §  5002. 

^  Const.  U.  S.,  Art.  XIV,  §  1;  Const.  U.  S.,  Art.  V.  See  the  following 
cases: 

United  States:  Booth  v.  People,  184  U.  S.  425,  46  L.  ed.  623,  22  Sup.  Ct. 
425;  afF'g  186  111.  43,  57  N.  E.  798,  50  L.  R.  A.  762  (gambling  contract; 
grain  futures  prohibited;  State  suppression);  United  States  v.  Joint  Traffic 
Association,  171  U.  S.  505,  559,  .572,  43  L.  ed.  2.59,  19  Sup.  Ct.  25,  rev'g 
89  Fed.  1020,  32  C.  C.  A.  491,  and  (U.  S.  C.  C.)  76  Fed.  895  (Fourteenth 
and  Fifth  Amendments);  Niagara  Fire  Ins.  Co.  v.  Cornell  (U.  S.  C.  C), 
110  Fed.  816  (Anti-Trust  Act  of  Nov.,  1897,  chap.  79,  held  to  deprive  of 

256 


FEDERAL   CONSTITUTION  §  231 

embraced  within  the  Uberty  to  contract.*"  Freedom  of 
contract  is,  however,  a  quaUfied  and  not  an  absolute 
right.  There  is  no  absolute  freedom  to  contract  as  one 
chooses.  Liberty  implies  the  absence  of  arbitrary  re- 
straint, not  immunity  from  reasonable  regulations.^^ 

liberty  of  contract);  United  States  v.  Trans-Missouri  A880cia*^,ion,  58  Fed. 
58,  7  C.  C.  A.  15;  Arkansas  Stave  Co.  v.  State,  94  Ark.  27,  125  S.  W.  1001. 

Arkansas:  Arkansas  Stave  Co.  v.  State,  94  Ark.  27,  125  S.  W.  1001. 

Kentucky:  Equitable  Life  Ins.  Society  v.  Commonwealth,  113  Ky.  126, 
23  Ky.  L.  Rep.  2359,  67  S.  W.  388. 

Michigan:  People  v.  Dickerson,  164  Mich.  148,  17  Det.  Leg.  N.  1044, 
129  N.  W.  199. 

Missouri:  McGrew  v.  Missouri  Pac.  Ry.  Co.,  230  Mo.  416,  132  S.  W. 
1076. 

South  Dakota:  State  v.  Central  Lumber  Co.,  24  S.  Dak.  136,  123  N.  W. 
504,  516,  517. 

Meaning  of  life,  liberty  and  property  in  Fourteenth  Amendment.  See 
Spring  Valley  Water  Co.  v.  City  &  County  of  San  Francisco  (U.  S.  C.  C), 
165  Fed.  667. 

See  note  1,  "public  policy  as  test — underlying  principle"  under  §  86, 
herein. 

80  Matthews  v.  People,  202  111.  389,  67  N.  E.  28. 

8'  Chicago,  Burlington  &  Quincy  Rd.  Co.  v.  McGuire,  219  U.  S.  549, 

31  Sup.  Ct.  259,  55  L.  ed. ;  aff'g  131  Iowa,  340.    The  court  per  Mr. 

Justice  Hughes,  said:  "It  has  been  held  that  the  right  to  make  contracts 
is  embraced  in  the  conception  of  liberty  as  guaranteed  by  the  Constitution. 
Allgeyer  v.  Louisiana,  165  U.  S.  578,  41  L.  ed.  832,  17  Sup.  Ct.  427;  Lochner 
V.  New  York,  198  U.  S.  45,  49  L.  ed.  93,  25  Sup.  Ct.  539;  Adair  v.  United 
States,  208  U.  S.  161,  52  L.  ed.  436,  28  Sup.  Ct.  277.  In  Allgeyer  v.  Louisi- 
ana, supra,  the  court  in  referring  to  the  Fourteenth  Amendment,  said 
(p.  589):  'The  Uberty  mentioned  in  that  amendment  means  not  only  the 
right  of  the  citizen  to  be  free  from  the  mere  physical  restraint  of  his  person, 
as  by  incarceration,  but  the  term  is  deemed  to  embrace  the  right  of  the 
citizen  to  be  free  in  the  enjoyment  of  all  his  faculties;  to  be  free  to  use 
them  in  all  lawful  ways;  to  live  and  work  where  he  will;  to  earn  his  hveli- 
hood  by  any  lawful  calling;  to  pursue  any  livelihood  or  avocation,  and  for 
that  purpose  to  enter  into  all  contracts  which  may  bo  proper,  necessary 
and  essential  to  his  carrying  out  to  a  successful  conclusion  the  purposes 
above  mentioned"  but  it  was  recognized  in  the  cases  cited,  as  in  many 
others,  that  freedom  of  contract  is  a  qualified  and  not  an  absolute  right. 
There  is  no  absolute  freedom  to  do  as  one  wills  or  to  contract  as  one  chooses. 
The  guaranty  of  liberty  does  not  withdraw  from  legislative  supervision 
that  wide  department  of  activity  which  consists  of  the  making  of  contracts, 
or  deny  to  government  the  power  to  provide  restrictive  safeguards.  Liberty 
impUes  the  absence  of  arbitrary  restraint,  not  immunity  from  reasonable 
regulations  and  prohibitions  imposed  in  the  interests  of  the  community. 
Crowley  v.  Christensen,  137  U.  S.  89,  34  L.  ed.  620,  11  Sup.  Ct.  13; 
Jacobsen  v.  Massachusetts,  197  U.  S.  11,  25  Sup.  Ct.  358,   49  L.  ed. 

17  257 


§  232  CONSTITUTIONAL   LAW — 

§  232.  Liberty  to,  or  Freedom  of  Contract  Continued — 
Power  of  Government  to  Restrict,  Regulate  or  Control.^- 

As  above  stated  there  is  no  absolute  freedom  of  con- 
tract.^' The  right  of  contract  is  a  part  of  both  the  right 
of  propert}^  and  the  right  of  hberty,  but  it  is  nevertheless 
subject  to  restriction  and  control,  without  violation  of 
Federal  or  State  Constitutions,  by  statutes  enacted  in 
such  manner  as  to  become  the  law  of  the  land.^^  It  may 
also  be  limited  by  a  State  statute  where  there  are  visible 
reasons  of  public  policy  for  the  limitation,^^  and  the 
government  may  deny  liberty  of  contract  by  regulating 
or  forbidding  every  contract  reasonably  calculated  to 
injuriously  affect  public  interests.  Contracts  which  con- 
travene public  policy  cannot  be  made  at  all.^^  But  free- 
dom of,  or  liberty  to  contract  should  not  be  restricted 
unless  it  is  obvious  that  the  public  will  suffer  by  the 
enforcement  of  the  contract.  Nor  should  parties  be 
allowed  to  invoke  public  policy  merely  to  enable  them 
to  violate  their  agreements. ^^  In  a  New  York  case  the 
court  says:  "That  a  man  may  not  contract,  as  he  will, 
with  respect  to  himself  or  to  his  property  rights,  demands 

643.  *  *  *  The  right  to  make  contracts  is  subject  to  the  exercise  of  the 
powers  granted  to  Congress  for  the  suitable  conduct  of  matters  of  national 
concern,  as,  for  example,  the  regulation  of  commerce  with  foreign  nations 
and  among  the  several  States.  *  *  *  The  principle  involved  in  these 
decisions  is  that  where  the  legislative  action  is  arbitrary  and  has  no  reason- 
able relation  to  a  purpose  which  it  is  competent  for  government  to  effect, 
the  legislature  transcends  the  hmits  of  its  power  in  interfering  with  Uberty 
of  contract;  but  where  there  is  reasonable  relation  to  an  object  within  the 
governmental  authority,  the  exercise  of  the  legislative  discretion  is  not 
subject  to  judicial  review."    Id.,  566-569. 

'2  See  quotation  at  end  of  §  231,  herein. 

*'  See  §  231,  herein.    See  also  Atlantic  Coast  Line  Rd.  Co.  v.  Riverside 

Mills,  219  U.  S.  186,  55  L.  ed. ,  31  Sup.  Ct.  164;  case  affirms  168  Fed. 

987,  990. 

84  State  V.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59  S.  W.  1033,  78  Am.  St. 
Rep.  941.  See  quotation  from  219  U.  S.  549,  given  in  note  under  §  231, 
herein. 

"  Minnesota  Iron  Co.  v.  Kline,  199  U.  S.  593,  26  Sup.  Ct.  159,  50  L.  ed. 
322. 

8«  Atlantic  Coast  Line  Rd.  Co.  v.  Riverside  Mills,  219  U.  S.  186,  55  L. 
ed. ,  31  Sup.  Ct.  164;  case  affirms  168  Fed.  987,  990. 

"Central  New  York  Teleg.  &  Teleph.  Co.  v.  Averill,  114  N.  Y.  Supp. 
99,  129  App.  Div.  752;  judgment  modified  in  199  N.  Y.  128,  92  N.  E.  206. 

258 


FEDERAL   CONSTITUTION  §  233 

the  intervening  of  some  authoritative  reason  founded  in 
considerations  of  public  poHcy.  The  denial  of  the  right 
can  only  be  reasonable,  when  to  permit  its  exercise  is 
seen  to  be  fraught  with  consequences  injurious  to  the 
interests  of  society.  The  State  has  a  right  to  limit  in- 
dividual rights,  when  their  exerciser  touches  the  public 
interests  and,  if  unrestrained,  would  be  prejudicial  to 
order  or  to  progress."  ^^  In  a  case  in  the  Federal  Supreme 
Court  it  is  declared  that:  "There  are  some  things  which 
counsel  easily  demonstrate.  They  easily  demonstrate 
that  some  combination  of  'capital,  skill  or  acts,'  is  neces- 
sary to  any  business  development,  and  that  the  result 
must  inevitably  be  a  cessation  of  competition.  But 
this  does  not  prove  that  all  combinations  are  inviolable 
or  that  no  restriction  upon  competition  can  be  forbidden. 
To  contend  for  these  extremes  is  to  overlook  the  differ- 
ence in  the  efTect  of  actions,  and  to  limit  too  much  the 
function  and  power  of  government.  By  arguing  from 
extremes  almost  every  exercise  of  government  can  be 
shown  to  be  a  deprivation  of  individual  liberty.  "  ^^ 

§  233.  Liberty  to,  or  Freedom  of  Contract  Continued- 
Power  of  Congress  Under  Commerce  Clause  to  Restrict, 
etc. 

The  constitutional  guarantee  of  liberty  of  contract 
does  not  prevent  Congress  from  prescribing  the  rule  of 
free  competition  for  those  engaged  in  interstate  and 
international  commerce.^"  And  the  provision  of  the 
Constitution  regarding  the  liberty  of  the  citizen  is  to 
some  extent  limited  by  the  commerce  clause;  ^^  and  the 

88  Wood  V.  Whitehead  Bros.  Co.,  165  N.  Y.  545,  550,  59  N.  E.  357,  per 
Gray,  J. 

8»  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  128,  49  L.  ed.  689,  25 
Sup.  Ct.  379,  per  Mr.  Justice  McKenna.  Case  holds  that  the  Anti-Trust 
Acts  of  Texas  of  1889,  1895,  and  1899,  as  they  then  stood  (decision  was  in 
1905),  were  not  in  conflict  with  the  Fourteenth  Amendment,  and  did  not 
work  a  deprivation  of  property  without  due  process  of  law  or  impair  the 
liberty  of  contract,  nor  deprive  the  defendant  of  the  equal  protection  of  the 
laws. 

»  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436. 

»'  Contained  in  §  8,  Art.  I  of  the  Constitution  of  the  United  States, 

259 


§  233  CONSTITUTIONAL   LAW — 

power  of  Congress  to  regulate  interstate  commerce  com- 
prises the  right  to  enact  a  law  prohibiting  the  citizen 
from  entering  into  those  private  contracts  which  directly 
and  substantially,  and  not  merely  indirectly,  remotely, 
incidentally  and  collaterally  regulate  to  a  greater  or  less 
degree  commerce  among  the  States.^^  Again,  the  power 
of  Congress  to  regulate  commerce  among  the  States  and 
with  foreign  nations  is  complete  and  unrestricted  except 
by  limitations  in  the  Constitution  itself,  and  an  act  of 
Congress  rendering  contracts  in  regard  to  interstate 
commerce  invalid  does  not  infringe  the  constitutional 
liberty  of  the  citizen  to  make  contracts.  The  power  of 
Congress  to  act  in  regard  to  matters  delegated  to  it  is 
not  hampered  by  contracts  made  in  regard  to  such  mat- 
ters by  individuals;  but  contracts  of  that  natm-e  are 
made  subject  to  the  possibility  that  even  if  valid  when 
made  Congress  may  by  exercising  the  power  render  them 
in  valid.  ^^ 

granting  Congress  the  power  "to  regulate  commerce  with  foreign  nationB 
and  among  the  several  States,  and  with  Indian  Tribes." 

«2Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  20  Sup. 
Ct.  96,  44  L.  ed.  136;  case  under  Sherman  Anti-Trust  Act  (see  §  13,  herein). 
But  compare  "Appendix  A,"  herein. 

93  Louisville  &  Nashville  Rd.  Co.  v.  Mottley,  219  U.  S.  467,  55  L.  ed. , 

31  Sup.  Ct.  2G5;  case  reverses  133  Ky.  652.  The  court,  per  Mr.  Justice 
Harlan  (pp.  482,  483),  said:  "Does  the  act  infringe  upon  the  constitutional 
liberty  of  the  citizen  to  make  contracts?  Manifestly  not.  In  the  Addyston 
Pipe  case,  p.  228  (Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S. 
211,  20  Sup.  Ct.  96,  44  L.  ed.  136.  Case  modifies  85  Fed.  271,  29  C.  C.  A. 
141,  a  case  as  to  combinations  in  restraint  of  trade  and  enhancement  of 
prices),  the  court  said,  'We  do  not  assent  to  the  correctness  of  the  prop- 
osition that  the  constitutional  guaranty  of  liberty  to  the  individual  to 
enter  into  private  contracts  limits  the  power  of  Congress  and  prevents  it 
from  legislating  upon  the  subject  of  contracts'  relating  to  interstate  com- 
merce. Again:  'But  it  has  never  been,  and  in  our  opinion  ought  not  to  be, 
held  that  the  word  [liberty]  included  the  right  of  an  individual  to  enter 
into  private  contracts  upon  all  subjects,  no  matter  what  their  nature  and 
wholly  irrespective  (among  other  things)  of  the  fact  that  they  would,  if 
performed,  result  in  the  regulation  of  interstate  commerce,  and  in  the 
violation  of  an  act  of  Congress  upon  the  subject.  The  provision  in  the 
Constitution  does  not,  as  we  believe,  exclude  Congress  from  legislating 
with  regard  to  contracts  of  the  above  nature,  while  in  the  exercise  of  its 
constitutioruil  right  Iq  regulate  commerce  among  the  States.  *  *  *  Anything 
which  directly  obstructs  and  thus  regulates  that  commerce  which  is  carried 

260 


FEDERAL   CONSTITUTION  §  234 

§  234.  Liberty  to,  or  Freedom  of  Contract  Continued — 
Police  Power  of  States. 

Although  the  due  process  clause  of  the  Fourteenth 
Amendment  secures  Uberty  of  contract,  it  does  not  con- 
fer Hberty  to  disregard  lawful  police  regulations  of  a 
State  established  by  such  State  for  all  within  its  juris- 
diction.^^ Again,  even  though  there  is  a  certain  freedom 
of  contract  which  the  States  cannot  destroy  by  legisla- 
tive enactment,  in  pursuance  whereof  parties  may  seek 
to  further  their  business  interests,  the  police  power  of 
the  States  extends  to  and  may  define  and  prohibit,  under 
penalties,  trusts  or  secret  arrangements  by  which,  although 
there  is  no  merger  of  interests  through  partnerships  or 
incorporation,  an  apparently  existing  competition  among 

on  among  the  States,  whether  it  is  State  legialation  or  private  eontracta 
between  individuals  or  corporations,  should  be  subject  to  the  power  of 
Congress  in  the  regulation  of  that  commerce.'  *  *  *  After  the  (commerce 
act  came  into  efifect  no  contract  that  was  inconsistent  with  the  regulations 
estabUshed  by  the  act  of  Congress  could  be  enforced  in  any  court.  The 
rule  upon  this  subject  is  thoroughly  established." 

Author's  comment:  Is  the  force  of  the  last  proposition  stated  in  the 
text  added  to  or  detracted  from  by  the  decisions  in  the  cases  of  Standard 

Oil  Co.  V.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup.  Ct.  .502,  and 

United  States  v.  American  Tobacco  Co.,  221  U.  S.  106,  55  L.  ed.  — ,  31 
Sup.  Ct.  632?  Exactly  what  difference  does  it  make  whether  or  not  a 
contract  in  alleged  "restraint  of  trade"  was  made  before  or  after  an 
act  of  Congress,  such  as  the  Sherman  Anti-Trust  Act,  when  the  words 
"restraint  of  trade"  are  now  under  the  above  decisions,  to  be  construed 
by  a  "resort  to  reason"  or  by  the  "standard  of  reason,"  and  when  it  is 
also  held,  in  the  above  cases,  that  this  country  has  followed  the  line  of 
development  of  the  law  of  England,  etc.,  and  that  the  cases  of  United 
States  V.  Trans-Missouri  Freight  Association,  166  U.  S.  290,  41  L.  ed. 
1007,  17  Sup.  Ct.  540,  and  United  States  v.  Joint  Traffic  Association,  171 
U.  S.  505,  43  L.  ed.  250,  19  Sup.  Ct.  25,  are  held  only  authoritative  by  the 
certitude  that  the  rule  of  reason  was  applied  and  they  are  limited  and 
qualified  so  far  as  they  conflict  with  the  construction  now  given  to  the 
Anti-Trust  Act  of  1890. 

»*  Brodnax  v.  Missouri,  219  U.  S.  285,  31  Sup.  Ct.  238,  55  L.  ed. . 

"Much  was  said  at  bar  about  the  'liberty  of  contract.'  In  a  large  sense 
every  person  has  that  liberty.  It  is  secured  by  the  provision  in  the  Federal 
Constitution,  forbidding  a  State  to  deprive  any  person  of  liberty  or  property 
without  due  process  of  law.  But  the  Federal  Constitution  does  not  confer 
a  hberty  to  di.'^'regard  regulations  as  to  the  conduct  of  business  which  the 
State  lawfully  establishes  for  all  within  its  jurisdiction."  Id.,  293,  per 
Mr.  Justice  Harlan. 

261 


§  235  CONSTITUTIONAL   LAW — 

all  the  dealers  in  a  community  in  one  of  the  necessities 
of  life  is  substantially  destroyed,  and  such  an  enactment 
is  not  in  conflict  with  the  Fourteenth  Amendment  as  to 
a  person  convicted  of  combining  with  others  to  pool  and 
fix  the  price,  divide  the  net  earnings  and  prevent  compe- 
tition in  the  purchase  and  sale  of  grain. ^^ 

§  235.  Liberty  to,  or  Freedom  of  Contract  Continued- 
Standard  Oil  Company's  Case. 

It  is  held  in  the  very  recent  case  of  the  Standard  Oil 
Company  in  the  Federal  Supreme  Court  that  freedom  to 
contract  is  the  essence  of  freedom  from  undue  restraint 
or  the  right  to  contract.  Mr.  Chief  Justice  White,  who 
delivered  the  opinion  of  the  court,  said:  "And  it  is  worthy 
of  observation,  as  we  have  previously  remarked  concern- 
ing the  common  law,  that  although  the  statute  [The 
Sherman  Anti-Trust  Act]  by  the  comprehensiveness  of 
the  enumerations  embodied  in  both  the  first  and  second 
sections  makes  it  certain  that  its  purpose  was  to  prevent 
undue  restraints  of  every  kind  or  nature,  nevertheless 
by  the  omission  of  any  direct  prohibition  against  monop- 
oly in  the  concrete  it  indicates  a  consciousness  that  the 
freedom  of  the  individual  right  to  contract  when  not 
unduly  or  improperly  exercised  was  the  most  efficient 
means  for  the  prevention  of  monopoly,  since  the  opera- 
tion of  the  centrifugal  and  centripetal  forces  resulting 
from  the  right  to  freely  contract  was  the  means  by  which 
monopoly  would  be  inevitably  prevented  if  no  extraneous 
or  sovereign  power  imposed  it  and  no  right  to  make  un- 
lawful contracts  having  a  monopolistic  tendency  were 
permitted.  In  other  words,  that  freedom  of  contract 
was  the  essence  of  freedom  from  undue  restraint  or  right 
to  contract."  Mr.  Justice  Harlan,  in  his  concurring  and 
dissenting  opinion  in  the  same  case,  said:  "There  are 
some  who  say  that  it  is  a  part  of  one's  liberty  to  conduct 
commerce  among  the  States  without  being  subject  to 

»6  Smiley  v.  Kansas,  196  U.  S.  447,  49  L.  ed.  546,  25  Sup.  Ct.  276,  aff'g 
State  V.  Smiley,  65  Kan.  240,  69  Pac.  199.  See  also  quotation  from  this 
case  in  Grenada  Lumber  Co.  v.  Mis.sissippi,  217  U.  S.  433,  442,  54  L,  ed. 
826,  30  Sup.  Ct.  695,  per  Air.  Justice  Lurton. 

262 


FEDERAL   CONSTITUTION  §  235 

governmental  authority.  But  that  would  not  be  liberty, 
regulated  by  law,  and  liberty,  which  cannot  be  regulated 
by  law,  is  not  to  be  desired.  The  Supreme  Law  of  the 
Land — which  is  binding  alike  upon  all — upon  Presi- 
dents, Congresses,  the  Courts  and  the  People — gives  to 
Congress,  and  to  Congress  alone,  authority  to  regulate 
interstate  commerce,  and  when  Congress  forbids  any 
restraint  of  such  commerce,  in  any  form,  all  must  obey 
its  mandate.  To  overreach  the  action  of  Congress  merely 
by  judicial  construction,  that  is,  by  indirection,  is  a  blow 
at  the  integrity  of  our  governmental  system,  and  in  the 
end  will  prove  most  dangerous  to  all.  Air.  Justice  Brad- 
ley wisely  said,  when  on  this  Bench,  that  illegitimate 
and  unconstitutional  practices  get  their  first  footing 
by  silent  approaches  and  slight  deviations  from  legal 
modes  of  legal  procedure.  *  *  *  We  shall  do  well  to 
heed  the  warnings  of  that  great  jurist."  In  this  case  the 
following  points  were  also  determined:  (a)  The  original 
doctrine  that  all  contracts  in  restraint  of  trade  were 
illegal  was  long  since  so  modified  in  the  interest  of  free- 
dom of  individuals  to  contract  that  the  contract  was 
valid  if  the  resulting  restraint  was  only  partial  in  its 
operation  and  was  otherwise  reasonable,  (b)  At  common 
law  monopolies  were  unlawful  because  of  their  restriction 
upon  individual  freedom  of  contract  and  their  injury 
to  the  public  and  at  common  law;  and  contracts  creating 
the  same  evils  were  brought  within  the  prohibition  as 
impeding  the  due  course  of,  or  being  in  restraint  of  trade, 
(c)  At  the  time  of  the  passage  of  the  Sherman  Anti-Trust 
Act,^^  the  English  rule  was  that  the  individual  was  free 
to  contract  and  to  abstain  from  contracting  and  to 
exercise  every  reasonable  right  in  regard  thereto  except 
only  as  he  was  restricted  from  voluntarily  and  unreason- 
ably or  for  wrongful  purposes  restraining  his  right  to 
carry  on  his  trade.  And  (d)  this  country  has  followed 
the  line  of  development  of  the  law  of  England.  It  is 
further  declared  by  Mr.  Chief  Justice  \Miite  in  that  case 
that:   ''Outside   of   the  restrictions   resulting   from   the 

9«See  §  13  h(T<>in. 

263 


§  236  CONSTITUTIONAL   LAW — 

want  of  power  of  an  individual  to  voluntarily  and  un- 
reasonably restrain  his  right  to  carry  on  his  trade  or 
business  and  outside  of  his  want  of  right  to  restrain  the 
free  course  of  trade  by  contracts  or  acts  which  implied 
a  wrongful  purpose,  freedom  to  contract  and  to  abstain 
from  contracting  and  to  exercise  every  reasonable  right 
incident  thereto  became  the  rule  of  the  English  law."  ^^ 

§  236.  Liberty  to,  or  Freedom  of  Contract  Continued 
— State  Statutes  Prohibiting  Combinations,  etc.— In- 
stances. 

A  State  statute  prohibiting  combinations  of  insurance 
companies  as  to  rates,  commissions,  and  m  nner  of 
transacting  business,  is  not  unconstitutional  as  depriving 
the  companies  of  their  property  or  of  their  liberty  of 
contract  within  the  meaning  of  the  Fourteenth  Amend- 
ment.^*   The  liberty  of  contract  protected  by  the  Four- 

^  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  56,  55  L.  ed. ,  31 

Sup.  Ct.  502  (see  "Appendix  A,"  herein);  case  modifies  and  affirms  173  Fed. 
177. 

98  Carroll  v.  Greenwich  Ins.  Co.,  199  U.  S.  401,  50  L.  ed.  246,  26  Sup. 
Ct.  66,  rev'g  Greenwich  Ins.  Co.  v.  Carroll,  125  Fed.  121.  The  court, 
per  Mr.  Justice  Holmes,  who  delivered  the  opinion  in  the  case,  said:  "We 
pass  to  the  question  upon  which  the  Circuit  Court  decided  the  case,  namely, 
the  constitutionality  of  §  1754  [Code,  Iowa],  *  *  *  Whatever  may  be 
thought  of  the  policy  of  such  attempts,  it  cannot  be  denied  in  this  court, 
unless  some  of  its  decisions  are  to  be  overruled,  that  statutes  prohibiting 
combinations  between  possible  rivals  in  trade  may  be  constitutional.  The 
decisions  concern  not  only  statutes  of  the  United  States,  Northern  Se- 
curities Co.  V.  United  States,  193  U.  S.  197,  48  L.  ed.  679,  24  Sup.  Ct.  436; 
Swift  &  Co.  V.  United  States,  196  U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct.  276, 
but  also  State  laws  of  similar  import.  Smiley  v.  Kansas,  196  U.  S.  447, 
49  L.  ed.  546,  25  Sup.  Ct.  276;  National  Cotton  Oil  Co.  v.  Texas,  197  U. 
S.  115,  49  L.  ed.  689,  25  Sup.  Ct.  379.  *  *  *  While  wo  need  not  affirm 
that  in  no  instance  could  a  distinction  be  taken,  ordinarily  if  an  act  of 
Congress  is  vaUd  under  the  Fifth  Amendment  it  would  be  hard  to  say  that 
a  State  law  was  void  under  the  Fourteenth.  It  is  true  that  by  the  provision 
in  the  body  of  the  instrument  Congress  has  power  to  regulate  commerce, 
and  that  the  act  of  Congress  referred  to  in  the  cases  cited  was  passed  in 
pursuance  of  that  power.  But  even  if  the  Fifth  Amendment  were  read  as 
contemporaneous  with  the  original  Constitution,  the  power  given  in  the 
commerce  clause  could  not  be  taken  to  override  it  so  far  as  the  Fifth  Amend' 
merit  protects  fundamental  personal  rights.  It  is  only  on  the  ground  that 
the  right  to  combine  at  will  is  a  fundamental  personal  right  that  it  can  be  held 
to  be  protected  by  the  Fourteenth  Amendment  from  any  abridgment  by  the 

264 


FEDERAL   CONSTITUTION  §  237 

teenth  Amendment  is  not  impaired  by  an  anti-trust 
statute  of  a  State  prohibiting  acts  which  are  a  pubhc 
wrong,  the  object  of  a  conspiracy  and  operate  in  re- 
straint of  trade,  as  in  case  where  an  agreement  among 
retail  lumber  dealers  was  held  within  the  prohibition  of 
such  a  statute.^^ 

§  237.  Fourteenth  Amendment— Equal  Protection  of 
the  Laws. 

The  equal  protection  clause  of  the  Federal  Constitu- 
tion '  means  subjection  to  equal  laws  applying  alike  to 

State.  Cincinnati  Street  Ry.  Co.  v.  Snell,  193  U.  S.  30,  36,  48  L.  ed.  604, 
24  Sup.  Ct.  319.  Many  State  laws  which  limit  the  freedom  of  contract  have 
been  sustained  bj*  this  court,  and  therefore  an  objection  to  this  law  on  the 
general  ground  that  it  limits  that  freedom  cannot  be  upheld.  Indeed,  Mr. 
Dicey,  in  his  recent  work  on  Law  and  Public  Opinion  in  England  during 
the  Nineteenth  Century,  intlicates  that  it  is  out  of  the  very  right  to  make 
what  contracts  one  chooses,  so  strenuously  advocated  by  Bentham,  that 
combinations  have  arisen  which  restrict  the  very  freedom  that  Bentham 
sought  to  attain,  and  which  even  might  menace  the  authority  of  the  State. 
If,  then,  the  statute  before  us  is  to  be  overthrown  more  special  reasons 
must  be  assigned."    Italics  are  ours. — The  Author. 

9»  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  54  L.  ed.  826,  30 
Sup.  Ct.  695;  Code,  Miss.,  §5002.  "That  legislation  might  be  so  ar- 
bitrary or  so  irrational  in  depriving  a  citizen  of  freedom  of  contract  as  to 
come  under  the  condemnation  of  the  amendment  may  be  conceded." 
Id.,  442,  per  Mr.  Justice  Lurton. 

'  Equal  protection  clause:  "Nor  shall  any  State  *  *  *  deny  to  any  per- 
son within  its  jurisdiction  the  equal  protection  of  the  laws."  Const.  U.  S., 
Art.  XIV,  §  1.  See  Joyce  on  Franchises,  §  300  (also  Index  to  same  under 
this  heading);  9  Fed.  Stat.  Annot.,  pp.  538  et  seq.  See  also  the  following 
cases: 

United  States:  Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  558, 
559,  46  L.  ed.  679,  22  Sup.  Ct.  431  (case  of  alleged  illegal  combination). 

Indiana:  Knight  &  Jilison  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 

Missouri;  State  ex  inf.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S. 
W.  902  (clause  not  violated). 

South  Dakota:  State  v.  Central  Lumber  Co.,  24  S.  Dak.  136,  123  N.  W. 
604. 

Texas:  Walsh,  Ex  parte,  (Tex.  Cr.  App.,  1910),  129  S.  W.  118. 

Corporation  is  a  person  within  meaning  of  equal  protection  clause  of  Four- 
teenth Amendment.  Southern  Railway  Co.  v.  Greene,  216  U.  S.  400,  54 
L.  ed.  536,  30  Sup.  Ct.  287,  case  reverses  160  Ala.  396,  49  So.  404.  See 
also  §  13,  herein  subdv.  §  8. 

Equal  protection  of  the  laws — Difference  in  method  of  determining  guilt  of 
corporations  arui  individuals — Validity  of  Anti-Trust  Act  of  Tennessee  of 

265 


§  238  CONSTITUTIONAL   LAW — 

all  in  the  same  situation.-  The  Fourteenth  iimendment 
will  not  be  construed  as  introducing  a  factitious  equality 
\vithout  regard  to  practical  differences  that  are  best  met 
by  corresponding  differences  of  treatment.^  Nor  is  such 
clause  offended  against  because  some  inequality  may  be 
occasioned  by  a  classification  in  legislation  properly  en- 
acted under  the  police  power.  ^  The  following  proposi- 
tions have  been  shown  by  repeated  decisions  of  the 
Federal  Supreme  Court:  (a)  The  equal  protection  clause 
of  the  Fourteenth  Amendment  does  not  take  from  the 
State  the  power  to  classify  in  the  adoption  of  police  laws, 
but  admits  of  the  exercise  of  a  wide  scope  of  discretion 
in  that  regard,  and  avoids  what  is  done  only  when  it  is 
done  without  any  reasonable  basis  and  therefore  is  purely 
arbitrary,  (b)  A  classification  having  some  reasonable 
basis  does  not  offend  against  that  clause  merely  because 
it  is  not  made  with  mathematical  nicety  or  because  in 
practice  it  results  in  some  inequality,  (c)  When  the 
classification  in  such  a  law  is  called  in  question,  if  any 
state  of  facts  reasonably  can  be  conceived  that  would 
sustain  it,  the  existence  of  that  state  of  facts  at  the  time 
the  law  was  enacted  must  be  assumed,  (d)  One  who 
assails  the  classification  in  such  a  law  must  carry  the 
burden  of  showing  that  it  does  not  rest  upon  any  reason- 
able basis,  but  is  essentially  arbitrary.^ 

§  238.  Same    Subject — Power  of    Congress    and    of 
States. 
Assuming  that  even  if  the  equal  protection  provision 

1903.    See  Standard  Oil  Co.  of  Ky.  v.  Tennessee,  217  U.  S.  413,  54  L.  ed. 

,  30  Sup.  Ct.  543,  aff'g  State  v.  Standard  Oil  Co.  of  Ky.,  120  Tenn.  86, 

110  S.  W.  565. 

2  Southern  Railway  Co.  v.  Greene,  216  U.  S.  400,  54  L.  ed.  536,  30  Sup. 
Ct.  287,  case  reverses  160  Ala.  396,  49  So.  404. 

» Standard  Oil  Co.  of  Ky.  v.  Tennessee,  217  U.  S.  413,  54  L.  ed. ,  30 

Sup.  Ct.  543,  aff'g  State  v.  Standard  Oil  Co.  of  Ky.,  120  Tenn.  86,  110  S. 
W.  565,  under  Anti-Trust  Act  of  March  16,  1903;  Laws,  1903,  chap.  140. 

*  Louisville  &  Nashville  Rd.  Co.  v.  Melton,  218  U.  S.  36,  54  L.  ed.  921, 
30  Sup.  Ct.  676,  case  affirms  127  Ky.  276. 

«  Lindsley  v.  Natural  Carbonic  Gas  Co.,  220  U.  S.  61,  55  L.  ed. ,  31 

Sup.  Ct.  337,  case  affirms  170  Fed.  1023.  See  §  238,  herein,  as  to  subdv.  (a) 
In  above  text. 

266 


FEDERAL   CONSTITUTION  §  238 

of  this  amendment  can  be  held  to  apply  to  the  United 
States,  it  can  have  no  broader  meaning  when  so  applied 
than  when  applied  to  the  States.^  The  Fourteenth 
Amendment  was  not  intended  to  and  does  not  strip  the 
States  of  the  power  to  exert  their  lawful  police  authority; 
it  did  not  deprive  the  States  of  the  power  to  classify  but 
only  of  the  abuse  of  such  power."  So  it  is  declared  that 
the  Fourteenth  .\mendment  "is  unqualified  in  its  decla- 
ration that  a  State  shall  not  'deny  to  any  person  within 
its  jurisdiction  the  equal  protection  of  the  laws.'  Passing 
on  that  amendment,  we  have  repeatedly  decided  *  *  * 
that  it  does  not  take  from  the  States  the  power  of  classi- 
fication. And  also  that  such  classification  need  not  be 
either  logically  appropriate  or  scientifically  accurate. 
The  problems  that  are  met  in  the  government  of  human 
beings  are  different  from  those  involved  in  the  examina- 
tion of  objects  of  the  phj^sical  world  and  assigning  them 
to  their  proper  associates.  A  wide  range  of  discretion, 
therefore,  is  necessary  in  legislation  to  make  it  practical, 
and  we  have  often  said  that  the  courts  cannot  be  made 
a  refuge  from  ill-advised,  unjust  or  oppressive  laws."  * 

•  United  States  v.  Heinze,  218  U.  S.  532,  54  L.  ed.  1139,  31  Sup.  Ct.  98, 
case  reverses  161  Fed.  425. 

'  Louisville  &  Nashville  Rd.  Co.  v.  Melton,  218  U.  S.  36,  54  L.  ed.  921, 
30  Sup.  Ct.  671,  case  affirms  127  Ky.  276.  See  text,  subdv.  (a),  §  237, 
herein. 

8  District  of  Columbia  v.  Brooke,  214  U.  S.  138,  150,  29  Sup.  Ct.  560, 
53  L.  ed.  941,  case  reverses  29  App.  D.  C.  563. 


267 


CONSTITUTIONAL   LAW — 


CHAPTER  XVII 


CONSTITUTIONAL   LAW — STATE    CONSTITUTIONS 


§  239.  Creation    of     Monopolies—      §  249. 
State    Constitutions    Pro- 
hibiting Monopolies    Gen- 
erally. 

240.  Alabama  Constitution — Leg- 

islative Duty  as  to  Monop-         250. 
olies,  Combinations,  etc.,  to 
Control  Articles  of  Neces- 
sity, etc.,    or    to    Prevent         251. 
Competition. 

241.  Alabama  Constitution  Con- 

tinued— Effect  Upon  Com-         252. 
petition — Meaning  of  "Un- 
reasonably "  and  "  Reason-         253. 
able  Competition." 

242.  Arkansas         Constitution- 

Monopolies  Prohibited. 

243.  Idaho  Constitution — Combi- 

nations to  Control  Prices, 
Regulate  Production,  etc.,         254. 
Prohibited — Duty  of  Leg- 
islature. 

244.  Kentucky        Constitution — 

Legislative    Duty    as    to 
Trusts,  Combinations,  etc.,         255. 
to  Control  Prices. 

245.  Louisiana        Constitution — 

Combinations,  etc.,  to  Qon- 
trol  Prices,  Unlawful — 
Duty  of  Legislature. 

246.  Maryland       Constitution — 

Monopolies  Prohibited. 

247.  Minnesota      Constitution —         256. 

Combinations   to   Control 
Food  Products  a  Criminal         257. 
Conspiracy — Duty  of  Leg- 
islature. 258. 

248.  Mississippi     Constitution — 

Duty  of  Legislature  to  Pre- 
vent Trusts,  Combinations, 
etc. 

268 


Montana  Constitution  — 
Combinations,  Trusts,  etc., 
to  Fix  Prices  or  Regulate 
Production  Prohibited — 
Duty  of  Legislature. 

Montana  Constitution  Con- 
tinued —  Necessity  of 
Showing  Intent. 

Montana  Constitution  Con- 
tinued —  Meaning  of 
"Trust"  Therein. 

North  Carolina  Constitution 
— Monopolies  Prohibited. 

North  Dakota  Constitution 
— Combinations  to  Con- 
trol Prices,  Cost  of  Ex- 
Change  or  Transportation 
Prohibited  —  Franchises 
Forfeited. 

Oklahoma  Constitution — 
Monopolies  Prohibited — 
Duty  of  Legislature  as  to 
Combinations,  Monopo- 
lies, etc. 

South  Dakota  Constitution 
— Monopolies  and  Trusts 
Prohibited — Combinations 
to  Control  Prices,  Pro- 
duction, Transportation, 
or  to  Prevent  Competition 
Prohibited — Duty  of  Leg- 
islature. 

Tennessee    Constitution — 
Monopolies  Prohibited. 

Texas  Constitution  —  Mo- 
nopolies Prohibited. 

Utah  Constitution — Combi- 
nations to  Control  Prices, 
Cost  of  Exchange  or  Trans- 
portation Prohibited — 
Duty  of  Legislature. 


STATE    CONSTITUTIONS 


§§  239,  240 


§  259.  Washington  Constitution — 
Monopolies  and  Trusts 
Prohibited  —  Combina- 
tions to  Control  Prices, 
Production, Transportation 
or  to  Prevent  Competition 
Prohibited — Duty  of  Leg- 
islature. 

260.  Washington        Constitution 

Continued — Its  Provisions 
Not  Self-Executing. 

261.  Washington        Constitution 

Continued — Combinations 
of  Common  Carriers  to 
Share  Earnings  Prohibited. 

262.  Wyoming        Constitution — 

Monopolies    Prohibited — 


Combinations   to   Prevent 
Competition,  Control  Pro- 
ductions   or    Prices,  etc., 
Prohibited. 
§  263.  Constitutional        Provisions 
Prohibiting  Granting  Spe- 
cial   or    Exclusive    Privi- 
leges, Immunities  or  Fran- 
chises, etc. 
264.  Same  Subject — General   In- 
stances. 
Constitutional        Provisions 
Prohibiting     Creation     of 
Corporations    by    Special 
Act,  etc. 
Same  Subject — General   In- 
stances. 


265. 


266. 


§  239.  Creation  of  Monopolies— State  Constitutions 
Prohibiting  Monopolies  Generally. 

Monopolies  may  be  created,  but  they  must  be  called 
into  being  by  the  sovereign  power  alone.  They  are  con- 
trary to  the  genius  of  a  free  government  and  ought  not 
to  be  encouraged  by  the  people  or  countenanced  by  the 
courts  except  when  expressly  authorized  by  positive  law. 
In  several  of  the  State  Constitutions  this  principle  is 
clearly  and  explicitly  declared,  and  monopolies  are  posi- 
tively prohibited.^ 

§  240.  Alabama  Constitution — Legislative  Duty  as  to 
Monopolies,  Combinations,  etc.,  to  Control  Articles  of 
Necessity,  etc.,  or  to  Prevent  Competition. 

Under  the  Alabama  Constitution  ''The  legislature  shall 
provide  by  law  for  the  regulation,  prohibition,  or  reason- 
able restraint)  of  common  carriers,  partnerships,  asso- 
ciations, trusts,  monopolies,  and  combinations  of  capital, 
so  as  to  prevent  them  or  any  of  them  from  making  scarce 
articles  of  necessity,  trade,  or  commerce,  or  from  increas- 
ing unreasonably  the  cost  thereof  to  the  consumer,  or 
preventing  reasonable  competition  in  any  calling,  trade, 
or  business."  ^ 

>  See  Davenport  v.  Kleinschmidt,  6  Mont.  502,  529,  13  Pac.  249,  per 
McLeary,  J.    See  §§  269,  272,  herein. 
=  Ala.  Const.,  1901,  §  103. 

269 


§§  241,  242  CONSTITUTIONAL   LAW — 

§  241.  Alabama  Constitution  Continued— Effect  Upon 
Competition  -Meaning  of  "Unreasonably"  and  "Reason- 
able Competition." 

The  above  constitutional  provision  of  Alabama  has  not 
restricted  the  law  of  competition  as  defined  at  the  com- 
mon law.  It  is  aimed  at  combinations  of  capital  to  pre- 
vent them  from  making  scarce  articles  of  necessity  in 
order  to  "unreasonably"  increase  the  cost  to  the  con- 
sumer, and  also  to  prohibit  anything  which  prevents 
"reasonable  competition"  in  any  calling  or  business.  It 
does  not  denounce  combinations  of  capital  as  such.  They 
must  "unreasonably"  increase  the  cost  in  order  to  bring 
them  within  the  purview  of  the  section.  The  section  is 
not  aimed  at  everything  which  restricts  competition. 
Its  purpose  is  not  that  there  shall  be  no  restraints  of 
competition  arising  from  the  workings  of  the  laws  of 
trade,  but  only  that  whatever  is  done  in  trade  must  leave 
the  field  open  to  "reasonable  competition."  ^ 

§  242.  Arkansas  Constitution— Monopolies  Prohibited. 

The  Constitution  of  Arkansas  provides  that  "Per- 
petuities and  monopolies  are  contrary  to  the  genius  of  a 
republic,  and  shall  not  be  allowed."  '^ 

"The  monopolies  which  in  England  became  so  odious 
as  to  excite  general  opposition,  and  infuse  a  detestation 
which  has  been  transmitted  to  the  free  States  of  America, 
were  in  the  nature  of  exclusive  privileges  of  trade,  granted 
to  favorites  or  purchasers  from  the  crown,  for  the  enrich- 
ment of  indivduals,  at  the  cost  of  the  public.  They  were 
supported  by  no  considerations  of  public  good.  They 
enabled  a  few  to  oppress  the  community  by  undue  charges 
for  goods  or  services.    The  memory,  and  historical  tradi- 

'  Citizens'  Light,  Heat  &  Power  Co.  v.  Montgomery  Light  &  Water 
Power  Co.  (U.  S.  C.  C),  171  Fed.  553,  561,  per  Jones,  Dist.  J. 

Under  §  103  of  the  Constitution  of  Alabama  of  1901,  to  regulate  com- 
petition, one  man  may  take  over  all  of  another  man's  customers,  and  thus 
control  a  business,  if  it  results  from  competition  within  legal  Umits.  Citi- 
zens' Light,  Heat  &  Power  Co.  v.  Montgomery  Light  &  Water  Power  Co. 
(U.  S.  C.  C),  171  Fed.  553. 

*  Const.  Ark.,  Art.  II  (Declaration  of  Rights),  §  19. 

270 


STATE    CONSTITUTIONS  §§  243,  244 

tions,  of  abuses  resulting  from  this  practice,  has  left  the 
impression  that  they  are  dangerous  to  Uberty,  and  it  is 
this  kind  of  monopoly,  against  which  the  constitutional 
provision  is  directed."  ^ 

§  243.  Idaho  Constitution— Combinations  to  Control 
Prices,  Regulate  Production,  etc..  Prohibited— Duty  of 
Legislature. 

The  Constitution  of  Idaho  provides:  "That  no  incor- 
porated company,  or  any  association  of  persons  or  stock 
company,  in  the  State  of  Idaho,  shall  directly  or  in- 
directly combine  or  make  any  contract  with  any  other 
incorporated  company,  foreign  or  domestic,  through  their 
stockholders  or  the  trustees  or  assignees  of  such  stock- 
holders, or  in  any  manner  whatsoever,  for  the  purpose 
of  fixing  the  price,  or  regulating  the  production  of  any 
article  of  commerce  or  of  produce  of  the  soil,  or  of  con- 
sumption by  the  people;  and  that  the  legislature  be  re- 
quired to  pass  laws  for  the  enforcement  thereof,  by 
adequate  penalties,  to  the  extent,  if  necessary  for  that 
purpose,  of  the  forfeiture  of  their  property  and  fran- 
chise." ® 

§  244.  Kentucky  Constitution— Legislative  Duty  as  to 
Trusts,  Combinations,  etc.,  to  Control  Prices. 

Under  the  Kentucky  Constitution  "It  shall  be  the  duty 
of  the  General  Assembly  from  time  to  time,  as  necessity 
may  require,  to  enact  such  laws  as  may  be  necessary  to 
prevent  all  trusts,  pools,  combinations  or  other  organi- 
zations, from  combining  to  depreciate  below  its  real 
value  any  article  or  to  enhance  the  cost  of  any  article 
above  its  real  value."  ^ 


"  Leon  Levy,  Ex  parte,  43  Ark.  42,  51,  per  Eakin,  J. 

*  Const.  Idaho,  Art.  II  (Corporations,  Public  and  Private),  §  18. 

'  Const.  Ky.  (Corporations),  §  190.  See  Commonwealth  v.  International 
Harvester  Co.,  131  Ky.  551,  115  S.  W.  703,  131  Ky.  768,  115  S.  W.  755; 
Owen  County  Burley  Tobacco  Society  v.  Brumback,  32  Ky.  L.  Rep.  916, 
107  S.  W.  710.  Examine  Commonwealth  v.  Hodges,  137  Ky.  233,  125 
S.  W.  689. 

271 


§  245-248  CONSTITUTIONAL   LAW — 

§  245.  Louisiana  Constitution — Combinations,  etc.,  to 
Control  Prices,  Unlawful — Duty  of  Legislature. 

Under  the  Louisiana  Constitution,  "It  shall  be  unlaw- 
ful for  persons  or  corporations,  or  their  legal  representa- 
tives, to  combine  or  conspire  together,  or  to  unite  or 
pool  their  interests  for  the  purpose  of  forcing  up  or  down 
the  price  of  any  agricultural  product  or  article  of  neces- 
sity, for  speculative  purposes;  and  the  legislature  shall 
pass  laws  to  suppress  it."  ^ 

§  246.  Maryland  Constitution — Monopolies  Prohib- 
ited. 

The  Maryland  Constitution  provides:  "That  monop- 
olies are  odious,  contrary  to  the  spirit  of  free  government 
and  the  principles  of  commerce,  and  ought  not  to  be 
suffered."  ^ 

§  247.  Minnesota  Constitution — Combinations  to  Con- 
trol Food  Products  a  Criminal  Conspiracy — Duty  of  Leg- 
islature. 

Under  the  Minnesota  Constitution:  "Any  combina- 
tion of  persons,  either  as  individuals  or  as  members  or 
officers  of  any  corporation,  to  monopolize  the  markets 
for  food  products  in  this  State,  or  to  interfere  with,  or 
restrict  the  freedom  of  such  markets,  is  hereby  declared 
to  be  a  criminal  conspiracy,  and  shall  be  punished  in  such 
manner  as  the  legislature  may  provide."  ^^ 

§  248.  Mississippi  Constitution — Duty  of  Legislature 
to  Prevent  Trusts,  Combinations,  etc. 
Under  the  Mississippi  Constitution:  "The  legislature 

*  Const.  La.,  Art.  190.  See  New  Orleans  Water  Works  Co.  v.  Louisiana 
Sugar  Ref.  Co.,  125  U.  S.  18,  8  Sup.  Ct.  741,  31  L.  ed.  607. 

'Const,  of  Md.  (Declaration  of  Rights),  Art.  41. 

^^  Const.  Minn.,  Art.  4  (the  legislative  department),  §  3.5. 

Above  provision  was  embodied  in  organic  law  of  the  State  in  1888,  and 
is  noted,  in  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  515,  121  N. 
W.  395,  as  declaring,  in  connection  with  the  statutes  there  considered,  the 
pubhc  policy  of  Minnesota  "with  reference  to  combinations  and  agree- 
ments which  tend  to  restrain  trade,  and  limit,  restrict  or  regulate  the 
production,  price  and  distribution  of  articles  of  trade,  manufacture,  or 
use,"   per  Elliott,   J. 

272 


STATE    CONSTITUTIONS  §  249 

shall  enact  laws  to  prevent  all  trusts,  combinations, 
contracts,  and  agreements  inimical  to  the  public  wel- 
fare." " 

It  is  declared  by  the  court  in  a  case  in  this  State: 
"It  must  be  observed  that  not  all  trusts,  combinations, 
contracts,  and  agreements  were  to  be  prohibited,  because 
the  great  lawmakers  who  framed  the  fundamental  law 
of  this  commonwealth  as  the  same  is  embodied  in  our 
present  Constitution  well  knew  that  such  legislation  would 
be  palpably  trenching  upon,  if  not  absolutely  violative 
of,  the  inherent  rights  of  the  citizens,  and  would  be 
restrictive  to  an  unwarranted  degree  of  the  privilege  of 
contract  which  any  man  is  entitled  to  enjoy  under  our 
form  of  government.^-  No  such  legislation  was  author- 
ized, because  no  such  legislation  was  demanded.  Only 
such  trusts,  combinations,  contracts  and  agreements 
were  to  be  prevented  as  would  be  '  inimical  to  the  public 
welfare.'  "  '' 

§  249.  Montana  Constitution— Combinations,  Trusts, 
etc.,  to  Fix  Prices  or  Regulate  Production  Prohibited— 
Duty  of  Legislature. 

Under  the  Montana  Constitution:  ''No  incorporation, 
stock  company,  person  or  association  of  persons  in  the 
State  of  Montana,  shall  directly,  or  indirectly,  combine 
or  form  what  is  known  as  a  trust,  or  make  any  contract 
with  any  person,  or  persons,  corporations,  or  stock  com- 
pany, foreign  or  domestic,  through  their  stockholders, 
trustees,  or  in  any  manner  whatever,  for  the  purpose  of 
fixing  the  price,  or  regulating  the  production  of  any 
article  of  commerce,  or  of  the  product  of  the  soil,  for  con- 
sumption by  the  people.  The  legislative  assembly  shall 
pass  laws  for  the  enforcement  thereof  by  adequate  pen- 
alties to  the  extent,  if  necessary  for  that  purpose,  of  the 
forfeiture  of  their  property  and  franchises,  and  in  case 

"  Const.,  1890,  Miss.  (Art.  7,  Corporations),  §  198. 
"  Citing  Tiedeman,  Lira.  Police  Powers,  §  244. 

"  Yazoo  &  Mississippi  Valley  Rd.  Co.  v.  Searles,  85  Miss.  520,  528,  529, 
37  So.  939,  per  Truly,  J. 

18  273 


§§  250,  251  CONSTITUTIONAL   LAW — • 

of  foreign  corporations  prohibiting  them  from  carrying 
on  business  in  the  State."  " 

§  250.  Montana  Constitution  Continued— Necessity  of 
Showing  Intent.  - 

Under  the  terms  of  the  above  constitutional  provision 
in  Montana  there  must  be  shown  a  specific  intent  to  do 
the  prohibited  act,  or  that  the  association  or  combination 
necessarily  tends  to  accomplish  the  same  results.  ^^ 

§  251.  Montana  Constitution  Continued— Meaning  of 
"  Trust "  Therein. 

"It  was  not  the  purpose  of  the  convention  *  *  *  to 
limit  *  *  *  the  term"  trust  ''used  in  the  constitu- 
tion *  *  *  by  any  narrow  definition,  but  to  leave  it  to 
the  courts  to  look  beneath  the  surface,  and  from  the 
methods  employed  in  the  conduct  of  the  business,  to 
determine  whether  the  association  or  combination  in 
question,    no   matter   what   its   particular   form   should 

"  Const.  Mont.,  Art.  15  (corporations  other  than  municipal),  §  20. 

For  statute  attempting  to  make  effective  above  constitutional  provision  and 
held  obnoxious  to  the  Fourteenth  Amendment  of  the  Federal  Constitution 
and  void.  See  State  v.  Cudahy  Packing  Co.,  33  Mont.  179,  82  Pac.  834, 
14  Am.  St.  Rep.  804. 

1^  MacGinnis  v.  Boston  &  Montana  Consol.  Copper  &  Silver  Min.  Co., 
29  Mont.  428,  75  Pac.  94.  The  court,  per  Brantly,  C.  J.,  said:  "Section 
20  prohibits  any  combination  or  contract  which  has  a  particular  purpose, 
to  wit,  'fixing  the  price  or  regulating  the  production  of  any  article  of  com- 
merce, or  of  the  product  of  the  soil,  for  consumption  by  the  people.'  The 
terms  'combine'  and  'form  a  trust'  were  evidently  intended  to  be  read  in 
connection  with  the  expression  'for  the  purpose,'  etc.,  clearly  implying 
that,  in  order  to  subject  offenders  to  the  severe  penalties  which  the  legis- 
lature might  impose,  there  must  be  shown  a  special  intent  to  do  the  pro- 
hibited act,  or  that  the  association  or  combination  necessarily  tends  to 
accomplish  the  same  result.  That  this  is  the  meaning  is  clear  from  the 
enumeration  of  persons  who  may  not  do  the  prohibited  acts.  Corporations, 
stock  companies,  natural  persons,  or  partnerships  are  all  included.  If 
the  criminal  intent  is  not  a  necessary  ingredient  of  the  evil  denounced, 
then  all  sorts  of  combinations  are  to  be  deemed  prohibited,  even  ordinary 
copartnerships,  as  coming  within  the  letter  of  the  prohibition.  For  the 
terms  'combine'  and  'form  a  trust'  are  of  equal  difinity.  If  the  former  ia 
to  be  regarded  as  modified  and  explained  by  the  clau.se  'for  the  purpose,' 
etc.,  by  the  same  rule  must  the  latter  also."    Id.,  454. 

274 


STATE    CONSTITUTIONS  §§  252,  253 

chance  to  be,  or  what  might  be  its  constituent  elements, 
is  taking  advantage  of  the  pubhc  in  an  unlawful  way.'^ 
In  each  case,  therefore,  under  these  provisions,  the  nature 
of  the  arrangement  or  combination  is  a  question  of  fact 
to  be  determined  by  the  court  from  the  evidence  before 
it  or  from  the  vice  which  inheres  in  the  contract  itself.  ^^ 

§  252.  North  Carolina  Constitution— Monopolies  Pro- 
hibited. 

The  North  Carolina  Constitution  provides  that:  "Per- 
petuities and  monopolies  are  contrary  to  the  genius  of  a 
free  State,  and  ought  not  to  be  allowed."  '^ 

§  253.  North  Dakota  Constitution— Combinations  to 
Control  Prices,  Cost  of  Exchange  or  Transportation  Pro- 
hibited— Franchises  Forfeited. 

Under  the  North  Dakota  Constitution:  "Any  combina- 
tion between  individuals,  corporations,  associations  or 
either,  having  for  its  object  or  effect  the  controlling  of 
the  price  of  any  product  of  the  soil  or  any  article  of 
manufacture  or  commerce,  or  the  cost  of  exchange  or 
transportation,  is  prohibited  and  hereby  declared  unlaw- 
ful and  against  public  policy;  and  any  and  all  franchises 
heretofore  granted  or  extended,  or  that  may  here- 
after be  granted  or  extended  in  this  State,  whenever  the 
owner  or  owners  thereof  violate  this  article  shall  be 
deemed  annulled  and  become  void."  ^^ 

"  Citing  Harding  v.  American  Glucose  Co.,  182  III.  551,  55  N.  E.  577,  74 
Am.  St.  Rep.  189. 

"  MacGinnis  v.  Boston  &  Montana  Conaol.  Copper  &  Silver  Min.  Co., 
29  Mont.  428,  455,  75  Pac.  94.  See  also  Yazoo  &  Mississippi  Valley  Rd. 
Co.  V.  Searles,  85  Miss.  520,  538,  37  So.  939,  per  Truly,  J. 

'8  Const.  N.  C,  Art.  1  (Declaration  of  Rights),  §  31.  See  State  v.  Perry, 
151  N.  C.  661,  65  S.  E.  915;  Robinson  v.  Lamb,  126  N.  C.  492,  36  S.  E.  29; 
Gray  v.  Board  of  Commissioners  of  Cumberland  County,  etc.,  122  N.  C. 
471,  29  S.  E.  771;  Thrift  v.  Elizabeth  City,  122  N.  C.  31,  30  S.  E.  349,  44 
L.  R.  A.  427;  Washington  Toll  Bridge  Co.  v.  Commissioners  of  Beaufort, 
81  N.  C.  491. 

Above  Constitution  is  noted  as  in  existence  from  1776,  in  Ware-Kramer 
Tobacco  Co.  (U.  S.  C.  C),  180  Fed.  160,  170. 

**  Const.  N.  Dak.  (Art.  7,  corporations  other  than  municipal),  §  146. 

275 


§§  254,  255  CONSTITUTIONAL   LAW 

§  254.  Oklahoma  Constitution— Monopolies  Prohib- 
ited—Duty of  Legislature  as  to  Combinations,  Monopo- 
lies, etc. 

The  Oklahoma  Constitution  provides  that: ''Perpetui- 
ties and  monopoUes  are  contrary  to  the  genius  of  a  free 
government,  and  shall  never  be  allowed."  ^° 

The  Constitution  of  that  State  also  provides  that: 
''The  legislature  shall  define  what  is  an  unlawful  com- 
bination, monopoly,  trust,  act,  or  agreement,  in  restraint 
of  trade,  and  enact  laws  to  punish  persons  engaged  in 
any  unlawful  combination,  monopoly,  trust,  act,  or 
agreement,  in  restraint  of  trade,  or  composing  any  such 
monopoly,  trust,  or  combination."  ^^ 

§  255.  South  Dakota  Constitution— Monopolies  and 
Trusts  Prohibited— Combinations  to  Control  Prices,  Pro- 
duction, Transportation,  or  to  Prevent  Competition  Pro- 
hibited— Duty  of  Legislature. 

The  South  Dakota  Constitution  is  as  follows:  "Monop- 
olies and  trusts  shall  never  be  allowed  in  this  State,  and 
no  incorporated  company,  co-partnership  or  association 
of  persons  in  this  State  shall  directly  or  indirectly  com- 
bine or  make  any  contract  with  any  incorporated  com- 
pany, foreign  or  domestic,  through  their  stockholders  or 
the  trustees  or  assigns  of  such  stockholders,  or  with  any 
co-partnership  or  association  of  persons,  or  in  any  manner 
whatever  to  fix  the  prices,  limit  the  production  or  regu- 
late the  transportation  of  any  product  or  commodity 
so  as  to  prevent  competition  in  such  prices,  production 
or  transportation  or  to  establish  excessive  prices  there- 
for. The  legislature  shall  pass  laws  for  the  enforcement 
of  this  section  by  adequate  penalties  and  in  the  case  of 
incorporated  companies,  if  necessary  for  that  purpose 
may,  as  a  penalty,  declare  a  forfeiture  of  their  fran- 
chises." ^^ 

2«  Const.  Okla.,  Art.  II  (Bill  of  Rights),  §  32.  Same  in  Const.  Tex., 
Art.  I  (Bill  of  Rights),  §  26. 

"  Const.  Okla.,  Art.  5  (The  Legislature,  Subdv.  Powers  and  Duties), 
§44. 

"  Const.  S.  Dak.,  Art.  17  (Corporations),  §  20. 

276 


STATE    CONSTITUTIONS  §§  256-258 

§  250.  Tennessee  Constitution— Monopolies  Prohib- 
ited. 

The  Tennessee  Constitution  provides:  "That  perpetui- 
ities  and  monopolies  are  contrary  to  the  genius  of  a  free 
State,  and  shall  not  be  allowed."  -^ 

§  257.  Texas  Constitution— Monopolies  Prohibited. 

The  Texas  Constitution  provides  that;  "Perpetuities 
and  monopolies  are  contrary  to  the  genius  of  a  free  govern- 
ment, and  shall  never  be  allowed."  ^^ 

It  is  said  in  a  Texas  case  that:  "Everything  contained 
in  the  Bill  of  Rights  is  excepted  out  of  the  general  powers 
of  government,  in  short  there  is  no  power  in  the  State 
that  can  create  a  monopoly,  for  in  the  emphatic  language 
of  the  people,  speaking  through  their  Bill  of  Rights, 
monopolies  'shall  never  be  allowed.'  "  -^ 

§  258.  Utah  Constitution — Combinations  to  Control 
Prices,  Cost  of  Exchange  or  Transportation  Prohibited— 
Duty  of  Legislature. 

The  Constitution  of  Utah  provides  that:  "Any  combi- 
nation by  individuals,  corporations,  or  associations,  hav- 
ing for  its  object  or  effect  the  controlling  of  the  price  of 
any  products  of  the  soil  or  of  any  article  of  manufacture 
or  commerce  or  the  cost  of  exchange  of  transportation 
is  prohibited,  and  hereby  declared  unlawful,  and  against 
public  policy.  The  legislature  shall  pass  laws  for  the 
enforcement  of  this  section  by  adequate  penalties,  and 
in  case  of  incorporated  companies,  if  necessary  for  that 
purpose,  it  may  declare  a  forfeiture  of  their  franchises."-® 


"  Const.  Tenn.,  Art.  I  (Declaration  of  Rights),  §  22.  See  Memphis, 
City  of,  V.  Memphis  Water  Co.,  5  Heiak.  (52  Tenn.)  495. 

"  Const.  Tex.  Art.  I  (Bill  of  Rights),  §  26.  See  Bartholomew  v.  City  of 
Austin,  85  Fed.  359,  29  C.  C.  A.  568;  Laredo,  City  of,  v.  International 
Bridge  &  Tramway  Co.,  66  Fed.  246,  14  C.  C.  A.  1,  30  U.  S.  App.  110; 
Brenham,  City  of,  v.  Brenham  Water  Co.,  67  Tex.  542,  4  S.  W.  143. 

"  Brenham,  City  of,  v.  Becker,  1  White  &  Wilson's  Civ.  Cas.  (Tex.  Ct. 
App.),    §1243. 

"•Const.  Utah,  .\rt.  12  (corporations),  §20. 

277 


§§  259,  260  CONSTITUTIONAL   LAW — 

§  259.  Washington  Constitution — Monopolies  and 
Trusts  Prohibited — Combinations  to  Control  Prices, 
Production,  Transportation  or  to  Prevent  Competition 
Prohibited — Duty  of  Legislature. 

The  Constitution  of  Washington  provides  that: 
"MonopoUes  and  trusts  shall  never  be  allowed  in  this 
State,  and  no  incorporated  company,  co-partnership,  or 
association  of  persons  in  this  State  shall  directly  or  in- 
directly combine  or  make  any  contract  with  any  other 
incorporated  company,  foreign  or  domestic,  through  their 
stockholders,  or  the  trustees,  or  assignees  of  such  stock- 
holders, or  with  any  copartnership  or  association  of 
persons,  or  in  any  manner  whatever,  for  the  purpose  of 
fixing  the  price  or  limiting  the  production  or  regulating 
the  transportation  of  any  product  or  commodity.  The 
legislature  shall  pass  laws  for  the  enforcement  of  this 
section  by  adequate  penalties,  and  in  case  of  incorporated 
companies,  if  necessary  for  that  purpose,  may  declare 
a  forfeiture  of  their  franchise."  -^ 

§  260.  Washington  Constitution  Continued— Its  Pro- 
visions Not  Self-Executing. 

The  above  constitutional  provision  of  Washington  is 
held  not  self-executing  but  limited  in  its  operation  to 
such  interpretation  as  has  been  given  it  by  legislative 
enactment.  ^^ 

"  Const.  Wash.,  Art.  12  (corporations  other  than  municipal),  §  22. 
See  Wood  v.  City  of  Seattle,  23  Wash.  1,  62  Pac.  135,  52  L.  R.  A.  369. 

^  Northwestern  Warehouse  Co.  v.  Oregon  Railway  &  Navigation  Co., 
32  Wash.  218,  73  Pac.  388.  "  It  cannot  be  said  that  the  makers  of  the  Con- 
stitution understood  §  22,  above  quoted,  to  be  self-executing,  since  they 
expressly  provided  that  the  legislature  shall  pass  laws  for  its  enforcement. 
Since  the  constitutional  convention  itself  so  interpreted  the  section,  it  is 
the  manifest  duty  of  the  courts  to  adopt  that  interpretation.  *  *  *  The 
legislature  has  *  *  *  construed  this  section  of  the  Constitution  as  not 
being  self-executing,  and  we  think  its  construction  the  correct  one.  It 
follows  that  whatever  rights  the  respondents  have  in  the  premises  must 
be  determined  by  the  terms  of  the  statute  in  so  far  as  its  terms  give  vital 
force  to  the  constitutional  provisions,  and  that  the  courts  cannot  enlarge 
upon  the  statutory  provisions  even  though  the  legislature  might  possibly 
do  so  within  the  constitutional  limitations."    Id.,  227,  228,  per  Hadley,  J. 

As  to  self -executing  constitutional  provisions,  see  Joyce  on  Franchises, 
§§  225-227. 

278 


STATE    CONSTITUTIONS  §§  261-263 

§261.  Washington  Constitution  Continued  Combi- 
nations of  Common  Carriers  to  Share  Earnings  Pro- 
hibited. 

The  Constitution  of  Washington  also  provides  that: 
"No  railroad  company  or  other  common  carrier  shall 
combine  or  make  any  contract  with  the  owners  of  any 
vessel  that  leaves  port  or  makes  port  in  this  State,  or 
with  any  common  carrier,  by  which  combination  or  con- 
tract the  earnings  of  one  doing  the  carrying  are  to  be 
shared  by  the  other  not  doing  the  carrying."  ^^ 

§  262.  Wyoming  Constitution — Monopolies  Prohibited 
— Combinations  to  Prevent  Competition,  Control  Produc- 
tions or  Prices,  etc.,  Prohibited. 

The  Wyoming  Constitution  provides  that:  "Per- 
petuities and  monopolies  are  contrary  to  the  genius  of  a 
free  State,  and  shall  not  be  allowed.  Corporations  being 
creatures  of  the  State,  endowed  for  the  public  good 
with  a  portion  of  its  sovereign  powers,  must  be  subject 
to  its  control."  ^° 

The  Constitution  of  that  State  also  provides  that: 
"There  shall  be  no  consoHdation  or  combination  of  cor- 
porations of  any  kind  whatever  to  prevent  competition, 
to  control  or  influence  productions  or  prices  thereof,  or 
in  any  manner  to  interfere  with  the  public  good  and  gen- 
eral welfare."  '^ 

§  263.  Constitutional  Provisions  Prohibiting  Granting 
Special  or  Exclusive  Privileges,  Immunities,  or  Fran- 
chises, etc. 

The  Constitutions  of  many  of  the  States  prohibit  the 
granting  to  corporations,  etc.,  of  any  special  or  exclusive 
privileges,  immunities  or  franchises;  or  the  enactment 
of  private  or  local  or  special  laws  for  the  benefit  of  indi- 
viduals or  corporations.^-     It  is  declared  in  a  Pcnnsyl- 

"  Const.  Wash.,  Art.  12  (corporations  other  than  municipal),  §  14. 
*»  Const.  Wyo.  Art.  1  (declaration  of  rights),  §  30.     See  Wood  v.  Se- 
attle, 23  Wash.  1,  20,  62  Pac.  135. 

*' Const.  Wyo.,  Art.  10  (corporations),  §8. 

"Omaha  Water  Co.  v.  City  of  Omaha,  147  Fed.  1,  77  C.  C.  A.  267,  12 

279 


§  264  CONSTITUTIONAL   LAW — 

vania  case  that:  All  corporate  franchises  are  held  to  be 
special  and  exclusive  privileges  or  immunities  discrimina- 
tive against  individuals.  The  act  of  incorporation  itself 
is  a  discrimination  as  to  privileges,  powers  and  liabilities 
against  the  natural  person.  The  Constitution  does  not 
prohibit  these  special  privileges  as  compared  with  indi- 
viduals.^^ In  an  Illinois  case  it  is  also  asserted  that  it 
is  against  the  public  policy  of  that  State  that  any  cor- 
poration shall  receive  a  special  or  exclusive  franchise  by 
virtue  of  any  special  law.^"* 

§  264.  Same  Subject— General  Instances. 
This  constitutional  inhibition  does  not  embrace  cer- 
tain statutory  prohibitions  against  an  insurance  com- 

L.  R.  A.  (N.  S.)  736;  Const.  Neb.,  Art.  1,  §  16  (not  unconstitutional); 
Skinner  v.  Garnett  Gold-Mining  Co.  (U.  S.  C.  C),  96  Fed.  735;  Const. 
Cal.,  Art.  1,  §21  (not  unconstitutional);  Gerino,  Ex  parte,  143  Cal.  412, 
77  Fac.  166,  66  L.  R.  A.  249;  Const.  Cal.,  Art.  4,  §  2.5,  subdv.  19  (not  in- 
valid); New  York,  New  Haven  &  Hfd.  Rd.  Co.  v.  Offield,  77  Conn.  417, 
59  Atl.  510;  Const.,  Art.  1,  §  1  (no  violation);  Starr  Burying  Ground 
Assoc.  V.  North  Lane  Cemetery  Assoc,  77  Conn.  83,  90,  58  Atl.  467  (not 
invaUd);  People  ex  rel.  Healy  v.  Clean  Street  Co.,  225  111.  470,  80  N.  E. 
298,  9  L.  R.  A.  (N.  S.)  455;  Const.  Art.  4,  §22  (in  conflict);  Martin  v. 
O'Brien,  34  Miss.  21.  See  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115 
U.  S.  683,  29  L.  ed.  510,  6  Sup.  Ct.  265.  See  also  other  decisions  under 
chaps.  22  et  seq.,  herein. 

County  is  not  a  "corporation"  under  a  constitutional  provision  that  the 
legislature  shall  not  pass  any  local  or  special  laws  "granting  to  any  cor- 
poration, association  or  individual  any  exclusive  privileges,  immunities, 
or  franchise  whatever.  In  all  other  cases  where  a  general  law  can  be  made 
applicable  no  special  law  shall  be  enacted."  Sherman  County  v.  Simons, 
109  U.  S.  735,  3  Sup.  Ct.  502,  27  L.  ed.  1093,  following  Woods  v.  Colfax 
County,  10  Neb.  552,  7  N.  W.  269. 

See  State  v.  Citizens'  Bank  of  Louisiana,  52  La.  Ann.  1086,  27  So.  709. 
(Art.  234  of  Const,  of  1879,  prohibits  among  other  things  the  passage  of 
"any  general  or  special  law  for  the  benefit  of  such  corporation"  save  upon 
conditions  mentioned;  held  that  where  charter  is  extended  the  corporation 
takes  subject  to  the  Constitution  then  in  force.  Case  was  reversed  in 
Citizens'  Bank  of  Louisiana  v.  Parker,  192  U.  S.  73,  48  L.  ed.  346,  24  Sup. 
Ct.  181.) 

"  Clark's  Estate,  In  re,  195  Pa.  St.  520,  46  Atl.  127,  48  L.  R.  A.  587,  re- 
lied upon  in  King  v.  Pony  Gold  Mining  Co.  (King  v.  Elling),  24  Mont. 
470,  476,  62  Pac.  783,  per  Pigott,  J. 

3<  First  Methodist  Episcopal  Church  of  Chicugo  v.  Dixon,  178  111.  260, 
272,  52  N.  E.  887,  per  Boggs,  J.,  case  reverses  77  111.  App.  lo(j. 

280 


STATE    CONSTITUTIONS  §  264 

pany;  ^^  nor  laws  prohibiting  combinations,  pools,  or 
trusts  to  regulate  fire,  lightning  or  storm  insurance  rates 
or  premiums,  with  certain  exceptions;  ^^  nor  a  statute 
which  hmits  the  amount  of  new  business  which  a  domes- 
tic insurance  company  may  do  yearly;  ^^  nor  an  act  au- 
thorizing surety  companies  to  become  sole  surety,  etc. ;  ^^ 
nor  to  statutes  on  the  subject  of  building  and  loan  asso- 
ciations where  said  statutes  apply  to  such  organizations 
as  a  class,  and  do  not  bestow  any  special  benefit  upon 
any  individual  or  corporation  or  suspend  any  general 
law  of  the  State  for  such  purpose;  ^^  nor  an  act  authoriz- 
ing companies  incorporated  thereunder  to  acquire  and 
operate  actually  existing  street  railroads,  whether  or  not 
they  are  at  the  time  being  operated  with  legal  authority;  "^^ 

"  People  V.  Commercial  Life  Ins.  Co.,  247  111.  92,  93  N.  E.  90;  Const., 
Art.  4,  §  22. 

3«  State  ex  rol.  Crow  v.  ^tna  Ins.  Co.,  150  Mo.  113,  51  S.  W.  413;  Const., 
Art.  4,  §  53.  See  State  ex  rel.  Crow  v.  Fireman's  Fund  Ins.  Co.,  152  Mo. 
1,  52  S.  W.  595;  Const.,  Art.  4,  §  28. 

In  Greenwich  Ins.  Co.  v.  Carroll  (U.  S.  C.  C),  125  Fed.  121,  it  was  held 
that  statute,  prohibiting  combinations,  etc.,  between  fire  insurance  com- 
panies, was  not  within  prohibitions  of  Const.,  Art.  1,  §  6,  as  to  grants  of 
special  privileges  and  immunities;  an  injunction  was  is.sued  and  made  per- 
petual; but  case  was  reversed  in  Carroll  v.  Greenwich  Ins.  Co.,  199  U.  S. 
401,  50  L.  ed.  246,  26  Sup.  Ct.  66,  upon  point  of  constitutionality  under 
the  Fourteenth  Amendment. 

"  Bush  V.  New  York  Life  Ins.  Co.,  119  N.  Y.  Supp.  796,  135  App.  Div. 
447,  aff'g  116  N.  Y.  Supp.  1056,  63  Misc  89;  Const.,  Art.  3,  §  18. 

38  King  V.  Pony  Gold  Mining  Co.  (King  v.  Elling),  24  Mont.  470,  62 
Pac.  783;  Const.,  Art.  5,  §  26. 

»» Beyer  v.  National  Building  &  Loan  Assoc,  131  Ala.  369,  377,  31  So. 
113;  Const.,  Art.  4,  §  23,  which  prohibits  a  local  law  from  being  enacted 
for  the  benefit  of  individuals  or  corporations,  or  the  suspension  of  any 
general  law  for  the  benefit  of  any  individual,  association  or  corporation. 
In  this  case  it  was  urged  that  the  statute  authorizing  building  and  loan 
associations  to  charge  more  than  8  per  cent  per  annum  violated  the  above 
constitutional  provision;  the  court  held  the  point  inapplicable  as  the  stat- 
ute under  which  the  loan  in  question  was  made  did  not  authorize  such  a 
charge,  and  the  contract  provided  for  6  per  cent  only. 

<"  Jersey  City  v.  North  Jersey  St.  Ry.  Co.,  74  N.  J.  L.  774,  67  Atl.  113, 
afT'g  73  N.  J.  L.  175,  63  Atl.  906.  "The  language  of  the  act  is  in  itself 
broad  enough  to  include  all  street  railways,  whether  or  not  they  are  oper- 
ated as  such  with  legal  authority.  That  it  was  intended  to  include  all 
street  railways  in  actual  operation  is  indicated  by  the  use  of  express  words 
including  railroads  operated  as  street  railways.  ♦  *  ♦  It  is  urged  that  in 
substance  a  grant  to  a  company  organized  under  the  Traction  .\ct  of  1893, 

281 


§  204  CONSTITUTIONAL   LAW — 

nor  an  act  authorizing  the  formation  of  gas  light  corpora- 
tions and  regulating  the  same  and  empowering  them  to 
extend  their  main  pipes  to  any  neighboring  city,  town  or 
village  wherein  no  gas  company  already  exists,  for  the 
purpose  of  supplying  the  same  with  illuminating  gas, 
upon  obtaining  permission  of  the  proper  authority  of 

conditioned  upon  the  assent  of  the  existing  company,  amounts  to  an  ex- 
tension of  the  right  of  the  existing  company  to  occupy  the  street,  since  all 
it  need  do  is  to  cause  a  traction  company  to  be  organized  in  its  own  interest 
and  under  its  own  control  and  grant  its  consent  to  that  company  and  no 
other.  No  doubt  such  a  result  is  possible.  The  effect  is  to  create  an  ex- 
clusive privilege  in  the  public  streets  and  a  right  to  lay  down  railroad 
tracks  indirectly  instead  of  directly.  If  the  statute  which  authorizes  and 
makes  possible  such  a  result  is  private,  local  or  special  it  is  in  conflict  with 
the  Constitution.  Is  the  act  of  1893  of  that  character?  Certainly  not  in 
form.  The  words  of  the  statute  are  as  general  as  possible.  It  authorizes 
any  three  persons  to  organize  a  traction  company  and  to  acquire  the  neces- 
sary consents.  It  appUes  to  all  streets  and  highways,  and  to  all  street 
railways  existing  at  the  time  of  the  passage  of  the  act  or  thereafter.  To 
secure  the  right  to  lay  tracks  in  the  street  where  none  exist,  a  route  must 
be  filed  with  the  Secretary  of  State,  and  the  consent  of  the  proper  municipal 
authority  secured.  The  privileges  offered  by  the  act  are  open  to  all.  No 
law  can  secure  to  all  an  equal  ability  to  avail  themselves  of  its  privileges. 
The  act  gives  all  an  equal  opportunity.  It  is  suggested  that  the  privilege 
should  be  awarded  in  an  open  competition  to  the  highest  bidder,  but  that 
plan  gives  an  advantage  to  the  man  with  the  longest  purse.  The  plan 
offered  by  the  law  gives  the  advantage  to  him  who  is  most  diligent  and 
expeditious  in  filing  the  route.  *  *  *  No  matter  how  general  may  be  the 
law  granting  rights,  franchises  or  privileges,  there  must  be  something  to 
constitute  an  acceptance  of  the  right.  *  *  *  Upon  compliance  with  the 
condition  the  rights  become  exclusive,  but  the  source  of  the  right  ia  the 
legislative  enactment,  and  that  is  none  the  less  general  because  only  a  few 
have  the  desire  or  the  ability  to  avail  themselves  of  its  privileges.  All  that 
the  legislature  is  forbidden  to  do  is  to  adopt  an  arbitrary  standard  for  those 
who  are  authorized  to  obtain  the  offered  privileges.  *  *  *  Numerous 
statutes  have  been  sustained  the  object  of  which  was  to  correct  the  de- 
fective execution  of  deeds  or  defective  municipal  action.  *  *  *  Such  stat- 
utes operate  to  confer  an  exclusive  privilege,  or  even  to  make  good  a  title 
to  land  but  the  legislative  power  has  never  been  doubted.  *  *  *  We  think 
the  act  is  constitutional."  Id.,  781-784,  per  Swayze,  J.  The  first  section 
of  the  act  [act  March  14,  1893,  §  1  (Pamph.  L.,  p.  302;  Gen.  Stat.,  p.  3235)] 
authorizes  corporations  formed  thereunder  to  enter  upon  any  highways 
upon  which  any  street  railway  or  other  railroad  operated  as  a  street  rail- 
way is  or  may  be  constructed,  and  to  maintain  and  operate  it,  with  the 
con.sent  of  the  owner  and  of  the  persons  operating  the  same;  to  construct 
lines  of  street  railway  through  any  highway,  either  by  extension  of  existing 
railways  or  by  the  building  of  new  lines  thereon,  and  to  use  and  operate 
them  when  constructed. 

282 


STATE   CONSTITUTIONS  §  2t)4 

such  city,  town  or  village,  and  giving  such  corporations, 
when  permission  is  granted,  the  same  rights  and  priv- 
ileges as  it  had  under  its  original  organization  where 
originally  located;  *^  nor  an  act  allowing  a  ferry  com- 
pany to  provide  additional  ferry  slips;  ^^  nor  a  statute 
authorizing  an  association  to  establish  rules  regulating 
trade  upon  its  grounds;  ^^  nor  statutes  for  the  adoption 
of  labels,  trade-marks  and  forms  of  advertising  by  asso- 
ciations or  unions  of  workingmen,  and  to  regulate  the 
same;  **  and  municipal  corporations  are  not  within  a 
constitutional  provision  prohibiting  such  grant  of  any 
special  or  exclusive  privileges,  imnmnities  or  fran- 
chises; *^  nor  is  a  grant  of  certain  powers  to  a  municipality 
relating  to  sewage  within  such  a  constitutional  prohibi- 
tion; ''^  nor  a  statute  which  regulates  the  internal  affairs 
of  towns  and  counties,  as  such  constitutional  inhibition 
applies  to  private  corporations  only/"  But  rights  granted 
to  railroad  companies  as  to  operating  a  surface  passenger 
railway  may  come  wdthin  such  a  constitutional  prohibi- 
tion; ^^  as  may  also  an  act  relating  to  taxes  for  road  and 
bridge  purposes,  etc. ;  ^^  and  statutes,  enacted  after  the 
passage  of  a  Constitution  prohibiting  the  granting  of 

*^  Millville  Improvement  Co.  v.  Pitman,  Glassboro  &  Clayton  Gas  Co., 
7-5  N.  J.  L.  410,  67  Atl.  1005,  afT'd  76  N.  J.  L.  826,  71  Atl.  1134;  Act  of 
March  14,  1879;  Gen.  Stat.,  p.  1613,  pi.  30. 

«  Matter  of  Application  of  Union  Ferry  Co.,  98  N.  Y.  139. 

"  Thousand  Island  Park  Assoc,  v.  Tucker,  173  N.  Y.  203,  210,  65  N.  E. 
975;  Const.,  Art.  3,  §  18.  Power  to  regulate  trade  does  not  authorize 
creation  of  a  monopoly.    Id. 

**  Schmalz  v.  Wooley,  57  N.  J.  Eq.  303,  41  Atl.  939,  43  L.  R.  A.  86,  73 
Am.  St.  Rep.  637,  rev'g  56  N.  J.  Eq.  649,  39  Atl.  539;  Const.,  Art.  4,  §  7, 
par.  11. 

*^  Commonwealth  v.  Emmers,  33  Pa.  Super.  Ct.  151;  Const.,  Art.  3,  §  7. 

«  Commonwealth  v.  Emmers,  221  Pa.  St.  298,  70  Atl.  762;  Const.,  Art.  3, 
§7. 

"  State  Board  of  Health  v.  Diamond  Mills  Paper  Co.,  63  N.  J.  Eq.  Ill, 
51  Atl.  1019,  affirmed  in  64  N.  J.  Eq.  793,  53  Atl.  1125. 

«  Long  Island  R.  Co.  v.  City  of  New  York,  199  N.  Y.  288,  92  N.  E.  681, 
aff'g  118  N.  Y.  Supp.  1121,  13  App.  Div.  928. 

«  People  ex  rel.  v.  Fox,  247  111.  402,  93  N.  E.  302;  Art.  4,  §  22. 

Exemption  of  railroad  from  taxation  for  a  certain  length  of  time  by  territorial 
legislation  is  not  within  act  of  Congress,  July  30,  1886,  24  Stat.  170,  chap. 
818.    Bennett  v.  Nichols,  9  Ariz.  138,  80  Pac.  392. 

283 


§§  265,  266  CONSTITUTIONAL   LAW — 

special  or  exclusive  privileges  or  immunities,  which  are 
amendatory  of  a  special  charter  of  an  insurance  company 
granted  prior  to  the  taking  effect  of  said  Constitution, 
which  strike  out  the  limitation  upon  corporate  duration 
so  that  it  shall  have  perpetual  succession,  and  under 
which  statutes  it  claimed  a  perpetual  special  charter, 
are  unconstitutional  within  the  above  prohibition  against 
the  granting  of  special  privileges,  etc.^° 

§  265.  Constitutional  Provisions  Prohibiting  Creation 
of  Corporations  by  Special  Act,  etc. 

Many  of  the  State  Constitutions  contain  provisions 
prohibiting  the  creation  of  corporations  by  special  act, 
or  also  provide  that  they  shall  be  created  only  under 
general  laws,  or  that  corporate  powers  shall  not  be  in- 
creased or  diminished  by  special  laws,  etc."  It  is  held 
in  New  York  that,  under  the  Constitution  of  that  State, 
a  discretion  is  vested  in  the  legislature  to  determine  the 
necessity  of  a  special  act  of  incorporation.^^ 

§  266.  Same  Subject — General  Instances. 

A  franchise  granted  by  the  legislature  to  construct 
and  maintain  a  dam  across  a  river  is  not  within  the 
meaning  of  a  State  Constitution  prohibiting  the  legis- 
lature from  enacting  any  special  or  private  law  granting 
corporate  powers  or  privileges  except  to  cities.  ^^     Other 

so  Bank  of  Commerce,  In  re  Application  of,  153  Ind.  460,  53  N.  E.  950, 
55  N.  E.  224;  Const.,  Art.  1,  §  23. 

"  See  Omaha  Water  Co.  v.  City  of  Omaha,  147  Fed.  1,  77  C.  C.  A.  267,  12 
L.  R.  A.  (N.  S.)  736  [Const.  Neb.,  Art.  lib  (13)];  Gillespie  v.  Ft.  Wayne  & 
Southern  R.  Co.,  17  Ind.  243;  State  v.  City  of  Bangor,  98  Me.  114,  56  Atl. 
589  (Const.,  Art.  4,  §  14);  Memphis  &  S.  L.  R.  Co.  v.  Union  Ry.  Co.,  116 
Tenn.  500,  95  S.  W.  1019  (Const.,  Art.  11,  §  8). 

Increase  of  capital  stock  within  prohibition  of  Const.,  Art.  11,  §  13;  "create" 
construed.    Marion  Trust  Co.  v.  Bennett,  169  Ind.  346,  82  N.  E.  782. 

"  Economic  Power  &  Const.  Co.  v.  City  of  Buffalo,  112  N.  Y.  Supp.  1127, 
128  App.  Div.  883,  aff'g  111  N.  Y.  Supp.  443,  59  Misc.  571;  Const.,  Art.  8, 
§  1.  See  People  v.  Board  of  Election  Comm'rs  of  Chicago,  221  111.  9,  77 
N.  E.  321;  Const.,  Art.  4,  §  22. 

"  Southern  Wisconsin  Power  Co.,  In  re,  140  Wis.  245,  265,  122  N.  W. 
801,  809;  Const.,  Art  4,  §  31.  This  was  held  especially  so  where  the  act 
granting  such  franchise  specificall)'  provides  that  no  corporate  powers  are 

284 


STATE    CONSTITUTIONS  §  266 

statutes  held  not  to  be  within  the  constitutional  prohibi- 
tion against  creating  corporations  by  special  acts  are 
as  follows :  the  grant  of  a  franchise  to  an  existing  corpora- 
tion to  construct  a  canal  and  locks;  ^^  the  regulation  of 
railroads  by  certain  cities  acting  under  statute;  ^^  the 
regulation  of  street  railway  fares;  ^^  a  grant  to  a  water 
company  of  an  exclusive  right;  "  and  a  reclamation  dis- 
trict is  not  within  such  a  constitutional  prohibition;  ^^ 
nor  is  a  board  of  water  works,  created  by  statute  for 
certain  cities,  a  private  business  corporation  within  the 
meaning  of  the  Constitution;  ^^  and  fraternal  benefit 
societies  are  held  not  embraced  within  the  prohibition;  ^° 
nor  the  incorporation  of  religious  societies;  ^^  nor  school 
districts,  but  only  private  or  quasi  public  corporations;  ^^ 
so  private  corporations  and  State  hospitals  are  distin- 
guished in  this  respect;  ^^  and  a  State  normal  college  is 

granted  or  intended  to  be  granted  by  it.  It  was  also  decided  that  a  fran- 
chise, such  as  a  right  to  build  a  dam  across  a  river,  may  be  conferred  by 
special  or  private  law  upon  an  existing  corporation. 

\Vheii  bill  ratifying  charier  and  conferring  certain  rights  as  to  constructing 
dam,  etc.,  held  not  within  prohibition  of  Const.,  Art  3,  §  34;  McMeekin  v. 
Central  Carolma  Power  Co.,  80  S.  C.  512,  61  S.  E.  1020,  construing  also 
Const.,  Art.  9,  §  2. 

"  State  V.  Portland  General  Electric  Co.,  52  Oreg.  502,  98  Pac.  160, 
denying  rehearing,  95  Pac.  722,  under  Const.,  Art.  11,  §  2. 

»  Pittsburg,  C,  C.  &  St.  L.  Ry.  Co.  v.  Hartford  City,  170  Ind.  674,  82 
N.  E.  787,  85  N.  E.  362;  Const.,  Art.  11,  §  13. 

« Indianapohs,  City  of,  v.  Navin,  151  Ind.  139,  47  N.  E.  525,  51  N.  E. 
80,  41  L.  R.  A.  337,  344;  Const.  Art.  11,  §  13. 

\Vhen  statute  authorizing  certain  railroad  rate  is  within  constitutional 
prohibition,  see  People  v.  Pubhc  Service  Commission,  125  N.  Y.  Supp. 
1000. 

"  San  Luis  Water  Co.  v.  Estrada,  117  Cal.  168,  48  Pac.  1075,  held  not  to 
create  a  corporation  by  special  act  within  the  prohibition  of  Const.,  Art.  4, 
§31. 

*'  Reclamation  Dist.  No.  70  v.  Sherman,  11  Cal.  App.  399,  105  Pac.  277; 
Const.,  Art.  12,  §  1. 

M  Kirch  V.  City  of  Louisville,  30  Ky.  L.  Rep.  1356,  101  S.  W.  373;  Const., 
§59. 

•»  Park  V.  Modern  Woodmen  of  America,  181  111.  214,  54  N.  E.  932. 

«'  St.  Hyacinth  Congregation  v.  Borucki,  141  Wis.  205,  124  N.  W.  284; 
Const.,  Art.  4,  §  31. 

"  State  V.  McCaw,  77  S.  C.  351,  58  S.  E.  145;  Const.,  Art.  9,  §  2. 

"  Napa  State  Hospital  v.  Daaso,  153  Cal.  698,  96  Pac.  355;  Const., 
Art.  12,  §  1. 

285 


§  266  CONSTITUTIONAL  LAW — 

not  a  corporation  under  such  a  constitutional  prohibi- 
tion; "  although  a  parish  board  of  education  is  held  to 
be  included  wdthin  the  meaning  of  the  Louisiana  Consti- 
tution.^^ Again,  statutes,  enacted  after  the  passage  of 
a  Constitution  providing  that  ''corporations  other  than 
banking  shall  not  be  created  by  special  act,  but  may 
be  formed  under  general  laws,"  which  are  amendatory 
of  a  special  charter  of  an  insurance  company  granted 
prior  to  the  taking  effect  of  said  constitutional  provision, 
and  which  strike  out  the  limitation  upon  corporate  dura- 
tion so  that  it  shall  have  perpetual  succession,  and  under 
which  statutes  it  claimed  a  perpetual  special  charter,  are 
unconstitutional  within  the  above  provision  against 
creating  corporations  by  special  act.^® 

"  Turner  v.  City  of  Hattiesburg  (Miss.,  1910),  53  So.  681;  Const.  1890, 
§178. 

**  Board  of  School  Directors  of  Madison  Parish  v.  Coltharp  (La.,  1911), 
54  So.  299;  Const,  of  1898,  Art.  48. 

8«  Bank  of  Commerce,  In  re  Apphcation  of,  153  Ind.  460,  53  N.  E.  950,  55 
N.  E.  224;  Const.,  Art.  11,  §  13. 


286 


MONOPOLIES,    ETC. 


§267 


CHAPTER  XVIII 

FEDERAL   AND   STATE    LEGISLATIVE   POWERS — 
MONOPOLIES,    ETC. 


!  267.  Power  of  Congress  to  Pro- 
hibit Restraints  Upon 
Competition  —  Railroad 
Corporation. 
26S.  Legislative  Powers  of  State 
Generally. 

269.  Federal  and  State  Legislative 

Powers  Distinguished. 

270.  Same       Subject — Interstate 

and  Intrastate  Commerce. 

271.  Police        Power — Definition 

and  General  Principles — 
Monopolies  May  Be  Pro- 
hibited, etc. 

272.  Grant    of    Monopoly — Sov- 

ereign Power  or  State  Is 


Source  of  Grant  or  Fran- 
chise. 
§  273.  Test  of  Legislative  Power  to 
Grant. 

274.  Legislative  Power  of  State  to 

Grant  Monopolies. 

275.  Monopoly   Cannot   Be   Im- 

pUed  from  Mere  Grant — 
PubUc  Grants  of  Fran- 
chises, Privileges,  etc. — 
Construction  Against 

Grantee. 

276.  Legislative   Power  of  State 

to  Prohibit  Combinations, 
MonopoUes,  etc. — Anti- 
Trust  Acts. 


§  267.  Power  of  Congress  to  Prohibit  Restraints  Upon 
Competition — Railroad  Corporations. 

Congress  with  regard  to  interstate  commerce  and  in 
the  case  of  railroad  corporations  has  the  power  to  say- 
that  no  contract  or  combination  shall  be  legal  which 
shall  restrain  trade  and  commerce  by  shutting  out  the 
operation  of  the  general  law  of  competition.^ 

1  United  States  v.  Joint  Traffic  Assoc,  171  U.  S.  505,  43  L.  ed.  259,  19 
Sup.  Ct.  25.  A  case  of  vahdity  of  joint  traffic  agreement;  decision  is  con- 
sidered in  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  64  (per  Mr.  Chief 
Justice  White),  91  et  seq.  (per  Mr.  Justice  Harlan  in  concurring  and  dis- 
senting opinion),  55  L.  ed.  — ,  31  Sup.  Ct.  502. 

Consiilutional  vestment  of  powers  in  Congress.    See  §  204,  herein. 

Commerce  clause  of  Constitution — Power  of  Congress.    See  §  205,  herein. 

Purpose  of  vestment  in  Congress  of  power  to  regulate  commerce.  See  §  206, 
herein. 

Regulation  of  Commerce — Extent  of  interference  with  private  contracts  or 
combinations — Interstate  and  intrastate  commerce.    See  §  207,  herein. 

287 


§§  268,  269     FEDERAL   AND   STATE    POWERS — 

§  268.  Legislative  Powers  of  State  Generally. 

The  legislature  of  a  State  has  all  powers  of  legislation, 
except  in  so  far  as  it  may  be  restrained  by  the  Constitu- 
tion of  the  State  or  of  the  United  States,  expressly  or 
by  necessary  hnplication.-  In  the  construction  of  State 
statutes  the  legislature  possesses  all  legislative  powers 
not  prohibited  by  the  fundamental  law,  and  every  legis- 
lative act  is  presumed  to  be  valid,  nevertheless  if  there 
be  a  clear  incompatibility  between  the  Constitution  and 
the  act,  the  latter  is  void,  and  must  be  so  declared.^  It 
is  no  part  of  the  essential  governmental  functions  of  a 
State  to  provide  means  of  transportation,  supply  arti- 
ficial light,  water  and  the  like.  These  objects  are  often 
accomplished  through  the  medium  of  private  corpora- 
tions, and,  though  the  public  may  derive  a  benefit  from 
such  operations,  the  companies  carrying  on  such  enter- 
prises are,  nevertheless,  private  companies  whose  business 
is  prosecuted  for  private  emolmnent  and  advantage/ 

§  269.  Federal  and  State  Legislative  Powers  Distin- 
guished.^ 

It  is  well  settled  that  the  government  created  by  the 
Federal  Constitution  is  one  of  enumerated  powers;  ^  it 
has  no  inherent  powers  of  sovereignty;  the  enumeration 
of  the  powers  granted  is  to  be  found  in  the  Constitution 
of  the  United  States  and  in  that  alone;  ^  it  cannot  by 
any  of  its  agencies  exercise  an  authority  not  granted  by 

2  Wright  V.  Cunningham,  115  Tenn.  445,  91  S.  W.  293.    See  §  269,  herein. 

That  State  legislative  power  unlimited  except  as  restricted  by  Federal  or 
State  Constitutions.  See  McGrew  v.  Missouri  Pacific  Ry.  Co.,  230  Mo. 
416,  132  S.  W.  1076. 

'  Miller  v.  Commonwealth,  88  Va.  618,  15  L.  R.  A.  441,  14  S.  E.  161,  344, 
979. 

*  Flint  V.  Stone  Tracy  Co.,  220  U.  S.  108,  55  L.  ed.  —  31  Sup.  Ct.  342  (a 
case  of  corporation  tax  as  imposed  by  act  of  Congress  in  the  Tariff  Act  of 
1909).    See  opinion  of  Mr.  Justice  Day  at  p.  172. 

^  Sec  Joyce  on  Franchises,  §§  120, 121, 137,  289;  see  also  §§  204-207,  268, 
herein. 

«  House  V.  Mayes,  219  U.  S.  270,  55  L.  ed.  — ,  31  Sup.  Ct.  234,  case  affirms 
227  Mo.  617,  127  S.  W.  305;  Kansas  v.  Colorado,  206  U.  S.  46,  51  L.  ed. 
956,  27  Sup.  Ct.  655. 

^  Kansas  v.  Colorado,  206  U.  S.  46,  51  L.  ed.  956,  27  Sup.  Ct.  655. 

288 


MONOPOLIES,    ETC.  §  269 

that  instrument  either  expressly  or  by  necessary  impli- 
cation, and  a  power  may  be  implied  when  necessary  to 
give  effect  to  a  power  expressly  granted.^  In  a  qualified 
sense,  however,  and  to  a  limited  extent  the  separate 
States  are  sovereign  and  independent,  and  the  relations 
between  them  partake  something  of  the  nature  of  inter- 
national law,  and  they  may  not  improperly  be  called  a 
body  of  interstate  law.^  It  is  also  a  fundamental  prin- 
ciple beyond  dispute  that  while  the  Constitution  of  the 
United  States  and  the  laws  enacted  in  pursuance  thereof, 
together  with  treaties  made  under  the  authority  of  the 
United  States  constitute  the  supreme  law  of  the  land,'" 
a  State  may  exercise  all  such  governmental  authority  as 
is  consistent  with  its  own,  and  not  in  conflict  with  the 
Federal  Constitution. '^  And  while  the  Federal  govern- 
ment is  one  of  enumerated  powers  specified  in  its  Con- 
stitution, State  Constitutions  are  limitations  upon  and 
not  grants  of  legislative  power. *^    It  may  also  be  generally 

« House  V.  Mayes,  219  U.  S.  270,  55  L.  ed.  —  31  Sup.  Ct.  337,  case  af- 
6rms  227  Mo.  617,  127  S.  W.  305. 

9  Kansas  v.  Colorado,  206  U.  S.  46,  51  L.  ed.  956,  27  Sup.  Ct.  655. 

10  See  §  203,  herein. 

Supremacy  of  Congress  over  Slate  laws.  See  9  Fed.  Stat.  Ann.,  pp.  221 
et  seq. 

"  Hou.se  V.  Mayes,  219  U.  S.  270,  55  L.  ed.  — ,  31  Sup.  Ct.  337,  case  af- 
firms 227  Mo.  617,  127  S.  W.  305.    See  §  268,  herein. 

1-  Alabama:  State  e.x  rel.  Woodward  v.  Skeggs,  154  Ala.  249,  46  So.  268, 
270;  Ensley  Development  Co.  v.  Powell,  147  Ala.  300,  40  So.  137;  Dor- 
sey.  In  re,  7  Port.  (Ala.)  293. 

California:  City  Street  Improvement  Co.  v.  Regents'  University  of  Cali- 
fornia, 158  Cal.  776,  778,  96  Pac.  801  (the  Constitution  of  the  State  being 
but  a  restriction  upon  the  power  of  the  legislature,  the  hmitation  therein 
contained  will  not  be  extended  beyond  the  legitimate  meaning  and  use  of 
the  terms  employed,  per  Hcnshaw,  J.);  Beals  v.  Amador  County  Super- 
visors, 35  Cal.  624;  McCarthy,  Ex  parte,  29  Cal.  395. 

Colorado:  People  ex  rel.  Rhodes  v.  Fleming,  10  Colo.  553,  16  Pac.  298 
(Constitution  not  a  grant  of  power  to  legislature,  it  is  but  a  limitation  upon 
legislative  authority,  as  it  is  invested  with  plenary  power  for  all  the  pur- 
poses of  civil  government). 

Florida:  Thomas  v.  Williamson,  51  Fla.  332,  40  So.  831  (State  Constitu- 
tion is  a  limitation  upon  power;  and  unless  legislation  duly  passed  be  clearly 
contrary  to  some  express  or  implied  prohibition  contained  in  Constitution 
courts  have  no  authority  to  pronounce  it  invahd). 

Illinois:  Harder's  Fire  Proof  Storage  &  Van  Co.  v.  Chicago,  235  111.  58, 
85  N.  E.  245;  Winch  v.  Tobin,  107  111.  212. 

19  289 


§  269  FEDERAL   AND   STATE    POWERS — 

stated,  in  view  of  our  republican  form  of  government 
and  of  the  powers  reserved  to  the  States  or  to  the  people 
under  the  Tenth  Amendment  to  the  Federal  Constitu- 
tion,^' that  the  legislative  powers  of  a  State  in  all  mat- 
ters of  government  are  sovereign  over  all  subjects  and 
embrace  all  that  are  not  forbidden  by  the  Constitution 
of  the  State  and  of  the  United  States.^'' 

Indiana:  Hovey  v.  State,  119  Ind.  395,  21  N.  E.  21. 

Compare  State  v.  Denny,  118  Ind.  449,  21  N.  E.  274. 

Iowa:  Eckerson  v.  City  of  Des  Moines,  137  Iowa,  452,  465,  115  N.  W. 
177;  Purczell  v.  Smidt,  21  Iowa,  54. 

Kentucky:  Bullitt  v.  Sturgeon,  127  Ky.  332,  32  Ky.  L.  Rep.  215,  105 
S.  W.  468  (see  this  case  in  next  following  note);  Griswold  v.  Hepburn,  2 
Duv.  (63  Ky.)  20. 

Louisiana:  Hughes  v.  Murdock,  45  La.  Ann.  935,  13  So.  182. 

Maine:  Winchester  v.  Corinna,  55  Me.  9. 

Michigan:  Attorney  General  v.  Preston,  56  Mich.  177,  22  N.  W.  261. 

Montana:  Evers  v.  Hudson,  36  Mont.  135,  92  Pac.  462. 

Nebraska:  State  v.  Moore,  40  Neb.  854,  59  N.  W.  755. 

New  Hampshire:  Concord  Rd.  v.  Greeley,  17  N.  H.  47. 

A'^ew;  York:  People  v.  Flagg,  46  N.  Y.  401;  Chenango  Bank  v.  Brown,  26 
N.  Y.  467. 

Ohio:  Southern  Gum  Co.  v.  Laylin,  66  Ohio  St.  578,  64  N.  E.  564. 

Pennsylvania:  Lewis,  Appeal  of,  67  Pa.  St.  153. 

South  Carolina:  Lynch,  Ex  parte,  16  S.  C.  32. 

Tennessee:  Stratton  v.  Morris,  5  Pick.  (89  Tenn.)  497,  12  L.  R.  A.  70,  15 
S.  W.  87. 

Texas:  Solon  v.  State  (Tex.  Civ.  App.,  1908),  349;  HoUy  v.  State,  14  Tex. 
App.  505. 

Utah:  Salt  Lake  City  v.  Christensen  Co.,  34  Utah,  38,  42,  95  Pac.  523. 

Vermont:  Thorpe  v.  Rutland  &  B.  R.  Co.,  27  Vt.  140,  62  Am.  Dec.  625. 

Virginia:  Commonwealth  v.  Drewry,  15  Gratt.  (Va.)  1. 

West  Virginia:  Bridges  v.  Shallcross,  6  W.  Va.  562. 

Wisconsin:  Bushnell  v.  Beloit,  10  Wis.  195. 

Compare  Leavenworth  County  Comm'rs  v.  Miller,  7  Kan.  479,  12  Am. 
Rep.  425;  Cincinnati,  W.  &  Z.  R.  Co.  v.  Supervisors,  1  Ohio  St.  77. 

See  also  Joyce  on  Franchisee,  §  289. 

'»  See  §  226,  herein. 

'<  United  States:  Piatt  v.  LeCocq  (U.  S.  C.  C),  150  Fed.  391  (legislation 
does  not  look  to  the  Constitution  for  power  to  act  but  only  to  see  if  that 
instrument  restricts  or  enlarges  its  powers). 

Alabama:  Finklea  v.  Parish,  160  Ala.  230,  49  So.  366  (Constitution  is  the 
source  of  legislative  power,  and  there  are  no  limits  to  the  legislative  power 
of  the  State  government  save  such  as  are  contained  in  the  Constitution). 

California:  Sheehan  v.  Scott,  145  Cal.  684,  79  Pac.  350  (includes  all  powers 
not  expressly  prohibited  or  otherwise  conferred);  Kingsbury  v.  Nye,  9  Cal. 
App.  574,  581,  99  Pac.  985  (legislature  within  its  sphere  of  action  is  om- 
nipotent, save  only  as  its  power  is  restricted  by  the  Constitution). 

290 


MONOPOLIES,    ETC.  §  270 

§  270.  Same  Subject— Interstate  and  Intrastate  Com- 
merce. '^ 
The  United  States  is  a  government  of  limited  and 

Colorado:  People  ex  rel.  Rhodes  v.  Fleming,  10  Colo.  553,  16  Pac.  298 
(legislature  has  plenary  power  for  all  purposes  of  civil  government). 

Connecticut:  AUyn's  Appeal,  81  Conn.  534,  71  .\tl.  794  (power  of  legisla- 
tion vested  by  Constitution  in  General  As.sembly  covers  whole  field  of  legiti- 
mate legislation,  except  as  that  may  be  limited  by  othor  provisions  of  that 
Constitution  or  by  the  Federal  Constitution;  subject  to  these  exceptions 
any  legislation  is  legitimate  which  is  not  inconsistent  with  a  republican 
form  of  government);  Booth  v.  Town  of  Woodbury,  32  Conn.  118  (legisla- 
tive power  is  limited  only  by  Constitution  of  State  and  of  United  States 
and  by  principles  of  natural  justice). 

Delaware:  State  v.  Fountain,  6  Pen.  (Del.)  520,  69  Atl.  926,  930  (legis- 
lative power  is  vested  by  Constitution  in  General  Assembly  and  such  grant 
is  broad  and  general,  and  though  limited  by  other  constitutional  i)rovision3 
inconsistent  therewith  such  limitations  are  not  an  enumeration  of  the  only 
specific  power). 

Florida:  Thomas  v.  Williamson,  51  Fla.  332,  40  So.  831  (see  this  case  un- 
der last  preceding  note). 

Illinois:  Harder's  Fireproof  Storage  &  Van  Co.  v.  Chicago,  235  111.  58,  85 
N.  E.  245  (legislature  may  exercise  any  power  not  prohibited  by  State  or 
Federal  Constitution);  Hawthorn  v.  People.  109  111.  302,  50  Am.  Rep.  610 
(State  has  supreme  legislative  power  except  so  far  as  limited  by  the  Con- 
stitution, State  or  Federal,  or  such  as  has  been  delegated  to  general  govern- 
ment). 

Indiana:  State  v.  Goldhart,  172  Ind.  210,  87  N.  E.  133  (legislature  su- 
preme except  as  limited  by  Constitution). 

Iowa:  McGuire  v.  Chicago,  Burlington  &  Quincy  R.  Co.,  131  Iowa,  340, 
108  N.  W.  340  (State  has  sovereign  legislative  power  over  all  subjects  ex- 
cept such  as  are  reserved  by  the  State  Constitution  and  subject  to  the  power 
delegated  expressly  or  by  necessary  implication  to  the  Federal  government). 

Kentucky:  Bullitt  v.  Sturgeon,  127  Ky.  332,  32  Ky.  L.  Rep.  215,  105  S.  W. 
468  (Constitution  not  a  delegation  of  powers  but  a  limitation,  and  wherever 
it  has  not  hmited  the  right  of  the  legi.slature  to  act  it  may  act). 

Missouri:  State  ex  rel.  llensen  v.  Sheppard,  192  Mo.  497,  507,  91  S.  W. 
477  (may  enact  any  law  not  prohibited  by  Constitution);  Roberts,  Ex  parte, 
166  Mo.  207,  65  S.  W.  726  (same  as  preceding  case). 

Montana:  Evers  v.  Hudson,  36  Mont.  135,  92  Pac.  462  (in  absence  of  some 
specific  prohibition  in  the  Constitution  or  the  use  in  that  instrument  of 
terms  which  imply  a  prohibition  the  legislative  power  is  supreme);  Missouri 
River  Power  Co.  v.  Steele,  32  Mont.  433,  80  Pac.  1093  (in  the  matter  of  leg- 
islation the  people  through  the  legislature  have  plenary  power  except  in  so 
far  as  inhibited  by  the  Constitution). 

Nevada:  Boyce,  Ex  parte,  27  Nev.  299,  75  Pac.  1,  65  L.  R.  A.  47  (legis- 
lature has  supreme  power  in  all  matters  of  government  when  not  prohibited 
by  constitutional  limitations,  and  while  powers  of  Federal  government  are 

"  See  §  77,  herein. 

291 


§  270  FEDERAL   AND    STATE    POWERS — 

delegated  powers  but  in  respect  to  the  powers  delegated, 
including  that  to  regulate  commerce  between  the  States, 
the  power  is  absolute  except  as  limited  by  other  provi- 

restricted  to  those  delegated,  those  of  State  government  embrace  all  not 
forbidden);  Wallace  v.  City  of  Reno,  27  Nev.  71,  73  Pac.  628,  103  Am.  St. 
Rep.  747,  63  L.  R.  A.  337  (have  all  powers  in  matters  of  government  unless 
limited  by  Constitution). 

New  York:  Ahern,  Matter  of,  v.  Elder,  195  N.  Y.  493,  500,  88  N.  E.  1059, 
aff'g  115  N.  Y.  Supp.  1108  ("subject  to  the  restrictions  and  limitations  of 
the  Constitution  the  power  of  the  legislature  to  make  laws  is  absolute  and 
uncontrollable,"  per  Werner,  J.);  People  v.  Young,  45  N.  Y.  Supp.  772,  18 
App.  Div.  162. 

Ohio:  Southern  Gum  Co.  v.  Laylin,  66  Ohio  St.  578,  64  N.  E.  564  (State's 
powers  are  sovereign  except  as  limited  and  restrained  by  Federal  and 
State  Constitutions). 

Fetmsylvania:  Likin's  Petition,  223  Pa.  St.  456,  72  Atl.  858  (whatever  the 
people  have  not  in  their  Constitution  restrained  themselves  from  doing, 
they,  through  their  representatives  in  the  legislature,  may  do);  Common- 
wealth V.  Mallet,  27  Pa.  Super.  Ct.  41  (except  where  Constitution  has  im- 
posed limits  upon  the  legislative  power  it  must  be  considered  as  practically 
absolute,  whether  it  operate  according  to  natural  justice  or  not  in  any 
particular  case. 

South  Dakota:  Watson,  In  re,  17  S.  Dak.  486,  97  N.  W.  463  (there  are 
no  limitations  on  the  power  of  the  legislature  except  such  as  are  imposed 
by  the  State  and  Federal  Constitutions). 

Tmnessee:  Wright  v.  Cunningham,  115  Tenn.  445,  91  S.  W.  293;  Reel- 
foot  Lake  Levee  Dist.  v.  Dawson,  97  Tenn.  151,  159,  34  L.  R.  A.  725,  36 
S.  W.  1041. 

Utah:  State  v.  Lewis,  26  Utah,  120,  72  Pac.  388  (legislative  power  to 
legislate  upon  all  subjects  and  for  all  purposes  of  civil  government  is  ab- 
solute, inherent  and  plenary  except  as  Umited  or  controlled  by  the  Federal 
or  State  Constitution);  Kimball  v.  Grantsville  City,  19  Utah,  368,  57  Pac. 
1,  45  L.  R.  A.  628  (where  State  has  committed  its  whole  lawmaking  power 
to  the  legislature,  except  such  as  is  expressly  or  imphedly  withheld  by  the 
State  or  Federal  Constitution,  it  has  plenary  power  for  all  purposes  of  civil 
government,  and,  therefore,  in  the  absence  of  any  constitutional  restraint, 
express  or  implied,  the  legislature  may  act  upon  any  subject  within  the 
sphere  of  government). 

Virginia:  Willis  v.  Kalmbach,  109  Va.  475,  64  S.  E.  342  (as  to  matters 
not  ceded  to  the  F'ederal  Government  the  legislative  powers  of  the  general 
assembly  are  without  limit  except  so  far  as  restrictions  are  imposed  by  the 
State  Constitution  in  express  terms  or  by  strong  implication;  State  Con- 
stitution is  restraining  instrument  only);  Norfolk,  City  of,  v.  Board  of 
Trade  &  Business  Men's  Assoc,  109  Va.  353,  63  S.  E.  987;  Couk  &  Duncan 
V.  Skeen,  109  Va.  6,  63  S.  E.  11  (legislature  has  full  power  to  legislate  on 
any  subject  unless  prohibited  by  Constitution) ;  Whitlock  v.  Hawkins,  105 
Va.  242,  53  S.  E.  401  (same  as  Willis  case);  Brown  v.  Epps,  91  Va.  726,  27 
L.  R.  A.  676,  21  S.  E.  119  (Constitution  is  restraining  instrument,  and 
legislature  possesses  all  legislative  power  not  prohibited  by  Constitution). 

292 


MONOPOLIES,    ETC.  §  270 

sions  of  the  Constitution."'  And  whilst  every  instrumen- 
taUty  of  domestic  commerce  is  subject  to  State  control, 
every  instrumentality  of  interstate  conmierce  may  be 
reached  and  controlled  by  national  authority,  so  far  as 
to  compel  it  to  respect  the  rules  for  such  commerce 
lawfully  established  by  Congress;  '^  and  no  State  can 
pass  any  law  directly  regulating  or  restraining  interstate 
commerce,^''  nor  exclude  from  its  limits  a  corporation 
engaged  therein,'^  for  no  State  enactment  can  avail 
when  the  subject  has  been  covered  by  an  act  of  Con- 
gress acting  within  its  constitutional  powers.  In  such 
a  case  the  act  of  Congress  is  paramount  and  the  State 
law  must  give  way.^°  No  State  can,  by  merely  creating 
a  corporation,  or  in  any  other  mode,  project  its  authority 
into  other  States,  so  as  to  prevent  Congress  from  exert- 
ing the  power  it  possesses  under  the  Constitution  over 
interstate  or  international  commerce,  or  so  as  to  exempt 
its  corporation  engaged  in  interstate  commerce  from 
obedience  to  any  rule  lawfully  established  by  Congress 
for  such  commerce;  nor  can  any  State  give  a  corporation 

Washington:  State  v.  Clark,  30  Wash.  439,  71  Pac.  20  (absence  in  Consti- 
tution of  specially  delegated  power  to  legislature  is  not  a  restriction). 

Wisconsin:  Minneapolis,  St.  Paul  &  Sault  Ste.  Marie  Ry.  Co.  v.  Railroad 
Commission,  136  Wis.  146,  116  N.  W.  905  (no  specific  enabling  provision 
required  to  enable  legislature  to  make  all  laws  necessary-  and  proper  to 
carry  into  execution  the  powers  which  the  Constitution  vests  in  the  State 
government);  State  v.  Redmon,  134  Wis.  89,  114  N.  W.  137  (general  decla- 
ration in  Constitution  of  the  purposes  of  civil  government  is  a  hmitation 
upon  legislative  power,  designed,  at  least  in  part,  to  prevent  clearly  un- 
reasonable enactments  restricting  natural  private  rights). 

16  Atlantic  Coast  Line  Rd.  Co.  v.  Riverside  Mills,  219  U.  S.  186,  55  L. 
ed.  — ,  31  Sup.  Ct.  164,  case  affirms  168  Fed.  987,  990.  See  §§  204-207, 
herein. 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436.    See  §§  205-207,  herein. 

Supremacy  of  Congress  over  State  laws.  See  9  Fed.  Stat.  Ann.,  pp.  221 
et  seq. 

1'  Southern  Railway  Co.  v.  King,  217  U.  S.  524,  54  L.  ed.  2,  30  Sup.  Ct. 
594,  case  afiirms  160  Fed.  332.  See  Oklahoma  v.  Kansas  Natural  Gas  Co., 
221  U.  S.  229,  31  Sup.  Ct.  — ,  55  L.  ed.  — ,  a£f'g  172  Fed.  545. 

'9  Oklahoma  v.  Kansas  Natural  Gas  Co.,  221  U.  S.  524,  55  L.  ed.  — ,  31 
Sup.  Ct.  — ,  aff'g  172  Fed.  545. 

^  Chicago,  Indianapolis  ct  Louisville  Ry.  Co.  v.  United  States,  219  U. 
S.  486,  55  L.  ed.  — ,  31  Sup.  Ct.  272. 

293 


§  270  FEDERAL   AND   STATE    POWERS — 

created  under  its  laws  authority  to  restrain  interstate  or 
international  commerce  against  the  will  of  the  nation 
as  lawfully  expressed  b}'^  Congress.  Every  corporation 
created  by  a  State  is  necessarily  subject  to  the  supreme 
law  of  the  land.-^  But  the  fact  alone  that  a  corporation 
is  engaged  in  interstate  commerce  does  not  deprive  the 
State  of  power  to  exercise  reasonable  control  over  its 
business  done  wholly  within  the  State."  Again,  although 
the  jurisdiction  of  Congress  over  commerce  among  the 
States  is  full  and  complete,  it  is  not  questioned  that  it 
has  none  over  that  which  is  wholly  within  a  State,  and 
therefore  none  over  combinations  or  agreements  so  far 
as  they  relate  to  a  restraint  of  such  trade  or  commerce; 
nor  does  it  acquire  any  jurisdiction  over  that  part  of  a 
combination  or  agreement  which  relates  to  conmierce 
wholly  within  a  State,  by  reason  of  the  fact  that  the 
combination  also  covers  and  regulates  commerce  which 
is  interstate.  ^^  But  inaction  by  Congress  in  regard  to 
a  subject  of  interstate  commerce  is  a  declaration  of 
freedom  from  State  interference.  ^^  And  until  Congress 
acts  a  State  may  prescribe  proper  police  regulations  in 
regard  to  matters  which  may  properly  come  within  the 
power  of  Congress  without  violating  the  commerce  clause 
of  the  Federal  Constitution,  and  the  statutes  of  a  State 
not  in  their  nature  arbitrary  and  which  really  relate  to 
the  rights  and  duties  of  all  within  the  jurisdiction  must 
control.    This  principle  is  held  to  be  firmly  established. ^^ 

"  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436.    See  9  Fed.  Stat.  Ann.,  pp.  221  et  seq. 

"  McGuire  v.  Chicago,  Burlington  &  Quincy  Rd.  Co.,  121  Iowa,  340, 
108  N.  W.  902. 

"  Addyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.  211,  44  L.  ed. 
136,  20  Sup.  Ct.  96.  See  Reagan  v.  Mercantile  Trust  Co.,  154  U.  S.  413, 
14  Sup.  Ct.  1060,  38  L.  ed.  1028,  cited  in  Ames  v.  Union  Pacific  Ry.  Co. 
(U.  S.  C.  C),  64  Fed.  165,  170. 

Commerce — State  control  of  business  vnthin  jurisdiction.  See  Joyce  on 
Franchises,   §  369. 

2<  Oklahoma  v.  Kansas  Natural  Gas  Co.,  221  U.  S.  229,  31  Sup.  Ct.  — , 
55  L.  ed.  — ,  aff'g  172  Fed.  .545. 

"  Chicago,  Rock  Island  &  Pacific  Ry.  Co.  v.  Arkansas,  219  U.  S.  453, 
55  L.  ed.  — ,  31  Sup.  Ct.  275,  aflf'g  86  Ark.  412.  See  Western  Union  Teleg. 
Co.  V.  Crovo,  220  U.  S.  364,  55  L.  ed.  — ,  31  Sup.  Ct.  399. 

294 


MONOPOLIES,    ETC.  §  271 

A  State  may  in  the  exercise  of  its  police  power  pass  laws 
which  do  not  interfere  directly  with  the  operations  of 
interstate  commerce.  ^^ 

§  271.  Police  Power— Definition  and  General  Prin- 
ciples— Monopolies  May  Be  Prohibited,  etc.^^ 

The  term  police  power  is  hard  to  define  ^^  and  defini- 

Commerce — Power  of  States  where  Congress  has  not  acted.  See  Joyce  on 
Franchises,  §§  367,  368. 

Commerce — As  to  exclusive  or  concurrent  powers  of  Congress  and  the  States, 
see  the  following  casea:  Adams  Express  Co.  v.  Kentucky,  214  U.  S.  218,  29 
Sup.  Ct.  633,  .53  L.  ed.  972;  Missouri  Pacific  Ry.  Co.  v.  Larabee  Flour 
Mills  Co.,  211  U.  S.  612,  620,  622,  29  Sup.  Ct.  214,  ,53  L.  ed.  3.52;  AsbeU  v. 
Kansas,  209  U.  S.  251,  28  Sup.  Ct.  485,  52  L.  ed.  778;  McLean  v.  Denver 
&  Rio  Grande  Ry.  Co.,  203  U.  S.  38,  51  L.  ed.  78,  27  Sup.  Ct.  1;  New  York, 
New  Haven  &  Hartford  Rd.  Co.  v.  Interstate  Commerce  Commission,  200 
U.  S.  361,  26  Sup.  Ct.  272,  50  L.  ed.  596;  Northern  Securities  Co.  v.  United 
States,  193  U.  S.  197,  48  L.  ed.  679,  24  Sup.  Ct.  436;  Covington  &  Cin- 
cinnati Bridge  Co.  v.  Kentucky,  154  U.  S.  204,  38  L.  ed.  962,  14  Sup.  Ct. 
1087;  Manchester  v.  Massachusetts,  139  U.  S.  240,  35  L.  ed.  159,  11  Sup. 
Ct.  559;  Philadelpliia  &  Southern  Steamship  Co.  v.  Pennsylvania,  122  U. 
S.  326,  7  Sup.  Ct.  1118,  30  L.  ed.  1200;  Robbins  v.  Shelby  Co.  Tax  Dist., 
120  U.  S.  480,  30  L.  ed.  694,  7  Sup.  Ct.  592;  Wabash,  St.  Louis  &  P.  Ry. 
Co.  V.  Illinois,  118  U.  S.  557,  30  L.  ed.  214,  7  Sup.  Ct.  4;  Morgan's  Steam- 
ship Co.  V.  Louisiana  Board  of  Health,  118  U.  S.  455,  30  L.  ed.  237,  6  Sup. 
Ct.  1114;  Pickard  v.  Pulhnan  Southern  Car  Co.,  117  U.  S.  34,  6  Sup.  Ct. 
635,  29  L.  ed.  785;  Brown  v.  Houston,  114  U.  S.  622,  29  L.  ed.  257,  5  Sup. 
Ct.  1091;  Gloucester  Ferry  Co.  v.  Pennsylvania,  114  U.  S.  196,  29  L.  ed. 
158,  5  Sup.  Ct.  826;  Head  Money  Cases,  112  U.  S.  580,  28  L.  ed.  798,  5 
Sup.  Ct.  247;  Mobile,  County  of,  v.  Kimball,  102  U.  S.  691,  26  L.  ed.  238; 
Sherlock  v.  Ailing,  93  U.  S.  99,  23  L.  ed.  819;  Henderson  v.  New  York,  92 
U.  S.  259,  23  L.  ed.  543;  Lottowanna,  The,  21  Wall.  (88  U.  S.)  558,  22  L. 
ed.  654;  State  Freight  Tax  Case,  15  Wall.  (82  U.  S.)  232,  21  L.  ed.  146; 
Crandall  v.  Nevada,  6  Wall.  (73  U.  S.)  35,  18  L.  ed.  745;  License  Tax 
Cases,  5  Wall.  (72  U.  S.)  462,  18  L.  ed.  497;  Gilman  v.  Philadelphia,  3 
Wall.  (70  U.  S.)  713,  18  L.  ed.  96;  Pennsylvania  v.  WTieeling  &  Belmont 
Bridge  Co.,  18  How.  (.59  U.  S.)  421,  15  L.  ed.  435;  Passenger  Cases,  7  How. 
(48  U.  S.)  283,  12  L.  ed.  702;  License  Cases,  5  How.  (46  U.  S.)  504,  573,  12 
L.  ed.  256;  Gibbons  v.  Ogden,  9  Wheat.  (22  U.  S.)  1,  6  L.  ed.  23. 

2«  Southern  Railway  Co.  v.  King,  217  U.  S.  524,  54  L.  ed.  868,  30  Sup. 
Ct.  594;  case  affirms  160  Fed.  332. 

"See  §226,  herein. 

28  State  v.  Central  Lumber  Co.,  24  S.  Dak.  136,  12  N.  W.  504,  510. 

Police  power  is  broad  and  plenary:  Barrett  v.  State  (Ind.,  1911),  93  N.  E. 
543,  544,  per  Cox,  J. 

Extent,  nature  and  definition  of  police  power,  see  the  following  cases: 

Ujiited  Slates:  Oklahoma  v.  Kan.s:us  Natural  G:us  Co.,  221  U.  S.  229, 
31  Sup.  Ct.  — ,  55  L.  ed.  — ,  affV'  17'J   V"d.  545  (State  and  interstate 

295 


§  271  FEDERAL   AND    STATE    POWERS — 

tions  of  the  police  power  must  be  taken  subject  to  the 
condition  that  the  State  cannot,  in  its  exercise,  for  any 

commerce — distinction  as  to  extent  of  police  power);  Lindsley  v.  Natural 
Carbonic  Gas  Co.,  220  U.  S.  61,  55  L.  ed.  — ,  31  Sup.  Ct.  337,  aff'g 
170  Fed.  1023  (a  police  statute  may  be  confined  to  the  occasion  for  its 
existence);  Chicago,  BurUngton  &  Quincy  Rd.  Co.  v.  McGuire,  219  U.  S. 
549,  31  Sup.  Ct.  259,  55  L.  ed.  — ,  aff'g  131  Iowa,  340  (where 
police  legislation  has  reasonable  relation  to  an  object  within  govern- 
mental authority  the  legislative  discretion  not  subject  to  judicial  re- 
view); Brodnax  v.  Missouri,  219  U.  S.  285,  55  L.  ed.  — ,  31  Sup.  Ct. 
238  (Federal  courts  should  not  strike  down  police  regulation  of  State 
that  does  not  clearly  violate  Federal  Constitution,  they  cannot  over- 
throw police  regulations  because  they  think  it  unwise  or  inexpedient;  due 
process  clause  does  not  confer  liberty  to  disregard  lawful  police  regulations 
established  bj'  State  for  all  within  its  jurisdiction;  statute  prohibiting 
gambling  in  futures);  Engel  v.  O'Malley,  219  U.  S.  128,  55  L.  ed.  — ,  31 
Sup.  Ct,  105  (where  subject  is  within  police  protection  of  State,  it  is  not  for 
the  court  to  determine  whether  the  enactment  is  wise  or  not;  that  is  within 
legislative  discretion.  Case  of  commerce,  burden  on;  private  banking 
act  of  New  York);  Noble  State  Bank  v.  Haskell,  219  U.  S.  104,  31  Sup. 
Ct.  299,  55  L.  ed.  — ,  aff'g  22  Okla.  48  [the  police  power  extends  to  all  the 
great  pubUc  needs  (Canfield  v.  United  States,  167  U.  S.  518,  42  L.  ed.  260, 
17  Sup.  Ct.  864)  and  includes  the  enforcement  of  commercial  conditions 
such  as  the  protection  of  bank  deposits  and  checks  drawn  against  them  by 
compelUng  co-operation  so  as  to  prevent  failure  and  panic];  Columbus  v. 
Mercantile  Trust  &  Deposit  Co.  of  Bait.,  218  U.  S.  645,  54  L.  ed.  105,  31 
Sup.  Ct.  105  [to  furnish  an  ample  supply  of  pure  and  wholesome  water  is 
the  highest  police  duty  resting  on  a  municipality.  See  this  case  under 
§  225,  herein);  Griffith  v.  Connecticut,  218  U.  S.  563,  54  L.  ed.  1151,  31  Sup. 
Ct.  134,  aff'g  83  Conn.  1  (where  a  matter  is  clearly  within  the  police  power 
of  a  State,  the  details  are  within  legislative  discretion  if  not  unreasonably 
and  arbitrarily  exercised;  classification,  on  a  reasonable  basis  of  subjects, 
within  the  police  power,  is  within  legislative  discretion,  and  a  reasonable 
selection  which  is  not  merely  arbitrary  and  without  real  difference  does 
not  deny  equal  protection  of  the  laws  within  the  meaning  of  the  Four- 
teenth Amendment);  Western  Union  Teleg.  Co.  v.  Commercial  Milling 
Co.,  218  U.  S.  406,  54  L.  ed.  1088,  31  Sup.  Ct.  59,  aff'g  151  Mich.  425  (pubUc 
service  corporations  are  subject  to  the  police  regulation,  even  though  the 
police  power  is  not  unhmited);  Watson  v.  Maryland,  218  U.  S.  173,  54  L. 
ed.  987, 30  Sup.  Ct.  644,  aff'g  105  Md.  650  (police  power  of  State  particularly 
extends  to  regulating  trades  and  callings  concerning  public  health) ;  South- 
em  Railway  Co.  v.  King,  217  U.  S.  524,  54  L.  ed.  868,  30  Sup.  Ct.  594, 
aff'g  160  Fed.  3.32  (States  may,  in  the  exercise  of  the  police  power,  pasa 
laws  in  the  interest  of  public  safety,  which  do  not  interfere  directly  with 
the  operations  of  interstate  commerce);  Missouri  Pacific  Railway  Co.  v. 
Nebraska,  217  U.  S.  196,  30  Sup.  Ct.  461,  54  L.  ed.  727,  rev'g  81  Neb.  15 
(there  are  constitutional  limits  to  what  can  be  required  of  owners  of  rail- 
roads under  the  police  power);  Laurel  Hill  Cemetery  v.  San  Francisco, 
216  U.  S.  358,  30  Sup.  Ct.  301,  54  L.  ed.  515,  aff'g  152  Cal.  464  (tradition 

296 


MONOPOLIES,    ETC.  §271 

purpose  whatever,  encroach  upon  the  powers  of  the  gen- 
eral government,  or  rights  granted  or  secured  by  the 

and  habits  of  the  community  count  for  more  than  logic  in  determining  the 
constitutionality  of  laws  enacted  for  the  public  welfare  under  the  police 
power);  Flaherty  v.  Hanson,  215  U.  S.  515,  30  Sup.  Ct.  179,  54  L.  ed.  307, 
rev'g  16  N.  Dak.  347  (State  cannot  so  exert  its  police  power  as  to  di- 
rectly hamper  or  destroy  a  lawful  authority  of  the  United  States);  St. 
Paul,  Minneapolis  &  Manitoba  Railway  Co.  v.  Minnesota,  214  U.  S.  497, 
29  Sup.  Ct.  698,  53  L.  ed.  1069,  following  Northern  Pacific  Railway  Co. 
V.  Duluth,  208  U.  S.  583,  52  L.  ed.  630,  28  Sup.  Ct.  341  (the  exercise  of 
the  police  power  in  the  interest  of  public  health  and  safety  is  to  be  main- 
tained unhampered  by  contracts  in  private  interests);  Houston  &  Texas 
Central  Rd.  Co.  v.  Mayes,  201  U.  S.  321,  50  L.  ed.  772,  26  Sup.  Ct.  491 
(commerce;  regulation  of  railroad.s);  Chicago,  Burlington  &  Quincy  Ry. 
Co.  V.  Drainage  Commrs.,  200  U.  S.  561,  26  Sup.  Ct.  341,  50  L.  ed.  596, 
aff'g  212  III.  103,  72  N.  E.  219  (removal  of  bridge);  Mansigault  v.  Springs, 
199  U.  S.  473,  50  L.  ed.  274,  26  Sup.  Ct.  127  (navigable  rivers;  dams); 
Cunnius  v.  Reading  School  District,  198  U.  S.  458,  25  Sup.  Ct.  721,  49  L. 
ed.  1125  (Fourteenth  Amendment  does  not  deprive);  Jacobson  v.  Mas- 
sachusetts, 197  U.  S.  11,  23  Sup.  Ct.  358,  49  L.  ed.  643  (scope  and  extent  of 
power;  reasonable  regulation);  Smiley  v.  Kansas,  196  U.  S.  447,  49  L.  ed. 
546,  25  Sup.  Ct.  276  (freedom  to  contract;  trusts;  monopolies);  Allgeyer 
v.  Louisiana,  165  U.  S.  578,  17  Sup.  Ct.  427,  41  L.  ed.  832  (foreign  insur- 
ance; extent  to  which  power  may  be  exercised  to  be  determined  in  each 
case);  Western  Union  Teleg.  Co.  v.  James,  162  U.  S.  650,  40  L.  ed.  1105, 
16  Sup.  Ct.  934  (telegraph  companies);  Louisville  &  Nashville  R.  Co.  v. 
Kentucky,  161  U.  S.  677,  40  L.  ed.  849,  16  Sup.  Ct.  714  (legislative  discre- 
tion as  to  exercise  of  such  power);  Eagle  Insurance  Co.  v.  Ohio,  153  U.  S. 
446,  38  L.  ed.  778,  14  Sup.  Ct.  868  (returns  by  insurance  companies); 
Brass  v.  Stoeser,  153  U.  S.  391,  38  L.  ed.  757,  14  Sup.  Ct.  857  (grain  ware- 
house act);  New  York  v.  Squires,  145  U.  S.  175,  36  L.  ed.  666,  12  Sup.  Ct. 
880  (regulation  of  carriers  of  electricity);  Budd  v.  New  York,  143  U.  S. 
517,  12  Sup.  Ct.  468,  36  L.  ed.  247  (grain  elevator  acts);  Minneapolis  & 
St.  L.  Ry.  Co.  V.  Beckwith,  129  U.  S.  26,  32  L.  ed.  585,  9  Sup.  Ct.  207 
(Fourteenth  Amendment  does  not  limit);  Smith  v.  Alabama,  124  U.  S. 
465,  31  L.  ed.  508,  9  Sup.  Ct.  564  (reserved  powers  of  States  in  connection 
with);  Western  Union  Teleg.  Co.  v.  Pendleton,  122  U.  S.  347,  30  L.  ed. 
1187,  7  Sup.  Ct.  1126  (telegraph  companies);  New  York  v.  Miln,  11  Pet. 
(36  U.  S.)  102,  9  L.  ed.  648  (internal  police  powers  of  States  unrestrained 
and  exclusive);  Brown  v.  Maryland,  12  Wheat.  (25  U.  S.)  419,  6  L.  ed.  678 
(reservation  bj'  States). 

Alabama:  Birmingham  Mineral  R.  Co.  v.  Parsons,  100  Ala.  662,  13  So. 
602,  46  Am.  St.  Rep.  92;  Van  Hook  v.  City  of  Solina,  70  Ala.  361;  American 
Union  Teleg.  Co.  v.  Western  Union  Teleg.  Co.,  67  Ala.  26,  42  Am.  Rep.  90. 

Arkansas:  Dabs  v.  State,  39  Ark.  353,  43  Am.  Rep.  275. 

Connecticut:  Allyn,  Appeal  of,  81  Conn.  534,  71  Atl.  794;  Clark,  In  re,  65 
Conn.  17,  40,  31  Atl.  522,  28  L.  R.  A.  242,  per  Hammersley,  J.;  Woodruff  v. 
New  York  &  New  Eng.  R.  Co.,  59  Conn.  63,  20  Atl.  17. 

lUinois:  Chicago,  City  of,  v.  Weber,  216  111.  304,  92  N.  E.  859;  Price  v. 

297 


§  271  FEDERAL  AND   STATE   POWERS — 

supreme  law  of  the  land.^^  The  dividing  line  between 
what  is,  and  what  is  not,  constitutional  under  the  police 

People,  193  111.  114,  117,  118,  86  Am.  St.  Rep.  306,  61  N.  E.  844,  per 
Boggs,  J.;  Harman  v.  City  of  Chicago  110  111.  400,  51  Am.  Rep.  698; 
Toledo,  W.  &  W.  Ry.  Co.  v.  City  of  Jacksonville,  67  111.  37,  16  Am.  Rep. 
611. 

Indiana:  Morris  v.  City  of  Indianapolis  (Ind.),  94  N.  E.  705;  State  v. 
Richereek,  167  Ind.  217,  77  N.  E.  1085  (banks  and  banking);  Champer  v. 
City  of  Greencastle,  138  Ind.  339,  35  N.  E.  14,  24  L.  R.  A.  768,  46  Am.  St. 
Rep,  390,  per  McCabe,  C.  J. 

Kansas:  Ratcliff  v.  Wichita  Union  Stockyards  Co.,  74  Kan.  1,  86  Pac. 
150  (stockyards;  regulation  of  rates);  Meflfert  v.  State  Board  of  Med.  Reg. 
&  Exam.,  66  Kan.  710,  72  Pac.  247,  per  Greene,  J. 

Louisiana:  New  Orleans  Gas  Light  Co.  v.  Hart,  40  La.  Ann.  474,  4  So. 
215,  8  Am.  St.  Rep.  544,  per  Bermudes,  C.  J. 

Maryland:  Deems  v.  Mayor  &  Council  of  Baltimore,  80  Md.  173,  45  Am. 
St.  Rep.  339,  30  Atl.  648,  26  L.  R.  A.  541,  per  Robinson,  C.  J. 

Massachusetts:  Commonwealth  v.  Alger,  7  Cush.  (61  Mass.)  53,  54,  85, 
per  Shaw,  C.  J. 

Minnesota:  State  v.  St.  Paul,  M.  &  M.  R.  Co.,  98  Minn.  380,  108  N.  W. 
261  (safety  devices  at  crossings). 

Mississipjn:  Macon,  Town  of,  v.  Patty,  57  Miss.  378,  407,  34  Am.  Rep. 
451,  per  George,  C.  J. 

Missouri:  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W. 
902;  State,  Star  Pub.  Co.  v.  Assoc.  Press,  159  Mo.  410,  60  S.  W.  91,  81  Am. 
St.  Rep.  368,  51  L.  R.  A.  151,  per  Sherwood,  J.;  State  v.  Searey,  20  Mo.  439. 

Montana:  State  v.  Penny,  42  Mont.  118,  111  Pac.  727. 

New  Hampshire:  State  v.  Griffin,  69  N.  H.  1,  76  Am.  St.  Rep.  139,  39  Atl. 
260,  41  L.  R.  A.  177,  per  Carpenter,  C.  J. 

New  York:  People  v.  Murphy,  195  N.  Y.  126,  88  N.  E.  17,  aff'g  113  N.  Y. 
Supp.  855,  129  App.  Div.  260,  which  reversed  113  N.  Y.  Supp.  854,  6  Misc. 
636;  People  v.  King,  110  N.  Y.  418,  423,  18  N.  E.  245,  6  Am.  St.  Rep.  389, 1 
L.  R.  A.  (N.  S.)  293,  per  Andrews,  J. 

North  Carolina:  State  v.  Moore,  104  N.  C.  714,  10  S.  E.  143,  17  Am.  St. 
Rep.  696,  per  Avery,  J. 

Pennsylvania:  Northumberland  County  v.  Zimmerman,  75  Pa.  St.  26. 

Rhode  Island:  State  v.  Dalton,  22  R.  I.  77,  80,  84  Am.  St.  Rep.  818,  48 
L.  R.  A.  775,  46  Atl.  234,  per  Tillinghast,  J.;  State  v.  Fitzpatrick,  16  R.  I. 
1,  54,  11  Atl.  767,  per  Durfee,  J. 

So^^th  Dakota:  State  v.  Central  Lumber  Co.,  24  S.  Dak.  136,  123  N.  W. 
504,  510. 

Texas:  Texarkana  Gas  &  Electric  Co.  v.  City  of  Texarkana  (Tex.  Civ. 
App.,  1909),  123  S.  W.  213. 

Washington:  Seattle,  City  of,  v.  Clark,  28  Wash.  717,  69  Pac.  407,  per 
White,  J.;  Karasek  v.  Peier,  22  Wash.  419,  61  Pac.  33,  50  L.  R.  A.  345,  per 
Anders,  J. 

Wisconsin:  Renz  v.Kremer,  142  Wis.  1, 125  N.  W.  99;  Madison,  City  of,  v. 

2»  New  Orieans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650,  29  L.  ed. 
516,  6  Sup.  Ct.  2.52. 

298 


MONOPOLIES,    ETC.  §  271 

power  of  the  State  is  picked  out  by  gradual  approach 
and  contact  of  decisions  on  opposing  sides.  ^°  There  is 
however,  always  a  difficulty  in  drawing  the  dividing  line 
between  that  which  is  within,  and  that  which  is  without, 
the  constitutional  power  of  the  States,  and  the  question 
in  each  specific  case  must  be  answered  by  the  pertinent 
facts  therein.^'  Generally  speaking  the  police  power  is 
reserved  to  the  States  and  there  is  no  grant  thereof  to 
Congress  in  the  Constitution. ^^  Although  said  power 
belongs  to,  and  is  to  be  exercised  by  the  State,  still  it 
must  yield  to  Congress  whenever  it  conflicts  with  the 
powers  belonging  exclusively  to  Congress.  ^^  The  police 
power  is  one  of  the  most  essential  of  governmental  powers, 
at  times  one  of  the  most  insistent,  and  always  one  of  the 
least  limitable  of  the  powers  of  government.^''  Again, 
the  right  to  exercise  said  power  is  a  continuing  one  that 
carmot  be  limited  or  contracted  away  by  the  State  or  its 
municipality,  nor  can  it  be  destroyed  by  compromise  as 
it  is  immaterial  upon  what  consideration  the  attempted 
contract  is  based.^^  The  police  power  extends  to  all  the 
great  public  needs  and  includes  the  enforcement  of 
commercial  conditions:  "It  may  be  said  in  a  general  way 
that  the  police  power  extends  to  all  the  great  public 


Madison  Gas  &  Electric  Co.,  129  Wis.  249,  108  N.  W.  65  (gas  rates);  Huber 
V.  Merkel,  117  Wis.  355,  366,  94  N.  W.  354,  62  L.  R.  A.  589,  per  Winslow,  J.; 
State  V.  Krentzberg,  114  Wis.  530,  537,  91  Am.  St.  Rep.  934,  58  L.  R.  A. 
748,  90  N.  W.  1098,  per  Dodge,  J. 

">  Noble  State  Bank  v.  Haskell,  219  U.  S.  104,  55  L.  ed.  — ,  31  Sup. 
Ct.  299,  aff'g  22  Okla.  48,  97  Pac.  590. 

"  Engel  V.  O'Malley,  219  U.  S.  128,  55  L.  ed.  — ,  31  Sup.  Ct.  190. 

«  Keller  v.  United  States,  213  U.  S.  138,  29  Sup.  Ct.  470,  53  L.  ed.  941; 
Kroschel  v.  Monkers  (U.  S.  D.  C),  179  Fed.  961. 

Police  power  is  inherent.  State  v.  Central  Lumber  Co.,  24  S.  Dak.  136, 
123  N.  W.  504. 

»  Adams  Express  Co.  v.  Kentucky,  214  U.  S.  218,  29  Sup.  Ct.  633,  53 
L.  ed.  972,  case  reverses  124  Ky.  182,  87  S.  W.  1111. 

"  District  of  Columbia  v.  Brooke,  214  U.  S.  138,  29  Sup.  Ct.  560,  53  L. 
ed.  941,  case  reverses  29  App.  D.  C.  563. 

»*St.  Paul,  Minneapolis  &  Manitoba  Railway  Co.  v.  Minnesota,  214 
U.  S.  497,  29  Sup.  Ct.  698,  53  L.  ed.  1060,  following  Northern  Pacific  Rail- 
way Co.  V.  Duluth,  208  U.  S.  583,  52  L.  ed.  630,  28  Sup.  Ct.  341,  the  ques- 
tion involved  being  almost  the  same. 

299 


§  271  FEDERAL   AND   STATE    POWERS — 

needs.  ^^  It  may  be  put  forth  in  aid  of  what  is  sanctioned 
by  usage,  or  held  by  the  prevaiHng  morality  or  strong 
and  preponderant  opinion  to  be  greatly  and  immediately 
necessary  to  the  public  welfare.  Among  matters  of  that 
sort  probabl}^  few  would  doubt  that  both  usage  and  pre- 
ponderant opinion  give  their  sanction  to  enforcing  the 
primary  conditions  of  successful  commerce."  ^^  The 
following  fundamental  principles  are  not  open  to  dis- 
pute: (a)  The  police  power  of  the  State,  never  having 
been  surrendered  by  it  to  the  Federal  government,  is 
not  granted  by  or  derived  from,  but  exists  independently 
of  the  Federal  Constitution,  (b)  One  of  the  powers 
never  surrendered  by,  and  therefore  remaining  with, 
the  State  is  to  so  regulate  the  relative  rights  and  duties 
of  all  wdthin  its  jurisdiction  as  to  guard  the  public  morals, 
safety  and  health,  as  well  as  to  promote  the  public  con- 
venience and  the  common  good,  (c)  It  is  within  the 
power  of  the  State  to  devise  the  means  to  be  employed 
to  the  above  ends  provided  they  do  not  go  beyond  the 
necessities  of  the  case,  have  some  real  and  substantial 
relation  to  the  object  to  be  accomplished,  and  do  not 
conflict  with  the  Constitution  of  the  United  States.  ^^ 
Whatever  is  contrary  to  public  policy  or  inimical  to  the 
public  interests  is  subject  to  the  police  power  of  the 
State  and  is  \vithin  legislative  control;  and  in  the  exer- 
tion of  such  power  the  legislature  is  vested  with  a  large 
discretion,  which,  if  exercised  bona  fide  for  the  protec- 
tion of  the  public,  is  beyond  the  reach  of  judicial  in- 
quiry.-^^  And  although  the  means  devised  by  the  State 
legislature  for  the  enforcement  of  its  police  regulations 
may  not  be  the  best  that  can  be  devised,  the  Federal 
Supreme  Court  cannot  declare  them  illegal  if  the  enact- 

3«  Citing  Camfield  v.  United  States,  167  U.  S.  518,  42  L.  ed.  260,  17 
Sup.  Ct.  864. 

^  Noble  State  Bank  v.  Haskell,  219  U.  S.  104,  111,  55  L.  ed.  — ,  31  Sup. 
Ct.  299,  per  Mr.  Justice  Holmes. 

38  House  V.  Mayes,  219  U.  S.  270,  55  L.  ed. ,  31  Sup.  Ct.  337,  case  af- 
firms 227  Mo.  617. 

39  Louisville  &  Nashville  R.  Co.  v.  Kentucky,  161  U.  S.  677,  40  L.  ed. 
849,  16  Sup.  Ct.  714. 

300 


MONOPOLIES,    ETC.  §  271 

ment  is  within  the  power  of  the  State,  and  a  State  is  not 
bound  to  go  to  the  full  extent  of  its  power  in  legislating 
against  an  evil  from  which  it  seeks  to  protect  the  pub- 
lic.''" All  corporations,  associations  and  individuals, 
within  its  jurisdiction,  are  subject  to  such  regulations  in 
respect  to  thejr  relative  rights  and  duties  as  the  State 
may,  in  the  exercise  of  its  police  power  and  in  harmony 
with  its  own  and  the  Federal  Constitution  prescribe  for 
the  public  convenience  and  the  general  good."*^  Again, 
it  is  for  the  State,  keeping  within  the  limits  of  its  consti- 
tutional powers,  to  say  what  particular  means  it  will 
prescribe  for  the  discouragement  of  monopoly  or  com- 
bination and  the  encouragement  of  competition,  in  order 
to  protect  the  public  in  such  matters.'*^  So  a  State,  by 
virtue  of  its  police  power,  has  the  right  to  enact  laws 
prohibiting  monopolies  and  thereby  protect  the  public 
against  unfair  competition.'*^  And  an  act  harmless  when 
done  by  one  may  become  a  public  wrong  when  done  by 
many  acting  in  concert,  and  when  it  becomes  the  object 
of  a  conspiracy,  and  operates  in  restraint  of  trade,  the 
State  may  prohibit  it  by  virtue  of  its  police  power.  ^* 
In  granting  an  exclusive  franchise  to  supply  gas  to  a 
municipality  and  its  inhabitants,  a  State  legislature  does 
not  part  with  the  police  power  and  duty  of  protecting 
the  public  health,  the  public  morals  and  the  public  safety, 
as  one  or  the  other  may  be  affected  by  the  exercise  of 
that  franchise  by  the  grantee.'*^    Again,  the  business  of 

«  German  Alliance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  55  L.  ed.  — ,  31  Sup. 
Ct.  246. 

"  German  Alliance  Insurance  Co.  v.  Hale,  219  U.  S.  307,  55  L.  ed.  — ,  31 
Sup.  Ct.  246,  citing  House  v.  Mayes,  219  U.  S.  270,  55  L.  ed.  — ,  31  Sup. 
Ct.  337;  Jacobson  v.  Massachusetts,  197  U.  S.  11,  27,  31,  25  Sup.  Ct.  358, 
49  L.  ed.  643;  Lake  Shore  &  M.  S.  Ry.  Co.  v.  Ohio,  173  U.  S.  285,  19  Sup. 
Ct.  465,  43  L.  ed.  702. 

«  German  Alliance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  55  L.  ed.  — ,  31  Sup. 
Ct.  246. 

"  State  V.  Central  Lumber  Co.,  24  S.  Dak.  136,  123  N.  W.  504. 

**  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  535,  54 
L.  ed.  816,  case  affirms  Retail  Lumber  Dealers,  Assoc,  v.  State,  95  Miss. 
337,  48  So.  1021 ;  under  Jili.s3.  Code,  1906,  chap.  145,  §  5002  (Laws,  1900, 
chap.  88).    Compare  Miss.  Laws,  1908,  p.  124,  chap.  119. 

«  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115  U.  S.  683,  29  L.  ed.  510.  6 

301 


§  271  FEDERAL   AND   STATE    POWERS — 

fire  insurance  is  of  an  extensive  and  peculiar  character, 
concerning  a  large  number  of  people;  and  it  is  within 
the  police  power  of  the  State  to  adopt  such  regulations 
as  will  protect  the  public  against  the  evils  arising  from 
the  combinations  of  those  engaged  in  such  business,  and 
to  substitute  competition  for  monopoly;  and  regulations 
which  have  a  real  substantial  relation  to  that  end  and 
are  not  essentially  arbitrary  do  not  deprive  the  insurance 
companies  of  their  property  without  due  process  of  law.''^ 
Mr.  Justice  Harlan,  who  delivered  the  opinion  of  the  court, 
holding  as  above  stated,  said:  "In  our  opinion  the  statute 
is  not  liable  to  objection  on  constitutional  grounds.  The 
State — as  we  may  infer  from  the  words  of  the  statute 
alone — regarded  the  fixing  of  insurance  rates  by  self- 
constituted  tariff  associations  or  combinations  as  an  evil 
against  which  the  public  should  be  guarded  by  such 
legislation  as  the  State  was  competent  to  enact.  This 
question  was  before  the  Supreme  Court  of  Alabama, 
and  the  statute  was  there  assailed  as  violating  both  the 
State  and  Federal  Constitutions.  That  court  held  that 
the  object  of  the  legislature  of  Alabama  was  to  prevent 
monopoly  and  to  encourage  competition  in  the  matter 
of  insurance  rates,  and  that  the  statute  was  a  legitimate 
exercise  to  that  end  of  the  police  power  of  the  State, 
not  inconsistent  with  either  the  State  or  Federal  Con- 
stitution."^ The  same  view  of  the  statute  was  taken  by 
the  State  court  in  subsequent  cases.  "^  We  concur  entirely 
in  the  opinion  expressed  by  the  State  court  that  the 
statute  does  not  infringe  the  Federal  Constitution,  nor 
deprive  the  insurance  company  of  any  right  granted  or 
secured  by  that  instrument.  The  business  of  fire  insurance 
is,  as  every  one  knows,  of  an  extensive  and  peculiar 

Sup.  Ct.  265;  New  Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650,  29 
L.  ed.  516,  6  Sup.  Ct.  252. 

«  German  Alliance  Insurance  Co.  v.  Hale,  219  U.  S.  307,  55  L.  ed.  — ,  31 
Sup.  Ct.  246. 

«  Citing  Continental  Ins.  Co.  v.  Parkes,  142  Ala.  650,  658,  659,  39  So. 
204. 

«  Citing  Firemen's  Fund  Ins.  Co.  v.  Hellner,  159  Ala.  447,  49  So.  297; 
iEtna  Fire  Ins.  Co.  v.  Kennedy,  161  Ala.  600,  50  So.  73. 

302 


MONOPOLIES,    ETC.  §  272 

character,  and  its  management  concerns  a  very  large 
number  of  people,  particularly  those  who  own  property 
and  desire  to  protect  themselves  by  insurance.  We  can 
well  understand  that  fire  insurance  companies,  acting 
together,  may  have  owners  of  property  practically  at 
their  mercy  in  the  matter  of  rates,  and  may  have  it  in 
their  power  to  deprive  the  public  generally  of  the  ad- 
vantages flowing  from  competition  between  rival  organi- 
zations engaged  in  the  business  of  fire  insurance.  In 
order  to  meet  the  evils  of  such  combinations,  the  State 
is  competent  to  adopt  appropriate  regulations  that  will 
tend  to  substitute  competition  in  the  place  of  combina- 
tion or  monopoly."  '^^ 

§  272.  Grant  of  Monopoly— Sovereign  Power  or  State 
Is  Source  of  Grant  or  Franchise. 

Although  monopolies  may  be  created  by  grant  still 
they  must  be  called  into  being  by  the  sovereign  power 
alone.  ^°  A  grant  or  franchise  must  have  its  source  in 
or  emanate  from  the  sovereign  power  wherein  it  prima- 
rily resides,  and  that  power  alone  can  grant  it  and  make 
possible  its  lawful  exercises,  for  such  legislative  grant 
or  law  is  a  prerequisite.  The  source  of  a  franchise  is  the 
State,  whatever  the  agency  employed.^^    It  is,  therefore, 

«  Citing  Carroll  v.  Greenwich  Ins.  Co.,  199  U.  S.  401,  411,  50  L.  ed.  246, 
26  Sup.  Ct.  66. 

«>  Davenport  v.  Kleinschmidt,  6  Mont.  502,  529,  13  Pac.  249.  See  §  274, 
herein. 

"  United  States:  Bank  of  Augusta  v.  Earle,  13  Pet.  (38  U.  S.)  519,  595,  10 
L.  ed.  274  [per  Mr.  Chief  Justice  Taney,  who  says:  "It  is  essential  to  the 
character  of  a  franchise  that  it  should  be  a  grant  from  the  sovereign  au- 
thority, and  in  this  country  no  franchise  can  be  held  which  is  not  derived 
from  a  law  of  the  State, "  quotedin  whole  or  in  part  in  People's  Rd.  v.  Mem- 
phis Rd.,  10  Wall.  (77  U.  S.)  38,  51,  19  L.  ed.  844;  Western  Union  Teleg. 
Co.  V.  Norman,  77  Fed.  13,  22,  per  Barr,  Dist.  J.;  Chicago  &  Western  In- 
diana Rd.  Co.  V.  Dunbar,  95  111.  571,  575;  Purncll  v.  McLane,  98  Md.  589, 
592,  56  Atl.  830,  per  Pearce,  J.;  State  v.  Scougal,  3  S.  Dak.  55,  62,  44  Am. 
St.  Rep  .756,  15  L.  R.  A.  477,  per  Corson,  J.] 

Alabama:  Uniontown,  City  of,  v.  State  ex  rel.  Glass,  145  Ala.  471,  39  So. 
814;  State  v.  Moore  &  Ligon,  19  Ala.  520  (per  Parsons,  J.,  who  says:  "It 
is  clear  that  the  State  is  the  source  of  all  such  franchises"). 

Colorado:  Denver  &  Swansea  Ry.  Co.  v.  Denver  City  Ry.  Co.,  2  Colo.  673, 

303 


§  272  FEDERAL   AND    STATE    POWERS — 

universally  recognized  that  the  power  of  creating  cor- 
porations is  one  appertaining  to  sovereignty,  and  can 
only  be  exercised  by  that  branch  of  the  government  in 
which  it  is  legally  vested,  and  whatever  method  may  be 
adopted  for  their  formation,  and  with  whatever  liberality 
the  privilege  of  forming  them  may  be  conferred,  every 
corporation  is  dependent  for  its  existence  upon  the  per- 
mission of  the  State  in  which  it  is  created. ^^  In  the 
United  States  a  corporation  can  only  have  an  existence 
under  the  express  law  of  the  State  by  which  it  is  created 
and  can  exercise  no  power  or  authority  which  is  not 
granted  to  it  by  the  charter  under  which  it  exists,  or 

682  (per  Brazee,  J.,  who  says:  "It  is  essential  that  a  franchise  should  be 
created  by  a  grant  from  the  sovereign  authority."  It  is  a  franchise  which 
the  sovereign  authority  alone  can  grant). 

Idaho:  Spotswood  v.  Morris,  12  Idaho,  360,  85  Pac.  1094  (sovereign  power 
is  necessary  in  order  to  possess  or  lawfully  exercise  the  powers,  privileges 
or  franchises  of  a  corporation). 

Illinois:  Wilmington  Water  Power  Co.  v.  Evans,  166  111.  548,  556,  46 
N.  E.  1083,  per  Magruder,  C.  J.;  Chicago  City  Ry.  v.  People,  73  111.  541, 
547  (per  Story,  J.,  who  says:  "Corporate  franchises  in  the  American  States 
emanate  from  the  government  or  sovereign  power,  and  owe  their  existence  to 
a  grant,"  etc.);  People  ex  rel.  Koerner  v.  Ridgley,  21  111.  65, 69  (per  Breese,  J., 
who  says:  "In  this  country,  under  our  institutions,  a  privilege  or  immunity 
of  a  public  nature,  which  could  not  be  exercised  without  a  legislative  grant 
would  also  be  a  franchise.  There  must  be  some  parting  of  prerogative  be- 
longing to  a  king,  or  to  the  people,  under  our  system,  that  can  constitute  a 
franchise");  Cain  v.  City  of  Wyoming,  104  111.  App.  538  (a  franchise  must 
be  granted  by  the  legislature). 

Louisiana:  Maestri  v.  Board  of  Assessors,  110  La.  517,  526,  34  So.  658 
(per  Blanchard,  J.,  who  says:  "To  be  a  franchise  the  right  possessed  must 
be  such  as  cannot  be  exercised  without  the  express  permission  of  the  sover- 
eign power — a  privilege  or  immunity  of  a  public  nature  which  cannot  be 
legally  exercised  without  legislative  grant"). 

Maine:  Yarmouth  v.  North  Yarmouth,  34  Me.  411,  56  Am.  Dec.  666 
(private  corporations  exist  by  legislative  grants  conferring  rights  and  powers 
for  special  purposes). 

Minnesota:  State,  Clapp  v.  Minnesota  Thresher  Mfg.  Co.,  40  Minn.  213, 
3  L.  R.  A.  510,  41  N.  W.  1020  (same  statement  as  Louisiana  case);  Blake  v. 
Winona  &  St.  Peter  Ry.  Co.,  19  Minn.  418,  425. 

Pennsylvania:  Allegheny  County  v.  McKeesport  Diamond  Market,  123 
Pa.  St.  164,  19  Pitts.  L.  J.  (N.  S.),  280,  46  Phila.  Leg.  Int.  211,  23  W.  N.  C. 
89,  16  Atl.  619  (chartered  rights  from  commonwealth  necessary  to  effect 
purposes  for  which  organized). 

"  Bank  of  California  v.  San  Francisco,  142  Cal.  276,  279,  76  Pac.  832, 
64  L.  R.  A.  918,  per  Angellotti,  J. 

304 


MONOPOLIES,   ETC.  §§  273,  274 

by  some  other  legislative  act."  A  corporation  may, 
however,  exist  by  prescription  but  such  prescription 
presupposes  a  grant. ^^  So  it  is  declared  that  a  franchise 
being  derived  from  the  government  is  always  supposed 
to  have  been  originally  granted  by  the  government.^^ 

§  273.  Test  of  Legislative  Power  to  Grant. 

One  of  the  tests  of  legislative  power  to  grant  fran- 
chises to  particular  individuals  is  whether  such  grant 
will  promote  the  public  good,  and  is  such  that  the  rights 
or  privileges  granted  must  be  committed  to  a  few  in 
order  to  be  available.  ^^ 

§  274.  Legislative  Power  of  State  to  Grant  Monopolies. 
The  legislature  of  a  State,  in  the  absence  of  any  con- 

"  Oregon  Ry.  &  Nav.  Co.  v.  Oregonian  Ry.  Co.,  130  U.  S.  1,  9  Sup.  Ct. 
409,  32  L.  ed.  837. 

"  Wilmington  Water  Power  Co.  v.  Evans,  166  111.  548,  556,  46  N.  E. 
1083,  per  Magruder,  J.;  Chicago  City  Ry.  v.  People,  73  111.  541,  547,  per 
Scott,  J. 

"  I  am  not  here  to  apply  the  principles  which  have  been  long  estabhshed 
in  England,  for  the  protection  of  ancient  ferries,  markets,  fairs,  mills,  etc. 
In  my  opinion,  this  doctrine,  in  its  full  extent  is  not  adapted  to  the  con- 
dition of  our  country.  And  it  is  one  of  the  most  valuable  traits  of  the 
common  law,  that  it  forms  a  rule  of  right,  only  in  cases  and  under  circum- 
stances adapted  to  its  principles.  In  this  country  there  are  few  rights  founded 
on  prescription.  The  settlement  of  our  country  is  comparatively  recent; 
and  its  rapid  growth  in  population  and  advance  in  improvements  have 
prevented,  in  a  great  degree,  interests  from  being  acquired  by  immemorial 
usage.  Such  evidence  of  right  is  found  in  countries  where  society  has  be- 
come more  fixed,  and  improvements  are  in  a  great  degree  stationary.  But 
without  the  aid  of  the  principles  of  the  common  law,  we  should  be  at  a  loss 
how  to  construe  the  charter  of  the  complainants,  and  ascertain  their 
rights."  Charies  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  561, 
562,  9  L.  ed.  773,  per  Mr.  Justice  M'Lean  (decided  1837).     ItaUcs  are  ours. 

"There  is  no  doubt,"  says  Kent,  "that  corporations  as  well  as  other 
private  rights  and  franchises,  may  exist  in  this  country  by  prescription. 
2  Kent's  Comm.,  277  (a)  "  *  *  *  It  may  be  considered  well  settled,  that 
a  corporation  may  exist  in  this  country  by  presumptive  evidence.  *  *  * 
Although  corporations  may  *  *  *  exist  in  this  country  by  common  law 
and  by  reputation.  *  *  *  Yet  there  are  comparatively  but  few  cases 
where  a  legislative  act  or  charter  carmot  be  shown."  Angell  &  Ames  on 
Corp.  (9th  ed.),  §§  70,  71. 

"  Norwich  Gaslight  Co.  v.  Norwich  City  Gas  Co.,  25  Conn.  19,  36, 
per  Hinman,  J.  (right  to  lay  gas  pipes  in  streets). 
"  Horst,  Mayor,  etc.,  v.  Moses,  48  Ala.  129,  143. 

20  305 


§  274  FEDERAL   AND   STATE   POWERS — 

stitutional  prohibition,  may  grant  an  exclusive  privilege 
or  monopoly.  ^^  The  Parliament  of  Great  Britain  and 
the  State  legislatures,  except  when  the  latter  have  been 
prevented  by  constitutional  provisions  from  so  doing, 
have  always  exercised  the  power  of  granting  exclusive 
privileges  or  rights,  even  those  which  come  within  the 
definition  of  monopolies,  especially  so  when  they  were 
necessary  and  proper  to  effectuate  a  purpose  which  had 
in  view  the  public  good.  This  is  so  held  in  the  well- 
known  Slaughter-House  cases,  ^^  decided  in  1872.  The 
counsel  therein,  who  argued  the  negative  of  the  ques- 
tion there  under  discussion,  ^^  in  an  exhaustive  brief  gives 
the  history  of  monopolies  in  England  and  the  European 
continent  and,  as  said  by  Mr.  Justice  Miller  who  gave 
the  opinion  of  the  court,  "displayed  a  research  into" 
that  history.  The  court  also  said:  "But  it  is  to  be  ob- 
served that  all  such  references  are  to  monopolies  estab- 
lished by  the  monarch  in  derogation  of  the  rights  of  his 
subjects,  or  arise  out  of  transactions  in  which  the  people 
were  unrepresented,  and  their  interests  uncared  for. 
The  great  Case  of  Monopolies,  reported  by  Coke,^"  *  *  * 
was  undoubtedly  a  contest  of  the  commons  against  the 
monarch.  The  decision  is  based  upon  the  ground  that 
it  was  against  the  common  law,  and  the  argument  was 
aimed  at  the  unlawful  assumption  of  power  by  the  crown; 
for  whoever  doubted  the  authority  of  Parliament  to 
change  or  modify  the  common  law?  *  *  *  But  we  think 
it  may  he  safely  aftrmed,  that  the  Parliament  of  Great 
Britain,  representing  the  people  in  their  legislative  func- 
tions, and  the  legislative  bodies  of  this  country,  have  from 
time  immemorial  to  the  present  day,  continued  to  grant  to 

"  Crescent  City  Gaslight  Co.  v.  New  Orleans  Gaslight  Co.,  27  La. 
Ann.  138;  Memphis,  City  of,  v.  Memphis  Water  Co.,  5  Heisk.  (52  Tenn.) 
495;  State  v.  Milwaukee  Gashght  Co.,  29  Wis.  454. 

An  exdusive  privilege  or  monopoly  can  he  granted  under  the  usual  title  to 
incorporate  a  company.  Crescent  City  Gaslight  Co.  v.  New  .Orleans  Gas^; 
light  Co.,  27  La.  Ann.  138. 

^  16  Wall.  (83  U.  S.)  36,  65,  21  L.  ed.  394. 

"Which  was:  "Can  any  exclusive  privileges  bo  granted  to  any  of  ita 
citizens,  or  to  a  corporation,  by  the  legislature  of  a  State?" 

«>  11  Reports,  85. 

306 


MONOPOLIES,    ETC.  §  274 

persons  and  corporations  exclusive  privileges — privileges 
denied  to  other  citizens — privileges  which  come  within  any 
just  definition  of  the  word  monopoly,  as  much  as  those  now 
under  consideration;  and  that  the  power  to  do  this  has  never 
been  questioned  or  denied,  nor  can  it  be  truthfully  denied 
that  some  of  the  most  useful  and  beneficial  enterprises 
set  on  foot  for  the  general  good,  have  been  made  suc- 
cessful by  means  of  these  exclusive  rights,  and  could  only 
have  been  conducted  to  success  in  that  way.*^  It  may, 
therefore,  be  considered  as  established  that  the  authority 
of  the  legislature  of  Louisiana  to  pass  the  present  statute  ^- 
is  ample,  unless  some  restraint  in  the  exercise  of  that 
power  be  found  in  the  Constitution  of  that  State,  or  in 
the  amendments  to  the  Constitution  of  the  United  States 
adopted  since  the  date  of  the  decisions  we  have  already 

•1  Mem.    Italics  in  text  are  the  author's. 

That  part  of  the  above  quotation  commencing:  "But  we  think  it  may 
be  safely  affirmed  that  the  parliament  of  Great  Britain"  and  ending:  "and 
could  only  have  been  conducted  to  success  in  that  way"  is  quoted  in  City 
of  Laredo  v.  International  Bridge  &  Tramway  Co.,  66  Fed.  246,  248,  14 
C.  C.  A.  1.  A  case  of  contract,  by  ordinance,  not  to  exercise  city's  ferry 
franchise,  for  a  period  of  years  and  to  permit  certain  bridge  privileges 
for  same  period;  held  not  a  monopoly. 

"  The  legislature  of  Louisiana,  on  March  8,  1869,  passed  an  act  granting 
to  a  corporation,  created  by  it,  the  exclusive  right,  for  twenty-five  years, 
to  have  and  maintain  slaughter-houses,  landings  for  cattle,  and  yards  for 
enclosing  cattle  intended  for  sale  for  slaughter  within  the  parishes  of  Or- 
leans, Jefferson,  and  St.  Bernard,  in  that  State  (a  territory  which,  it  was 
said — see  16  Wall.  85 — contained  1,154  square  miles,  including  the  city 
of  New  Orleans  and  a  population  of  between  two  and  three  hundred  thou- 
sand people),  and  prohibiting  all  other  persons  from  building,  keeping,  or 
having  slaughter-houses,  landings  for  cattle,  and  yards  for  cattle  intended 
for  sale  or  slaughter  within  those  limits;  and  requiring  that  all  cattle  and 
other  animals  intended  for  sale  for  slaughter  within  that  district  should 
be  brought  to  the  yards  and  slaughter-houses  of  the  corporation,  and 
authorizing  the  corporation  to  exact  certain  prescribed  fees  for  the  use  of 
its  wharves  and  for  each  animal  landed,  and  certain  prescribed  fees  for 
each  animal  slaughtered,  besides  the  head,  feet,  gore  and  entrails,  except 
Bwine.  It  was  held  that  this  grant  of  exclusive  right  or  privilege,  guarded 
by  a  proper  limitation  of  the  prices  to  be  charged,  and  imposing  the  duty 
of  providing  ample  conveniences,  with  permission  to  all  owners  of  stock 
to  land,  and  of  all  butchers  to  slaughter  at  those  places,  was  a  police  reg- 
ulation for  the  health  and  comfort  of  the  people  (the  statute  locating  them 
where  health  and  comfort  required),  within  the  power  of  the  State  legis- 
latures, unaffected  by  the  Constitution  of  the  United  States  previous  to 
the  adoption  of  the  thirteenth  and  fourteenth  articles  of  amendment . 

307 


§  275  FEDERAL   AND   STATE    POWERS — 

cited."  ^^  Where,  however,  an  amendment  to  a  cor- 
porate charter  granted  the  right  to  lay  down  gas  pipes 
through  the  streets  and  pubUc  grounds  of  a  city  and  also 
provided  that  such  right  should  be  exclusive  as  against 
any  and  all  other  persons  and  corporations  except  such 
as  might  thereafter  be  invested  by  the  legislature  with 
power  to  use  said  streets  for  the  same  purpose  it  was 
determined,  that  so  far  as  such  amendment  was  a  restric- 
tion upon  the  free  manufacture  and  sale  of  gas  it  was  a 
monopoly,  and  was  unconstitutional  and  void.^* 

§  275.  Monopoly  Cannot  Be  Implied  from  Mere  Grant 
— Public  Grants  of  Franchises,  Privileges,  etc.— Con- 
struction Against  Grantee. 

A  monopoly  cannot  be  implied  from  the  mere  grant 
of  a  charter  to  construct  a  work  of  public  improvement, 
and  to  take  the  profits;  to  give  such  a  monopoly  there 
must  be  an  express  provision  in  the  charter,  whereby  the 
legislature  restrains  itself  from  granting  charters  for  rival 
and  competing  works.^^     It  is  very  well  settled  that  in 

6'  Mr.  Justice  Field,  in  his  dissenting  opinion,  in  the  Slaughter-House 
Cases  above  cited,  said:  "It  is  also  sought  to  justify  the  act  in  question  on 
the  same  principle  that  exclusive  grants  for  ferries,  bridges,  and  turnpikes 
are  sanctioned.  But  it  can  find  no  support  there.  Those  grants  are  of 
franchises  of  a  public  character  appertaining  to  the  government.  *  *  * 
The  grant  of  exclusive  privileges,  of  a  right  thus  appertaining  to  the  govern- 
ment, is  a  very  different  thing  from  a  grant,  with  exclusive  privileges,  of 
a  right  to  pursue  one  of  the  ordinary  trades  or  calUngs  of  life,  which  is  a 
right  appertaining  solely  to  the  individual." 

"  Norwich  Gaslight  Co.  v.  Norwich  City  Gas  Co.,  25  Conn.  19.  "Al- 
though we  have  no  direct  constitutional  provision  against  a  monopoly, 
yet  the  whole  theory  of  a  free  government  is  opposed  to  such  grants,  and 
it  does  not  require  even  the  aid  which  may  be  derived  from  the  Bill  of 
Rights,  the  first  section  of  which  declares  '  that  no  man  or  set  of  men,  are 
entitled  to  exclusive  public  emoluments,  or  privileges  from  the  community,' 
to  render  them  void.  *  *  *  While  we  are  not  called  upon  to  question  the 
authority  and  power  of  the  legislature  to  grant  to  the  plaintiffs  the  right 
to  lay  down  their  own  pipes  for  the  distribution  of  giis  through  the  streets, 
for  their  own  private  purposes,  we  think,  considering  that  the  streets, 
subject  to  the  public  easement,  are  private  property,  that  it  does  not 
possess  the  power  to  exclude  others  from  using  them  for  similar  purposes." 
Id.,  38,  .39,  per  Hinman,  J. 

«  Tuckahoe  Canal  Co.  v.  Tuckahoe  Rd.  Co.,  11  Leigh  (Va.),  42,  36  Am, 
Dec.   374. 

308 


MONOPOLIES,    ETC.  §  275 

contracts  with  States  or  municipalities  conferring  pow- 
ers, grants,  or  privileges  on  private  corporations  affecting 
the  general  rights  and  interests  of  the  public,  the  grant 
or  privilege  must  be  clearly  conferred,  all  implications, 
doubts  and  ambiguities  being  resolved  against  the  grant 
or  privilege  claimed.''^  And  the  rule  is  that  public  grants 
of  franchises,  powers,  rights,  privileges  or  property  in 
which  the  government  or  public  has  an  interest  must  be 
construed  in  favor  of  the  grantor  and  strictly  against 
the  grantee;  whatever  is  not  clearly,  plainly  and  un- 
equivocally granted  is  withheld;  nothing  passes  by  im- 
plication except  it  be  necessary  to  carry  into  effect  the 
obvious  intent  of  the  grant.  This  rule  applies  in  cases  of 
doubt  or  ambiguity  in  the  meaning  or  interpretation  of 
language  used  or  where  the  grant  is  susceptible  of  two 
constructions,  for  if  the  meaning  is  plain  and  clear  and 
the  intention  obvious  there  is  no  room  for  construction. 
Private  corporations  and  individuals  are  within  the  above 
rule,^"  which  also  applies  to  articles  of  association  or- 

«  Bartholomew  v.  City  of  Austin,  85  Fed.  359,  364,  29  C.  C.  A.  568,  per 
Pardee,  Cir.  J.    See  §  71,  herein. 

"  United  Slates:  Cleveland  Electric  Ry.  Co.  v.  Cleveland,  204  U.  S.  116, 
130,  51  L.  ed.  399,  27  Sup.  Ct.  202;  Blair  v.  Chicago,  201  U.  S.  400,  50  L. 
ed.  80,  26  Sup.  Ct.  427  (street  railroads;  public  rights;  private  rights  under 
franchise);  Knoxville  Water  Co.  v.  Knoxville,  200  U.  S.  22,  50  L.  ed.  353 
(exclusive  rights;  contract  to  supply  water;  legislative  grant;  obligation 
of  contract;  power  of  city  to  construct  water  plant);  Long  Island  Water 
Supply  Co.  V.  Brooklyn,  166  U.  S.  685,  696,  41  L.  ed.  1165,  17  Sup.  Ct.  718, 
per  Mr.  Justice  Brewer  (condemnation  of  water  supply;  water  companies; 
no  exclusive  privilege  beyond  reach  of  legislative  action;  legislative  powers; 
municipal  powers);  Wisconsin  Cent.  R.  Co.  v.  United  States,  164  U.  S.  190, 
41  L.  ed.  399,  17  Sup.  Ct.  45  (public  lands;  subsidized  railroad);  Pearsall 
V.  Great  Northern  R.  Co.,  161  U.  S.  646,  16  Sup.  Ct.  705,  40  L.  ed.  838, 
reversing  73  Fed.  933  (consolidation  of  raih-oads;  parallel  and  competing 
lines;  statute;  construction;  charter;  powers  not  directly  contemplated; 
revocation;  subsequent  legislative  restriction;  vested  rights);  Hamilton 
Gas  Light  &  Coke  Co.  v.  Hamilton  City,  146  U.  S.  258,  36  L.  ed.  963,  13 
Sup.  Ct.  90  (grant  to  corporation  of  special  privileges;  obligation  of  con- 
tract; municipal  gas  works;  contract  for  gas  supply;  municipal  ordinance 
not  a  contract;  legislative  grant;  power  to  revoke;  reservation  of);  Stein 
V.  Bienville  Water  Supply  Co.,  141  U.  S.  67,  11  Sup.  Ct.  802,  35  L.  ed.  622 
(grant  of  sole  and  exclusive  privilege  of  supplying  wafer;  obligation  of 
contract;  municipal  corporation);  Central  Transportation  Co.  v.  Pull- 
man's Palace  Car  Co.,  139  U.  S.  24,  35  L.  ed.  55,  11  Sup.  Ct.  478,  45  .Am. 

309 


§  275  FEDERAL  AND  STATE   POWERS — 

ganizing  a  corporation  under  general  laws  which  are  a 
substitute  for  a  charter  from  the  legislative  body.®^    Such 

&  Eng.  R.  Cas.  607,  9  Ry.  &  Corp.  L.  J.  342;  43  Alb.  L.  J.  328  (corporate 
contract;  alienation  of  francliise;  ultra  vires  agreement;  breach  of  duty  to 
public);  Slidell  v.  Grandjean,  111  U.  S.  412,  4  Sup.  Ct.  475,  28  L.  ed.  321; 
Turnpike  Co.  v.  State,  3  Wall.  (70  U.  S.)  210,  18  L.  cd.  180  (grants  to  cor- 
porations; no  exclusive  privilege;  obligation  of  contract;  unlawful  charter 
to  rival);  Jefferson  Bank  v.  Skelly,  1  Black  (66  U.  S.),  436,  17  L.  ed.  173 
(bank  charters;  waiver  of  sovereignty);  Ohio  Life  Ins.  &  Trust  Co.  v. 
Debolt,  16  How.  (57  U.  S.)  416,  14  L.  ed.  997  (statutes  as  to  insurance 
company;  exemption  from  taxation;  obligation  of  contracts;  validity; 
impairment);  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.) 
420,  9  L.  ed.  773  (corporate  franchise;  obligation  of  contracts;  impairment 
of;  vested  rights;  powers  expressly  granted;  exclusive  privileges  not  re- 
garded; imphcations  as  to  powers  of  government);  United  States  v.  Arre- 
dono,  6  Pet.  (31  U.  S.)  691,  736,  8  L.  ed.  547,  564;  Central  Trust  Co.  of 
New  York  v.  Municipal  Traction  Co.  (U.  S.  C.  C),  169  Fed.  308;  Helena, 
City  of,  V.  Helena  Waterworks  Co.,  122  Fed.  1,  58  C.  C.  A.  381;  Omaha 
Horse  R.  Co.  v.  Cable  Tramway  Co.  (U.  S.  C.  C),  30  Fed.  324. 

Georgia:  Macon  &  W.  R.  R.  Co.  v.  Davis,  13  Ga.  68. 

Illinois:  Mills  v.  County  of  St.  Clair,  7  111.  197. 

Louisiana:  State  of  Louisiana  v.  Morgan,  28  La.  Ann.  482. 

Maine:  Rockland  Water  Co.  v.  Camden  &  R.  Water  Co.,  80  Me.  544, 
15  Atl.  785,  1  L.  R.  A.  388. 

Michigan:  People  v.  Detroit  United  Ry.  Co.,  162  Mich.  460,  17  Det. 
Leg.  N.  673,  127  N.  W.  748,  aff'g  125  N.  W.  700. 

Minnesota:  State  v.  St.  Paul,  Minneapohs  &  Manitoba  Ry.  Co.,  98 
Minn.  380. 

Nebraska:  Lincoln  St.  Ry.  Co.  v.  City  of  Lincoln,  61  Neb.  109,  84  N.  W. 
802. 

New  Jersey:  Millville  Gashght  Co.  v.  Vineland  Light  &  Power  Co.  72 
N.  J.  Eq.  505,  65  Atl.  504;  Jersey  City  v.  North  Jersey  Ry.  Co.,  72  N.  J.  L. 
383,61  Atl.  95. 

iVeu)  Mexico;  Colorado  Telephone  Co.  v.  Fields  (N.  M.  1910),  110  Pac. 
571. 

New  York:  Trustees  of  Southampton  v.  Jessup,  162  N.  Y.  122,  127,  59 
N.  E.  538,  per  Vann,  J.,  case  reverses  10  App.  Div.  456;  People  v.  Wood- 
haven  Gas  Co.,  153  N.  Y.  528,  47  N.  E.  787,  reversing  11  App.  Div. 
175. 

Ohio:  Bank  of  Toledo  v.  City  of  Toledo  (Toledo  Bank  v.  Bond),  1  Ohio 
St.  622,  636,  per  Bartley,  C.  J. 

Pennsylvania:  Emerson  v.  Commonwealth,  108  Pa.  St.  Ill;  Pennsyl- 
vania Ry.  Co.  V.  Canal  Commissioners,  21  Pa.  St.  9,  22,  per  Black,  C.  J. 

Texas:  East  Line  &  R.  R.  Co.  v.  Rushing,  60  Tex.  306,  6  S.  W.  834. 

«*  Oregon  Railway  &  Navigation  Co.  v.  Orcgonian  Ry.  Co.,  130  U.  S.  1, 
32  L.  ed.  837,  9  Sup.  Ct.  409,  5  Rd.  &  Corp.  L.  J.  364;  see  also  Central 
Transportation  Co.  v.  Pullman's  Palace  Car  Co.,  139  U.  S.  24,  35  L.  ed.  55, 
11  Sup.  Ct.  478,  9  Rd.  &  Corp.  L.  J.  342,  43  Alb.  L.  J.  328,  45  Am.  &  Eng. 
R.  Cas.  607. 

310 


MONOPOLIES,    ETC.  §  276 

rule  also  differs  from  that  as  to  ordinary  grants,^^  and 
one  of  the  reasons  for  strict  construction  against  the 
grantee  is  that  such  grants  are  usually  prepared  by  those 
interested  in  them  and  submitted  to  the  legislature  with 
a  view  to  obtain  from  such  bodies  the  most  liberal  grant 
of  privileges  which  they  are  willing  to  give.'"'  The  rule 
or  principle  must,  however,  be  applied  with  reference  to 
the  subject-matter  as  a  whole,  and  not  in  such  a  manner 
as  to  defeat  the  general  intent  of  the  legislature,^'  as  the 
obvious  intention  of  the  parties,  when  expressed  in 
plain  and  unequivocal  language,  cannot  be  ignored  in  a 
public  any  more  than  in  a  private  grant.^-^ 

§  276.  Legislative  Power  of  State  to  Prohibit  Combi- 
nations, Monopolies,  etc. — Anti-Trust  Acts. 

The  legislature  of  a  State  may  ordain  that  competition 
and  not  combination  shall  be  the  law  of  trade  and  may 
prohibit  combinations  to  control  prices  as  where  the 
anti-trust  acts  of  a  State  were  all  direcfed  to  the  prohi- 
bitions of  combinations  to  restrict  trade,  to  in  any  way 
limit  competition  in  the  production  and  sale  of  articles, 
or  to  increase  or  reduce  prices  in  order  to  preclude  free 
and  unrestricted  competition.^^ 

•9  The  rule  of  construction  of  private  grants,  if  the  meaning  of  the  words 
be  doubtful,  is,  that  they  shall  be  taken  most  strongly  against  the  grantor. 
An  opposite  rule  prevails  in  cases  of  grants  made  by  the  sovereign  power. 
Mills  V.  County  of  St.  Clair,  7  111.  197. 

Generally,  dubious  words  ought  to  be  taken  most  strongly  against  the 
lawmaker.  United  States  v.  Heth,  3  Cranch  (7  U.  S.),  399,  413,  2  L.  ed. 
479. 

70  Cleveland  Electric  Ry.  Co.  v.  Cleveland,  204  U.  S.  116,  130,  51  L.  ed. 
399,  27  Sup.  Ct.  202. 
"  Moran  v.  Miami  County,  2  Black  (67  U.  S.)  722,  17  L.  ed.  342. 
"  People,  Woodhaven  Gas  Co.  v.  Dcehan,  153  N.  Y.  528,  47  N.  E.  187, 
reversing  42  N.  Y.  Supp.  1071,  17  App.  Div.  175,  76  N.  Y.  St.  Rep.  1071. 
"  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  25  Sup.  Ct.  379,  49 
L.  ed.  689. 

Mr.  Justice  Field  in  his  dissenting  opinion  in  the  Slaughter-House  Cases, 
16  Wall. (S3  U.  S.)  30,  21  L.  ed.  394,said: " The  struggleof  theEnglish  people 
against  monopolies  forms  one  of  the  most  interesting  and  instructive  chap- 
ters in  their  history.  It  finally  ended  in  the  passage  of  the  statute  of  2l3t 
James  1,  by  which  it  was  declared  'that  all  monopolies  and  all  commissions, 
grants,   Ucenses,  charters   and  letters-patent,  to  any  person  or  persons, 

311 


§276  FEDERAL    AND    STATE   POWERS — 

bodies  politic  or  corporate,  whatsoever,  of  or  for  the  sole  buying,  selling, 
making,  working,  or  using  of  anything'  within  the  realm  or  the  dominion  of 
Wales  were  altogether  contrary  to  the  law  of  the  realm  and  utterly  void,  with 
the  exception  of  patents  for  new  inventions  for  a  limited  period,  and  for 
printing,  then  supposed  to  belong  to  the  prerogative  of  the  king,  and  for 
the  preparation  and  manufacture  of  certain  articles  and  ordnance  intended 
for  the  prosecution  of  war.  The  common  law  of  England,  *  *  *  con- 
demned all  monopolies  in  any  known  trade  or  manufacture,  and  declared 
void  all  grants  of  special  privileges  wherebj'  others  could  be  deprived  of  any 
liberty  which  they  previously  had,  or  be  hindered  in  their  lawful  trade.  The 
statute  of  James  I,  to  which  I  have  referred,  only  embodied  the  law  as  it 
had  been  previously  declared  by  the  courts  of  England.  *  *  *  The  com- 
mon law  of  England  is  the  basis  of  the  jurisprudence  of  the  United  States." 
See  also  Patterson  v.  Wollmann,  5  N.  Dak.  608,  617,  67  N.  W.  1040,  33 
L.  R.  A.  536,  per  Corliss,  J. 

MonopoHes  "had  been  carried  to  an  enormous  height  during  the  reign 
of  Queen  Elizabeth;  and  were  heavily  complained  of  by  Sir  Edward  Coke 
in  the  beginning  of  the  reign  of  King  James  the  first:  but  were  in  a  great 
measure  remedied  by  statute  21  Jac.  I,  chap.  3,  which  declares  such  monop- 
olies to  be  contrary  to  law  and  void  (except  as  to  patents  not  exceeding 
the  grant  of  fourteen  years,  to  the  authors  of  new  inventions;  and  except 
also  patents  concerning  printing,  saltpetre,  gunpowder,  great  ordnance, 
and  shot);  *  *  *  In  the  same  manner,  by  a  constitution  of  the  emperor 
Zeno,  all  monopohes  and  combinations  to  keep  up  the  price  of  merchandise, 
provisions,  or  workmanship,  were  prohibited  upon  pain  of  forfeiture  of 
goods  and  perpetual  banishment."    4  Blackstone's  Comm.  159. 

English  statute  declaratory  of  common  law. 

"The  statute  of  21  James  I,  chap.  3,  which  declares  such  monopolies  to 
be  contrary  to  law  and  void,  except  as  to  patents  for  a  limited  time,  and 
printing,  the  regulation  of  which  was  at  that  time  considered  as  belonging 
to  the  king's  prerogative,  and  except  also  certain  warlike  materials  and 
manufactures,  the  regulations  of  which  for  obvious  reasons  may  fairly  be 
said  to  belong  to  the  king,  has  always  been  considered  as  merely  declaratory 
of  the  common  law."  Norwich  Gaslight  Co.  v.  Norwich  City  Gas  Co.,  25 
Conn.  19,  38. 

The  old  colonial  act  of  Massachusetts  of  1641  against  monopolies  "is  merely 
an  affirmance  of  the  principles  of  the  English  statute  against  monopolies,  of 
21  James  I,  chap.  3;  and  if  it  were  now  in  for(;e  (which  it  is  not)  it  would 
require  the  same  construction."  Charles  River  Bridge  v.  Warren  Bridge, 
11  Pet.  (36  U.  S.)  420,  606,  9  L.  ed.  773,  per  Mr.  Justice  Story,  case  decided 
in  1837.    In  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  56,  55  L.  ed. 

— ,  31  Sup.  Ct. (given  under  "Appendix  A"  herein),  Mr.  Chief  Justice 

White,  who  gives  the  opinion  of  the  court,  notes  "an  early  statute  of  the 
Province  of  Massachusetts,  that  is  chap.  31  of  the  Laws  of  1778-1779,  by 
which  monopoly  and  forestalling  were  expressly  treated  as  one  and  the  same 
thing." 

In  1824  it  was  said  that:  "Monopoly  is  also  an  offense  against  public 
trade,  and  at  common  law.  These  are  scarcfily  noticed  in  the  laws  of  the 
United  States,  or  in  those  of  Massachusetts,  but  in  general  terms.  This 
colony  early  passed  a  law,  declaring  there  should  be  no  monopolies  allowed, 

312 


MONOPOLIES,    ETC.  §  276 

but  of  Buch  new  inventions  as  were  profitable  to  the  country,  and  that  for  a 
short  time.  There  was  a  similar  law  in  Connecticut."  7  Dane's  Abridg. 
(Ed-  1824)  38,  chap.  205,  art.  5.  It  will  be  seen  from  what  is  stated  else- 
where herein  that  there  are  now  very  many  constitutional  and  statutory 
prohibitions  against  monopolies. 


313 


§  277         POWERS   OF   MUNICIPAL   CORPORATIONS — 


CHAPTER  XIX 

POWERS  OF  MUNICIPAL  CORPORATIONS — MONOPOLIES,  ETC. 

§  277.  Rule  as  to  Powers  of  Munic-  Create   Monopolies  or  to 

ipal  Corporations.  Make  Contracts  Tending 

278.  Delegation     of     Legislative  to  Create  a  Monopoly. 

Power  to  Municipalities.  §  281.  Same  Subject — Municipality 

279.  Municipal  Ordinances  Must  May    Adopt     Reasonable 

Not  Conflict  with  Consti-  Measures,  Although  Slight 

tution.  InequaUties    Exist    as    to 

280.  Power    of    MunicipaUty    to  Benefits  Conferred. 

§  277.  Rule  as  to  Powers  of  Municipal  Corporations. 

Municipal  corporations  will  be  held  to  the  strict  exer- 
cise of  their  franchises  as  they  are  created  solely  for  the 
public  good.^  And  the  principle  is  universal  that  munic- 
ipal corporations  possess  only  such  general  powers  as  are 
clearly  conferred  upon  them  by  the  sovereign  power  or 
State,  with  such  subsidiary  incidental  powers  as  are 
necessary  to  the  exercise  of  their  well-defined  powers. 
And  the  accepted  adhered  to  rule  is,  that  municipal 
corporations  possess  and  can  exercise  only  such  powers 
as  are  granted  in  express  words,  or  those  necessarily  all 
fairly  implied  in  or  incident  to  the  powers  expressly  con- 
ferred, or  those  essential  to  the  declared  objects  and 
purposes  of  the  corporation,  not  simply  convenient  but 
indispensable.  Implied  powers  are  such  as  are  necessary 
in  order  to  carry  into  effect  those  expressly  granted,  and 
which  must  therefore  be  presumed  to  have  been  within 
the  intention  of  the  legislative  grant.  ^    A  city  has  two 

'  Chicago,  City  of,  v.  RumpfT,  45  111.  90. 

2  Grand  Rapids  Electric  Light  &  Power  Co.  v.  Grand  Rapids  Edison 
Electric  Light  &  Fuel  Gas  Co.  (U.  S.  C.  C),  33  Fed.  659,  667,  per  Jackson,  J., 
quoting  in  part  from  Cooley's  Const.  Lim.,  marg.  p.  194.  See  also  St.  Louia 
V.  Kaime,  180  Mo.  309,  322,  79  S.  W.  140,  quoting  1  Dillion  on  Munic. 
Corp.  (14th  ed.,  p.  145),  and  quoted  in  part  in  Detroit  Citizens'  Street  Ry. 
Co.  V.  Detroit  Ry.,  171  U.  S.  48,  54,  43  L.  ed.  67,  18  Sup.  Ct.  732,  per 

314 


MONOPOLIES,    ETC.  §  277 

classes  of  powers,  the  one  legislative  or  governmental, 
by  virtue  of  which  it  controls  its  people  as  their  sovereign, 
the  other  proprietary^  or  business,  by  means  of  which  it 

Mr.  JuBtice  McKenna,  who  adds:  "Any  grant  of  power  in  general  terms 
read  literally^  can  be  construed  to  be  unlimited,  but  it  may,  notwithstand- 
ing, receive  limitation  from  its  purpose — from  the  general  purview  of  the 
act  which  confers  it.  A  municipaUty  is  a  governmental  agency — its  func- 
tions are  for  the  pubUc  good,  and  the  powers  given  to  it  and  to  be  exercised 
by  it  must  be  construed  with  reference  to  that  good  and  to  the  distinctions 
which  are  recognized  as  important  in  the  administration  of  public  affairs." 

Municipal  corporations  can  exercise  only  such  powers  as  are  expresslj'  con- 
ferred by  the  State,  or  such  as  are  necessary  to  carry  into  effect  those  ex- 
pressly delegated.    Chicago,  City  of,  v.  Rumpff,  45  111.  90. 

Rule  as  to  extent  of,  and  limitations  upon  power  of  municipal  corporations; 
Bee  also  the  following  cases: 

United  States:  Ottawa  v.  Carey,  108  U.  S.  110,  27  L.  ed.  669,  2  Sup.  Ct. 
361. 

Alabama:  Bessemer,  City  of,  v.  Bessemer  Waterworks,  152  Ala.  391,  44 
So.  663;  Birmingham  &  Pratt  Mines  St.  Ry.  Co.  v.  Birmingham  St.  Ry. 
Co.,  79  Ala.  465,  58  Am.  Rep.  615. 

Alaska:ConTiidt  v.  Miller,  2  Alaska,  433;  Ketchikan  Co.  v.  Citizens'  Co., 
2  Alaska,  120. 

California:  Piatt  v.  City  &  County  of  San  Francisco,  158  Cal.  74,  110 
Pac.  304; South  Pasadena, City  of,  v.  Pasadena  Land  &  Water  Co.,  152  Cal. 
579,  93  Pac.  490;  Galindo  v.  Walter,  8  Cal.  App.  234,  96  Pac.  505. 

Colorado:  Pueblo,  City  of,  v.  Stanton,  45  Colo.  523,  102  Pac.  512. 

District  of  Columbia:  United  States  v.  MacFarland,  28  App.  D.  C.  552. 

Florida:  Waller  v.  Osborn,  60  Fla. ,  52  So.  970;  Hardee  v.  Brown,  56 

Fla.  377,  47  So.  834;  State  v.  Tampa  Waterworks  Co.,  56  Fla.  858,  47  So. 
358;  State  ex  rel.  Wosley  v.  Lewis,  55  Fla.  570,  46  So.  630;  Porter  v.  Vin- 
zant,  49  Fla.  213,  111  Am.  St.  Rep.  93,  38  So.  607. 

Illinois:  Chicago,  City  of,  v.  Weber,  246  lU.  304,  92  N.  E.  859;  Loeffler  v. 
City  of  Chicago,  246  111.  43,  92  N.  E.  586;  Earlville,  City  of,  v.  Radley,  237 
111.  242,  86  N.  E.  624. 

Indiana:  Frank  v.  City  of  Decatur  (Ind.,  1910),  92  N.  E.  173;  Elkhart, 
City  of,  V.  Lipschitz,  164  Ind.  671,  74  N.  E.  528;  Pittsburg,  Cincinnati, 
Chicago  &  St.  Louis  Ry.  Co.  v.  Town  of  Crown  Point,  146  Ind.  421,  45 
N.  E.  587,  35  L.  R.  A.  684;  Clark  v.  City  of  South  Bend,  85  Ind.  276,  44 
Am.  Rep.  13. 

Iowa:  Bear  v.  City  of  Cedar  Rapids  (Iowa,  1910),  126  N.  W.  324,  27  L. 
R.  A.  (N.  S.)  1150;  Burroughs  v.  City  of  Cherokee,  134  Iowa,  429,  109 
N.  W.  876. 

Kentucky:  Henderson  v.  City  of  Covington,  14  Bush  (77  Ky.),  312. 

Maine:  Phillips  Village  Corp.  v.  Phillips  Water  Co.,  104  Me.  103,  71  Atl. 
474;  Mayo  v.  Dover  &  Foxeroff  Village  Fire  Co.,  96  Me.  539,  53  Atl.  62. 

Maryland:  Schultz  v.  State,  112  Md.  211,  76  Atl.  592. 

Michigan:  Wheeler  v.  City  of  Sault  Ste.  Marie  (Mich.,  1911),  17  Det. 
Leg.  N.  1117,  129  N.  W.  685;  Attorney  Gen'l  v.  Detroit  Common  Council, 
150  Mich.  310,  113  N.  W.  1107,  14  Det.  Leg.  N.  643. 

315 


§  27S         POWERS   OF   MUNICIPAL   CORPORATIONS — 

acts  and  contracts  for  the  private  advantage  of  the  in- 
habitants of  the  city  and  of  the  city  itself.^ 

§  278.  Delegation  of  Legislative  Powers  to  Munic- 
ipalities. 
A  city  is  the  creature  of  the  State.    A  municipal  cor- 

Mississippi:  Alabama  &  V.  Ry.  Co.  v.  Turner  (Miss.,  1910),  52  So,  261; 
Hazelhurst,  City  of,  v.  Mayes  (Miss.,  1910),  51  So.  890. 

Missouri:  Aurora  Water  Co.  v.  City  of  Aurora,  129  Mo.  540,  31  S.  W. 
946;  Leach  v.  Cargill,  60  Mo.  316;  State  ex  rel.  Case  v.  Wilson,  151  Mo. 
App.  723,  132  S.  W.  625;  Smith  v.  Berryman,  142  Mo.  App.  373,  127  S.  W. 
129. 

Montana:  Palmer  v.  City  of  Helena,  40  Mont.  498,  107  Pac.  512;  Daven- 
port V.  Kleinschmidt,  6  Mont.  502,  527,  13  Pac.  249. 

New  York:  People  v.  Perley,  123  N.  Y.  Supp.  436,  67  Misc.  471. 

North  Carolina:  Asheville  Street  Ry.  Co.  v.  West  Asheville  Sulphur 
Spring  Ry.  Co.,  114  N.  C.  725,  728,  19  S.  E.  697. 

South  Carolina:  Germania  Sav.  Bank  v.  Darlington,  50  S.  C.  337,  27 
S.  E.  846. 

Texas:  Brenham,  City  of,  v.  Brenham  Water  Co.,  67  Tex.  542,  4  S.  W. 
143;  Ball  v.  Texarkana  Water  Corp.  (Tex.  Civ.  App.  1910)  127  S.  W.  1068; 
Paris,  City  of,  v.  Sturgeon,  50  Tex.  Civ.  App.  519,  112  S.  W.  459;  Blanken- 
ship  V.  City  of  Sherman,  33  Tex,  Civ.  App.  507,  76  S.  W,  805. 

Virginia:  Kirkham  v.  Russell,  76  Va.  956. 

Wisconsin:  Flannagan  v.  Buxton  (Wis.,  1911),  129  N.  W.  642;  Schneider 
V.  City  of  Menasha,  118  Wis.  298,  95  N.  W.  94,  99  Am.  St.  Rep.  996. 

3  Omaha  Water  Co.  v.  City  of  Omaha,  147  Fed.  1,  77  C.  C.  A.  267,  12 
L.  R.  A.  (N.  S.)  736,  cited  in  Winona,  City  of,  v.  Botzet,  169  Fed.  321,  332, 
333,  94  C.  C.  A.  563.  See  Dillon  on  Municipal  Corp.  (5th  ed.),  §§  38  (26), 
39  (27).    See  also  the  following  cases: 

United  Stales:  Pike's  Peak  Power  Co.  v.  City  of  Colorado  Springs,  105 
Fed.  1,  11,  44  C.  C.  A.  333,  342;  lUinois  Trust  &  Savings  Bank  v.  City  of 
Arkansas  City,  76  Fed.  271,  282,  22  C.  C.  A.  171,  181,  40  U.  S.  App.  257, 
276,  34  L.  R.  A.  518,  525;  Safety  Insulated  Wire  &  Cable  Co.  v.  Mayor, 
etc.,  of  Baltimore,  66  Fed.  140,  143,  144,  13  C.  C.  A.  375,  377,  375. 

California:  San  Francisco  Gas  Co.  v.  City  of  San  Francisco,  9  Cal.  453, 
468,  469. 

Illinais:  Wagner  v.  City  of  Rock  Island,  146  111,  139,  154,  155,  34  N.  E. 
545,  548,  .549. 

Indiana:  Vincennes,  City  of,  v.  Citizens'  Gaslight  Co.,  132  Ind.  114,  126, 
31  N.  E.  573,  577;  Indianapolis,  City  of,  v.  Indianapolis  Gaslight  &  Coke 
Co.,  66  Ind.  396,  403. 

Louisiana:  New  Orleans  Gaslight  Co.  v.  City  of  New  Orleans,  42  La, 
Ann.  188,  192,  7  So.  559,  560, 

Massachusetts:  Lynch  v.  City  of  Springfield,  174  Mass,  430,  431,  54  N,  E, 
871, 

Minnesota:  Wiltse  v.  City  of  Red  Wing,  99  Minn.  255,  260,  109  N.  W. 
114. 

316 


MONOPOLIES,    ETC.  §  278 

poration  is  simply  a  political  subdivision  of  the  State 
existing  by  virtue  of  the  exercise  of  the  power  of  the 
State  through  the  legislative  department."  But  legisla- 
tures may  delegate  to  municipal  assemblies  the  power 
of  enacting  ordinances  relating  to  local  matters,  and 
such  ordinances  when  legally  enacted  have  the  force  of 
legislative  acts.^  And  the  legislature  generally  confers 
upon  subordinate  municipal  agencies  such  powers  of  the 
sovereign  authority  as  it  deems  shall  best  promote  the 
public  interests.^  It  is  also  held  that  the  police  power 
may  be  asserted  directly  by  the  legislature,  or  may  in 
the  absence  of  constitutional  restrictions,  be  delegated 
to  several  municipal  corporations  or  other  agencies  pro- 
vided for  its  exercise.'^  In  Tennessee  legislative  power 
cannot  be  delegated  except  in  those  special  instances  in 

New  Jersey:  Read  v.  Atlantic  City,  49  N.  J.  L.  558,  9  Atl.  759. 

Pennsylvania:  Commonwealth  v.  City  of  Philadelphia,  132  Pa.  St.  288, 
19  Atl.  136. 

Washington:  Tacoma  Hotel  Co.  v.  Tacoma  Light  &  Water  Co.,  3  Wash. 
316,  325,  28  Pac.  516,  519. 

*  Worcester,  City  of,  v.  Worcester  Consolidated  St.  Ry.  Co.,  196  U.  S. 
539,  49  L.  ed.  591,  25  Sup.  Ct.  327,  aflf'g  182  Mass.  49,  64  N.  E.  581.  See 
Memphis,  City  of,  v.  Postal  Teleg.  Cable  Co.,  139  Fed.  707. 

5  New  Orleans  Waterworks  Co.  v.  New  Orleans,  164  U.  S.  471,  41  L.  ed. 
518,  17  Sup.  Ct.  161. 

Legislature  has  the  right  to,  and  may  confer  power  upon  a  municipality  to 
pass  ordinances  which  shall  have  a  legislative  character.  Eureka  v.  Wilson, 
15  Utah,  53,  48  Pac.  41.  See  also  Central  Passenger  Ry.  Co.  v.  Louisville 
Bagging  Manfg.  Co.  (Louisville  L.  &  Eq.  Ct.  Ky.,  1890),  3  Am.  Elec.  Cas. 
252,  per  Toncy,  J.,  case  affirmed  in  Louisville  Bagging  Manfg.  Co.  v.  Cen- 
tral Passenger  Ry.  Co.,  95  Ky.  50,  23  S.  W.  592. 

It  is  "settled  that  it  is  competent  for  the  legislature  to  delegate  to  municipal 
corporations  the  power  to  make  by-laws  and  ordinances.^'  2  Dillon  on  Munic. 
Corp.  (5th  ed.),  §  573  (308),  p.  901. 

Stale  may  delegate  power  to  its  municipal  corporations.  McQuillin's  Munic. 
Ordinances,  §  43. 

Legislative  authority  cannot  be  delegated.  McQuillin's  Munic.  Ordinances, 
§§  86-88. 

6  State  ex  rcl.  Laclede  Gaslight  Co.  v.  Murphy,  130  Mo.  10,  31  S.  W. 
594;  see  also  Sinton  v.  Ashbury,  41  Cal.  425;  Cape  May,  Delaware  Bay 
&  S.  P.  R.  Co.  V.  City  of  Cape  May,  59  N.  J.  L.  393,  36  Atl.  679. 

7  Chicago,  Burlington  &  Quincy  Rd.  Co.  v.  Nebraska,  47  Neb.  549,  3 
Am.  &  Eng.  H.  Cas.  (N.  S.)  573,  41  L.  R.  A.  481,  66  N.  W.  624.  See  Chicago 
Union  Traction  Co.  v.  City  of  Chicago,  199  111.  484,  50  L.  R.  A.  631,  65 
N.  E.  451. 

317 


§§  279,  280   POWERS  of  municipal  corporations — 

which  the  Constitution  itself  authorizes  such  delegation, 
or  those  sanctioned  by  inunemorial  usage  originating 
anterior  to  the  Constitution  and  continuing  unquestioned 
thereunder.^  Under  a  Louisiana  decision  the  authorities 
of  a  city  are  not  invested  with  legal  power  to  create  cor- 
porations or  to  grant  franchises;  that  can  be  done  only 
by  the  State,  although  cities  may  concede  certain  priv- 
ilege? which  are  held  to  be  ''secondary  franchises,"  in- 
strumentalities by  means  of  which  the  corporate  powers 
granted  by  the  charter  may  be  exercised.^  And  where 
the  legislature  itself  has,  by  virtue  of  a  constitutional 
prohibition,  no  power  to  create  a  monopoly  a  municipal 
corporation  has  no  power  to  do  so.  The  legislative  pow- 
ers possessed  by  a  city  council  are  such  only  as  are  dele- 
gated by  the  legislature  in  the  city  charter,  and  the 
legislature  can  delegate  no  power  not  possessed  by  itself.^" 

§  279.  Municipal  Ordinances  Must  Not  Conflict  with 
Constitution. 

Ordinances  of  municipal  corporations  must  be  in  har- 
mony with  the  State  Constitution  and  they  are  invalid 
if  they  are  in  conflict  therewith  and  prohibitions  therein 
restraining  the  exercise  of  any  legislative  act  must  be 
observed." 

§  280.  Power  of  Municipality  to  Create  Monopolies 
or  to  Make  Contracts  Tending  to  Create  a  Monopoly. 

The  power  to  grant  monopolies  does  not  appertain  to 
a  municipal  corporation  unless  upon  express  grant.  Nor 
can  it  be  claimed  that  a  general  grant  of  such  powers  as 
pertain  to  cities  would  include  such  as  can  only  be  exer- 

«  Wright  V.  Cunningham,  115  Tenn.  445,  91  S.  W.  293. 

*  Shreve  Traction  Co.  v.  Kansas  City,  Shreveport  &  Gulf  Ry.  Co.,  119 
La.  759,  44  So.  457. 

'"  Brenham  v.  Becker,  1  White  &  Willson'a  Civ.  Cas.  (Tex.  Ct.  App.), 
§§  1243,  1244.  See  also  Thrift  v.  Elizabeth  City,  122  N.  C.  31,  37,  30  S.  E. 
349,  44  L.  R.  A.  427,  per  Douglas,  J. 

Delegation  of  power  to  cities,  tourrts,  etc.,  to  create  corporations,  or  to  grant 
franchises.    See  Joyce  on  Franchises,  §§  48,  147,  148. 

1'  People  V.  Clean  Street  Co.,  225  111.  470,  80  N.  E.  298.' 

318 


MONOPOLIES,    ETC.  §  280 

cised  under  an  express  grant.  ^'^  Nor  can  municipal  cor- 
porations confer  pecuniary  benefits  or  grant  monopolies 
to  any  portion  of  their  communities,  or  to  individual 
members  thereof,  but  must  exercise  their  powers  for 
purely  legitimate  purposes;  and  any  contract  made  by 
such  corporation  with  others  which  tends  to  create  a  mon- 
opoly is  void  where  there  exists  no  authority  in  the  charter 
to  make  it.^^  Nor  can  the  authorities  of  a  village,  pos- 
sessing the  usual  powers  only,  create  a  monopoly.^''  "It 
is  believed,  that  the  result  of  the  authorities  warrants 
the  assertion  that  corporate  franchises,  whether  munic- 
ipal or  private,  are  conferred  in  trust  for  the  benefit  of 
the  entire  body  of  corporators,  and  must,  like  all  other 
trusts,  be  exercised  with  prudence  and  discretion.  Hence 
their  by-laws  must  be  reasonable,  and  such  as  are  vexa- 
tious, unequal  or  oppressive,  or  are  manifestly  injurious 
to  the  interest  of  the  corporation  are  void.  And  of  the 
same  character  are  all  by-laws  in  restraint  of  trade,  or 
which  necessarily  tend  to  create  a  monopoly."  "  Again, 
"All  authorities  hold  that  no  such  exclusive  privilege  can 
be  granted  by  a  municipal  corporation  without  express 
legislative  authority."  ^^  When  privileges  are  granted 
by  a  city  ordinance  they  must  be  open  to  the  enjoyment 
of  all  persons  similarly  situated  upon  equal  terms  and 
conditions;  and  an  ordinance  framed  so  as  to  grant  such 
privileges  to  some  and  refuse  them  on  equal  terms  to 
others  would  be  invalid  for  being  unreasonable,  oppres- 
sive and  creating  a  monopoly.  ^^    It  is  also  held  that  a 

>2  Logan  &  Sons  v.  Pyne,  43  Iowa,  524.    See  next  following  note. 

"  Chicago,  City  of,  v.  Rumpff,  45  III.  90.  The  prohibitory  Constitutions 
and  statutes  of  the  several  States  should  be  considered  in  the  above  con- 
nection. 

Municipality  cannot  enact  ordinances  which  will  create  a  monopoly:  Tug- 
man  V.  City  of  Chicago,  7S  111.  405.  See  also  Illinois  Trust  &  Savings  Bk. 
V.  .\rkansas  City  Water  Co.  (U.  S.  C.  C),  67  Fed.  196. 

"  Gale  V.  Village  of  Kalamazoo,  23  Mich.  344. 

"  Chicago,  City  of,  v.  Rumpff,  45  lU.  90,  96. 

i«  Thrift  v.  Elizabeth  City,  122  N.  C.  31,  37,  30  S.  E.  349,  44  L.  R.  A. 
427,  per  Douglas,  J.  A  case  of  a  contract  or  ordinance  of  a  city  attempting 
to  grant  an  exclusive  privilege  for  construction,  etc.,  of  waterworks. 

"  Dauvi'le,  City  of,  v.  Noone,  103  111.  App.  290. 

319 


§  281         POWERS   OF   MUNICIPAL  CORPORATIONS — 

city  council  has  no  power  to  grant  to  any  person  a  monop- 
oly, even  where  no  express  prohibition  is  found  in  tiie 
charter  or  other  acts  of  the  legislature.^^ 

§  281.  Same  Subject— Municipality  May  Adopt  Rea- 
sonable Measures,  Although  Slight  Inequalities  Exist 
as  to  Benefits  Conferred. 

Although  a  municipal  corporation  cannot  grant  monop- 
olies, or  make,  in  excess  of  their  charter  powers,  contracts 
which  tend  to  create  monopolies,  still,  they  may  validly 
adopt  reasonable  measures  in  support  of  their  legal  exist- 
ence even  though  slight  inequalities  in  the  benefits  con- 
ferred may  result.  ^^ 

"  Davenport  v.  Kleinschmidt,  6  Mont.  502,  529,  13  Pac.  249. 

J9  Chicago,  City  of,  v.  Rumpff,  45  111.  90.  The  prohibitory  Constitutions 
and  statutes  of  the  several  States  should  be  considered  in  connection  with 
charter  powers  of  such  corporations. 


320 


PATENTS,   COPYRIGHTS,   TRA.DE-MARKS 


§282 


CHAPTER  XX 

FEDERAL   LEGISLATION — PATENTS,    COPYRIGHTS,    TRADE- 
MARKS,   AND    POST   ROADS   ACT 


I  282.  Patents — Source  and  Nature 
of — Whether  Monopohes 
or  Contracts. 

283.  Same  Subject. 

284.  Patents — Police     Power    of 

States. 

285.  Source    of    Copyright — Ex- 

clusive Right  or  Monop- 
oly. 

286.  Copyright  Law  Secures  Ex- 

clusive Right  or  Monop- 
oly. 

287.  Copyright — Statutory      and 

Common-Law  Right  Dis- 
tinguished— E  X  cl  u  s  i  V  e 
Property. 

288.  Trade-Marks     and     Trade- 

Names — Monopoly  —  Ex- 
clusive Right. 


§  289.  Unfair  Competition — When 
Cannot  Be  Predicated 
Solely  on  Use  of  Trade- 
Name. 

290.  Loss  of  Right  to  Individual 

Appropriation — Intent    of 
.  Injunction  Bill  to  Extend 
Monopoly  of  Trade-Mark 
or  Trade-Name. 

291.  Expiration    of    Patent — Use 

of  General  Name — Loss  of 
Trade-Mark  Rights. 

292.  Post    Roads    Act    Prohibits 

State  Monopolies  in  Com- 
mercial Intercourse  by 
Telegraph. 

293.  Railroad    Right    of    Way- 

Telegraph   Line — Exclu- 
sive Contract — Monopoly. 


§  282.  Patents— Source  and  Nature  of —Whether  Mo- 
nopolies or  Contracts.^ 

In  England  the  crown  always  exercised  a  control  over 
the  trade  of  the  country  and  though  restrained  by  the 
common  law  and  the  statute  of  monopolies  -  within 
reasonable  limits,  the  crown  might  grant  the  exclusive 
right  to  trade  with  a  new  invention  for  a  reasonable 
period.    The  statute  ^  did  not  create  but  controlled  the 

'  Contracts  between  owners  of  ■patents;  Sherman  Anti-Trust  Act.  Sec  §  134, 
herein. 

Patents;  licenses;  conditions;  Sherman  Anti-Trust  Act.  See  §§  135-137, 
herein. 

Suit  by  combination  for  infringement  of  patent;  Sherman  Anti-Tru^t  Act; 
illegality  of  combination  as  defense.    See  §  158,  herein. 

2  21  James  I,  c.  3.  See    §  276  note  73,  herein. 

'  21  James  I,  c.  3. 

21  321 


§  282  FEDERAL   LEGISLATION — 

power  of  the  crown  in  granting  to  the  first  inventors  the 
pri\'ilege  of  the  sole  working  and  making  of  new  manu- 
factures.^ It  is  declared  by  Judge  Lacombe  in  a  case 
decided  in  the  Federal  Circuit  Court  that:  ''It  is  the 
policy  of  the  law  in  this  country,  and  has  been  enacted 
by  Congress,^  under  the  powers  given  to  it  by  the  Con- 
stitution, that  if  a  man  finds  out  something  new  and 
useful, — and  publishes  it  to  the  world  through  the  inter- 
mediation of  the  patent  office,  he  shall  in  exchange  for 
it,  and  as  a  compensation  for  doing  so,  receive  a  patent; 
that  is,  he  receives  a  grant  of  a  monopoly  of  manufactur- 
ing, selling,  and  using  that  particular  invention  for  a 
certain  period  of  time.  *  *  *  That  monopoly  is  not  a 
monopoly  in  the  sense  in  which  the  word  first  came  into 
the  English  language,  where,  without  anything  at  all 
except  the  mere  whim  of  the  sovereign  power,  some  ex- 
traordinary privileges  were  granted  to  individuals.  *  *  * 
There  is  nothing  obnoxious  to  law  or  good  morals  or  to 
anything  else  in  the  fact  that  a  patent  secures  to  the 
holder  of  it  a  monopoly  for  a  limited  period  of  time."  ^ 
In  another  case  in  the  Federal  court  it  is  said:  "Our 
whole  patent  system  rests  upon  a  constitutional  provision 
and  the  statutes  passed  by  Congress.  By  the  Constitu- 
tion,^ Congress  has  the  power  of  securing  for  limited 
times,  to  authors  and  inventors  the  exclusive  right  to 
their  respective  writings  and  discoveries,  and  to  make 
all  laws  which  shall  be  necessary  and  proper  for  carrying 
into  execution  this  power.  To  the  Constitution  and  the 
acts  of  Congress,  therefore,  and  to  these  sources  alone,  we 
must  look  for  the  rights  and  remedies  of  patentees.  *  *  * 
A  patent  for  a  useful  invention  is  not,  under  the  laws  of 
the  United  States  a  monopoly  in  the  old  sense  of  the 

*  Caldwell  v.  Vanvlissengen,  9  Hare,  4L5. 

English  Statute  as  to  monopolies  declaratory  of  common  law.  See  note  to 
§  276,  herein. 

"  U.  S.  Rev.  Stat.,  §§  4883-4936;  U.  S.  Comp.  Stat.,  1901,  pp.  3380  et 
seq.;  Supp.,  1909,  pp.  1269  et  seq.    See  5  Fed.  Stat.  Annot.,  pp.  417,  et  seq. 

•=  International  Tooth  Crown  Co.  v.  Hanks  Dental  Assoc.  (U.  S.  C.  C), 
111  Fed.  916,  917,  per  Lacombe,  Cir.  J. 

7  Art.  1-,  §8. 

322  '         . 


PATENTS,    COPYRIGHTS,    TRADE-MARKS  §  282 

common  law.     The  whole  patent  system  of  the  United 
States  rests  upon  the  basis  of  the  constitutional  provision 
conferring  upon  Congress  the  power  to  promote  the  prog- 
ress of  science  and  the  useful  arts,  by  securing,  for  limited 
times,  to  authors  and  inventors,  the  exclusive  right  to  their 
respective  writings  and   discoveries.     So  long  as   such 
writings  and  discoveries  were  not  communicated  to  the 
public,  authors  and  inventors  had  a  possession  of,  which 
was  equivalent  to  a  property  in,  their  writings  and  dis- 
coveries.    When  communicated  to  the  public,   by  the 
common  law  that  property  was  lost.     In  consideration 
that  the  inventor  will  disclose  the  secret  of  his  invention, 
and  put  it  in  immediate  practice,  and  afford  to  the  public 
the  opportunity  to  practice  it,  when  it  becomes  public 
property  at  the  expiration  of  the  term  of  the  patent,  the 
govermnent  grants  to  the  author  of  a  new  and  useful 
invention  the  exclusive  right  in  that  invention  for  a  term 
of  years.    This  grant  is  not  the  exercise  of  any  prerogative 
to  confer  upon  one  or  more  of  the  subjects  of  the  govern- 
ment the  exclusive  property  in  that  which  would  other- 
wise belong  to  the  common  right.    It  more  nearly  resem- 
bles a  contract,  which  under  the  authority  conferred  by 
the  Constitution,  Congress  authorizes  to  be  entered  into 
between  the  government  and  the  inventor,  securing  to 
him  for  a  limited  time,  the  exclusive  enjoyment  of  the 
practice  of  his  invention,  in  consideration  of  the  disclosure 
of  his  secret  to  the  public,  and  his  relinciuishment  of  his 
invention  to  the  public  at  the  end  of  the  term.     To  the 
legislation  of  Congress,  and  to  this  alone  we  must  resort, 
under  our  fonn  of  government,  for  guidance  as  to  the 
extent,    limitations,    and    conditions    of    the    respective 
rights  of  inventors  and  the  pul^lic,  and  as  to  the  forms  of 
remedy  and   the  remedial  jurisdiction,   as  well   as   the 
remedy  itself,  under  our  system  of  patent  law.     So  far 
as  any  inquiry  may  relate  to  the  relations  between  the 
government  and   the  grantee  of  letters  patent   of  the 
United  States,  but  little  light  can  be  reflected  from  the 
English  decisions.    Originating,  as  their  system  of  patent 
law  did,  in  a  supposed  right  of  the  king,  residing  in  his 

323 


§  283  FEDERAL   LEGISLATION  — 

royal  prerogative,  to  create  monopolies,  and  continued 
under  the  authority  of  the  act  of  Parliament,^  which, 
while  prohibiting  by  the  statute  of  monopolies  the  grant- 
ing of  exclusive  privileges  in  trade,  excepted  letters  patent 
for  the  sole  working  or  making  of  any  manner  of  new 
manufactui'e  within  the  realm  to  the  first  and  true  inven- 
tors of  such  manufactures,  it  evidently  rests  "upon  a  dif- 
ferent basis  from  a  system  founded  solely  upon  the  express 
grant  of  power  in  a  written  Constitution."  ^  In  an  earlier 
decision  in  the  same  court  it  is  declared  that  ''Patentees 
are  not  monopolists  *  *  *  no  exclusive  right  can  be 
granted  for  anything  which  the  patentee  has  not  invented 
or  discovered.  If  he  claim  anything  which  was  before 
known  his  patent  is  void.  So  that  the  law  repudiates  a 
monopoly.  The  right  of  the  patentee  entirely  rests  on 
his  invention  or  discovery  of  that  which  is  useful,  and 
which  was  not  known  before.  And  the  law  gives  him  the 
exclusive  use  of  the  thing  invented  or  discovered,  for  a 
few  years,  as  a  compensation  for  '  his  ingenuity,  labor 
and  expense  in  producing  it.'  This,  then,  in  no  sense 
partakes  of  the  character  of  monopoly."  ^^ 

§  283.  Same  Subject. 

In  a  case  decided  in  1870  in  the  United  States  Supreme 
Court  Mr.  Justice  Clifford  said:  ''Letters  patent  are  not 
to  be  regarded  as  monopolies,  created  by  the  executive 
authority  at  the  expense  and  to  the  prejudice  of  all  the 
community  except  the  persons  therein  named  as  paten- 
tees, but  as  public  franchises  granted  to  the  inventors 
of  new  and  useful  improvements  for  the  purpose  of 
securing  to  them,  as  such  inventors,  for  the  limited  time 
therein  mentioned,   the  exclusive  right  and  liberty  to 

» Of  21  James  I.     See  §  276  note  73,  herein. 

9  Attorney  Gen'l  v.  Rumford  Chemical  Works,  32  Fed.  591,  602,  608, 
617,  per  Shepley,  J.;  a  case  denying  the  power  of  the  attorney  general  to 
maintain  in  hifl  own  name  a  bill  in  equity  to  cancel  a  patent  for  an  inven- 
tion. Compare,  however,  upon  this  point,  United  States  v.  American  Bell 
Teleph.  Co.,  128  U.  S.  315,  32  L.  ed.  450,  9  Sup.  Ct.  90. 

">  Allen  V.  Hunter,  6  McLean  (U.  S.  C.  C),  303,  305,  306,  Fed.  Gas.  No. 
225,  p.  477. 

324 


PATENTS,    COPYRIGHTS,    TRADE-MARKS  §  283 

make  Mild  use  and  vend  to  others  to  be  used  in  their  own 
inventions,  as  tending  to  promote  the  progress  of  science 
and  the  useful  arts,  and  as  matter  of  compensation  to  the 
inventors  for  their  labor,  toil,  and  expense  in  making  the 
inventions,  and  reducing  the  same  to  practice  for  the 
public  benefit,  as  contemplated  by  the  Constitution  and 
sanctioned  by  the  laws  of  Congress."  "  Again,  a  patent 
is  held  to  be  nothing  but  a  contract  by  which  the  govern- 
ment secures  to  the  patentee  the  exclusive  right  to  vend 
and  use  his  invention  for  a  few  years,  in  consideration 
of  the  fact  that  he  has  perfected  and  described  it  and  has 
granted  its  use  to  the  public  forever  after.  The  rules  for 
the  construction  of  contracts  apply  with  equal  force  to 
the  interpretation  of  patents.  The  contract  evidenced 
by  a  patent  is  effected  by  the  acceptance  by  the  govern- 
ment of  a  proposition  made  by  the  inventor  in  com- 
pliance with  the  statutes  of  the  United  States.^-  In  a 
well-known  treatise  on  the  law  of  patents  the  learned 
author  exhaustively  considers  the  question  whether  a 
patent  is  a  monopoly  or  a  contract  and  says:  "Certain 
modern  writers  upon  Patent  Law  have  asserted  that  the 
exclusive  privilege  conferred  on  an  inventor  is  not  a 
monopoly.  Certain  judges  of  the  courts  of  the  United 
States,  in  their  decisions  upon  patent  cases,  have  ex- 
pressed the  same  opinion.  Other  authors  and  j mists 
have  declared  that  the  exclusive  right  of  an  inventor  is 
not  only  a  true  monopoly,  but,  as  is  apparent  from  the 
historical  sketch  already  given,  that  it  is  the  primeval 
and  ideal  monopoly,  out  of  the  abuse  of  which  all  odious 
and  illegal  monopolies  have  grown.  The  latter  is  the 
view  taken  of  the  subject  by  the  earlier  writers,  and  is  the 
doctrine  generally  adhered  to  by  the  British  courts.  *  *  * 
An  investigation  will  disclose  not  only  that  a  patent 
privilege  is  a  true  monopoly,  but  that  it  approaches  very 
nearly  to  an  odious  monopoly  in  its  restriction  of  the 

"  Seymour  v.  Osborne,  11  Wall.  (60  U.  S.)  516,  533,  15  L.  od.  557. 

'2  O.  H.  Jewell  Filter  Co.  v.  Jaekson,  140  Fed.  340,  72  C.  C.  A.  .304.  See 
National  Hollow  Brake  Beam  Co.  v.  Interchangeable  Brake  Beam  Co., 
106  Fed.  693,  45  C.  C.  A.  544. 

325 


§§  284,  285  FEDERAL   LEGISLATION — 

pre-existing  public  right.  *  *  *  The  nature  of  the  patent 
privilege  differs  from  an  odious  monopoly  in  this:  that 
in  the  odious  monopoly  the  public  are  deprived  of  some 
existing  method  of  enjoying  these  rights,  while  the  patent 
privilege  prevents  their  exercise  only  in  the  new  direction 
marked  out  by  the  dispovery  of  the  inventor.  But  in 
both  cases  the  rights  restricted  are  the  same,  and  the 
effect  on  their  enjoyment  after  the  monopoly  is  granted 
is  identical.  That  a  patent  privilege  is  a  true  monopoly, 
derogatory  to  common  right,  is,  therefore,  the  correct 
theory  concerning  it  considered  in  itself."  ^^ 

§  284.  Patents — Police  Power  of  States. 

Where  by  the  application  of  the  invention  or  discovery 
for  which  letters  patent  have  been  granted  by  the  United 
States,  tangible  property  comes  into  existence,  its  use  is, 
to  the  same  extent  as  that  of  any  other  species  of  prop- 
erty, subject,  within  the  several  States,  to  the  control 
which  they  may  respectively  impose  in  the  legitimate 
exercise  of  their  powers  over  their  purely  domestic  af- 
fairs, whether  of  internal  commerce  or  of  police;  and 
this  is  so  notwithstanding  the  exclusive  right  or  monopoly 
given.  ^^ 

§  285.  Source  of  Copyright— Exclusive  Right  or  Mo- 
nopoly. 

In  this  country  it  is  well  settled  that  that  property  in 
copyright  is  the  creation  of  the  Federal  statute  passed  in 
the  exercise  of  the  power  vested  in  Congress  by  the  Fed- 
eral Constitution  ^^  to  promote  the  progress  of  science 
and  useful  arts  by  securing  for  limited  times  to  authors 
and  inventors  the  exclusive  right  to  their  respective 
writings  and  discoveries.^^ 

"Robinson  on  Patents  (ed.,  1890),  §§  11,  23,  32.  See  also  Id.,  "§41, 
Patent  Privilege  a  Monopoly :  its  contract  aspect  alone  involved  in  the  con- 
struction and  administration  of  Patent  Law:  Two  Fundamental  Principles." 
See  also  to  point  of  "contract  aspect,"  Id.,  §§  42,  43. 

"  Patterson  v.  Kentucky,  97  U.  S.  501,  24  L.  ed.  1115. 

"Art.  1,  §8. 

"  American  Tobacco  Co.  v.  Werckmeister,  207  U.  S.  284,  28  Sup.  Ct. 

326 


PATENTS,    COPYRIGHTS,    TRADE-MARKS   §§  286,  287 

§  286.  Copyright  Law  Secures  Exclusive  Right  or 
Monopoly. 

The  copyright  statute  of  the  United  States  ^'  confers 
an  exclusive  right  or  monopoly  of  sale  and  it  would  seem 
from  the  essential  nature  of  a  copyright  itself  that  there 
springs  this  principle  of  exclusive  sale  without  the  specially 
expressed  grant  of  the  statute  in  that  respect.  ^'^  The 
purpose  of  the  copyright  law  is  not  so  much  the  protection 
and  control  of  the  visible  thing,  as  to  secure  a  monopoly 
having  a  limited  time,  of  the  right  to  publish  the  produc- 
tion which  is  the  result  of  the  inventor's  thought. ^^ 

§  287.  Copyright— Statutory  and  Common-Law  Right 
Distinguished — Exclusive  Property. 

The  statutory  copyright  in  the  United  States  is  not  to 
be  confounded  with  the  exclusive  property  of  the  author 
in  his  manuscript  at  common  law.  In  enacting  the  copy- 
right statute  Congress  did  not  sanction  an  existing  right 
but  created  a  new  one  dependent  on  compliance  with  the 
statute.  In  the  case  enunciating  these  propositions  the 
court  says:  "We  have  had  such  recent  and  frequent 
occasions  to  consider  the  nature  and  extent  of  the  copy- 
right laws  of  the  United  States,  as  the  same  were  before 

72,  52  L.  ed.  208;  case  affirms  146  Fed.  375,  citing  Thompson  v.  Hubbard, 
131  U.  S.  123,  151,  33  L.  ed.  76,  9  Sup.  Ct.  710;  Banks  v.  Manchester,  128 
U.  S.  244,  252,  32  L.  ed.  425,  9  Sup.  Ct.  36;  Wheaton  v.  Peters,  8  Pet.  (33 
U.  S.)  591,  8  L.  ed.  1055. 

"Rev.  Stat.  U.  S.,  §4952;  U.  S.  Comp.  Stat.,  1901,  p.  3406;  Rev.  Stat. 
U.  S.  (Act  March  4,  1909),  chap.  320,  §  1,  35  Stat.,  1075;  U.  S.  Comp. 
Stat.  Supp.  1909,  p.  1289;  Rev.  Stat.  U.  S.,  §§  4948  et  scq.;  U.  S.  Comp. 
Stat.,  1901,  pp.  3405  ct  seq.,  Supp.  1909,  pp.  1288  et  seq.  Sec  2  Fed. 
Stat.  Annot.,  pp.  255  et  seq. 

Contracts  between  holders  of  copyrights;  Slwrynan  Anti-Trust  Act.  See 
§133,  herein. 

Suit  by  combination  for  infringement  of  copyright;  illegality  of  combination 
as  defense.    See  §  L59,  herein. 

'8  Bobbs-Merrill  Co.  v.  Straus,  147  Fed.  15,  77  C.  C.  A.  607,  case  affirmed 
in  210  U.  S.  339,  28  Sup.  Ct.  722,  r>2  L.  ed.  1086;  Henry  Bill  Publishing  Co. 
v.  Smythe  (U.  S.  C.  C),  27  Fed.  914,  916.  See  ali^o  /(/.  (p.  916),  as  to 
English  act  conferring  a  monopoly  of  sale.    Da\is  v.  Vories,  141  Mo.  234. 

'^  American  Tobacco  Co.  v.  Worcknicistcr,  207  U.  S.  284,  28  Sup.  Ct. 
72,  52  L.  ed.  208,  case  affirms  146  Fed.  375. 

327 


§  287  FEDERAL   LEGISLATION — 

the  recent  revision,  which  took  effect  July  1,  1909,^  that 
it  is  unnecessary  to  enter  into  any  extended  discussion  of 
the  subject  now.-^  In  these  cases  the  previous  decisions 
of  the  court  were  cited  and  reviewed.  As  a  result  of  the 
decisions  of  this  court  certain  general  propositions  may 
be  affirmed.  Statutory  copyright  is  not  to  be  confounded 
with  the  common-law  right.  At  common  law  the  exclu- 
sive right  to  copy  existed  in  the  author  until  he  permitted 
a  general  publication.  Thus,  when  a  book  was  published 
in  print,  the  owner's  common-law  right  was  lost.  At 
common  law  an  author  had  a  property  in  his  manuscript 
and  might  have  an  action  against  anyone  who  undertook 
to  publish  it  without  authority.  The  statute  created  a 
new  property  right,  giving  to  the  author,  after  publica- 
tion, the  exclusive  right  to  multiply  copies  for  a  limited 
period.  This  statutory  right  is  obtained  in  a  certain 
way  and  by  the  performance  of  certain  acts  which  the 
statute  points  out.  That  the  author  having  complied 
with  the  statute  and  given  up  his  common-law  right  of 
exclusive  duplication  prior  to  general  publication,  obtained 
by  the  method  pointed  out  in  the  statute  an  exclusive 
right  to  multiply  copies  and  publish  the  same  for  the  term 
of  years  named  in  the  statute.  Congress  did  not  sanction 
an  existing  right;  it  created  a  new  one.^^  Those  violating 
the  statutory  rights  of  the  author  or  proprietor  are  sub- 
ject to  certain  penalties,  and  to  the  payment  of  certain 
damages,  as  is  provided  in  the  statute."  -^ 

^  See  Rev.  Stat.  U.  S.  (Act  March  4,  1909),  chap.  320,  §  1;  35  Stat.  1075; 
U.  S.  Comp.  Stat.  Supp.,  1909,  p.  1289;  Rev.  Stat.  U.  S.,  §4952;  U.  S. 
Comp.  Stat.,  1901,  p.  3406;  Rev.  Stat.  U.  S.,  §§  4948  et  seq.;  U.  S.  Comp. 
Stat.,  1901,  pp.  3405  et  seq.;  Supp.,  1909,  pp.  1288  et  seq.  See  2  Fed.  Stat, 
Annot.,  pp.  2.55  et  seq. 

2'  Citing  Bong  v.  Campbell  Art  Co.,  214  U.  S.  236,  29  Sup.  Ct.  628,  53 
L.  ed.  979;  Bobbs-Merrill  Co.  v.  Straus,  210  U.  S.  339,  28  Sup.  Ct.  722,  52 
L.  ed.  1086,  oavse  affirms  147  Fed.  15;  White-Smith  Music  Pub.  Co.  v. 
Apollo  Co.,  209  U.  S.  1,  28  Sup.  Ct.  319,  .52  L.  ed.  655;  American  Tobacco 
Co.  V.  Werckmeister,  207  U.  S.  284,  28  Sup.  Ct.  72,  52  L.  ed.  208. 

"  Citing  Wheaton  v.  Peters,  8  Pet.  (33  U.  S.)  .591,  661,  8  L.  ed.  1055. 

"  Caliga  v.  Inter  Ocean  Newspaper  Co.,  215  U.  S.  182,  187,  188,  30  Sup. 
Ct.  38,  54  L.  ed.  150  (above  quotation  is  from  opinion  by  Mr.  Justice  Day). 

Copyright;  authors'  common-law  and  statutory  rights  considered.  See 
Wheaton  v.  Peters,  8  Pet.  (33  U.  S.)  591,  8  L.  ed.  1055.    "There  was  much 

328 


PATENTS,    COPYRIGHTS,    TRADE-MARKS  §  288 

§288.  Trade-Marks  and  Trade-Names  Monopoly— 
Exclusive  Right. 

A  trade-mark  '^^  is  neither  an  invention,  a  discovery, 
nor  a  writing,  within  the  meaning  of  the  eighth  clause  of 
the  eighth  section  of  the  first  article  of  the  Constitution 
of  the  United  States,  which  confers  on  Congress  power 
to  secure  for  limited  times  to  authors  and  inventors  the 
exclusive  right  to  their  respective  writings  and  discover- 
ies. Property  in  trade-marks  has  long  been  recognized 
and  protected  by  the  common  law  and  the  statutes  of 
the  several  States,  and  does  not  derive  its  existence  from 
the  act  of  Congress  providing  for  the  registration  of  them 
in  the  Patent  Office.  ^^  A  personal  trade-mark  is  not  a 
subject  of  monopoly  to  the  exclusion  of  persons  having 
the  same  name.^^  A  validly  registered  trade-mark  can- 
not be  used  by  anyone  other  than  the  owner,  as  his 
right  is  exclusive,  and  so  even  though  such  trade-mark 
is  used  with  words  explaining  that  the  article  to  which 
it  is  attached  is  not  manufactured  by  the  owner  of  the 
trade-mark."     "No  one  can  claim  protection  for  the 

contention  in  England  as  to  whether  the  common  law  recognized  this 
property  in  copyright  before  the  statute  of  Anne;  the  controversy  resulting 
in  the  decision  in  the  House  of  Lords  in  the  case  of  Donelson  v.  Beckett, 
4  Burr,  2408,  the  result  of  the  decision  being  that  a  majority  of  the  judges, 
while  in  favor  of  the  common-law  right,  held  the  same  had  been  taken 
away  by  the  statute.  See  Wheaton  v.  Peters,  8  Pet.  (33  U.  S.)  591,  656, 
8  L.  ed.  1055;  Holmes  v.  Hurst,  174  U.  S.  82,  43  L.  ed.  904,  19  Sup.  Ct. 
606."  Mr.  Justice  Day  in  American  Tobacco  Co.  v.  Werckmeister,  207 
U.  S.  284,  291,  28  Sup.  Ct.  72,  52  L.  ed.  208.    Case  affirms  146  Fed.  375. 

^*  Suit  by  combination  for  infringement  of  trade-mark;  illegality  of  combi- 
nation as  defense.    See  §  159,  herein. 

Trade-marks  and  trade-names.  See  State  v.  Central  Lumber  Co.,  24 
S.  Dak.  136,  123  X.  W.  504,  510. 

"  Trade-Mark  Cases,  100  U.  S.  82,  25  L.  ed.  550  (in  this  case  an  act  of 
Congress  concerning  trade-marks  was  held  to  be  unconstitutional  because 
too  broad  in  its  scope).  See  also  National  Biscuit  Co.  v.  Ohio  Baking  Co. 
(U.  S.  C.  C),  127  Fed.  160,  affirmed  in  Ohio  Baking  Co.  v.  National  Biscuit 
Co.,  127  Fed.  116. 

Trade-marks.  Rev.  Stat.  U.  S.,  4937-4947;  U.  S.  Comp.  Stat.,  1901, 
pp.  3401  et  seq.;  Supp.,  1909,  pp.  1275  et  seq.  See  7  Fed.  Stat.  Annot., 
pp.  326  et  seq. 

'»  Paul  on  Trade-Marks,  §  68. 

="  Baglin  v.  Cusenier  Co.,  221  U.  S.  580,  55  L.  ed. ,  31  Sup.  Ct.  669. 

This  case  involved  the  vaUdity  of  the  word  "Chartreuse"  as  a  trade-mark, 

329 


§§  289,  290  FEDERAL   LEGISLATION— 

exclusive  use  of  a  trade-mark  or  trade-name  which  would 
practically  give  him  a  monopoly  in  the  sale  of  any  goods 
other  than  those  produced  or  made  by  himself.  If  he 
could,  the  public  would  be  injured  rather  than  protected, 
for  competition  would  be  destroyed. ^^ 

§  289.  Unfair  Competition —When  Cannot  Be  Predi- 
cated Solely  on  Use  of  Trade-Name. 

The  essence  of  unfair  competition  consists  in  the  sale 
of  the  goods  of  one  manufacturer  or  vendor  as  those  of 
another,  and  this  cannot  be  predicated  solely  on  the  use 
of  a  trade-name  if  such  trade-name  is  invalid  as  a  trade- 
mark. To  do  so  would  be  to  give  to  a  trade-name  the 
full  effect  of  a  trade-mark  notwithstanding  it  should  be 
or  is  invalid  as  such.^^ 

§  290.  Loss  of  Right  to  Individual  Appropriation — In- 
tent of  Injunction  Bill  to  Extend  Monopoly  of  Trade- 
Mark  or  Trade-Name. 

The  right  to  individual  appropriation  once  lost  is  gone 
forever.  This  rule  or  principle  has  been  applied  where 
the  intent  of  a  bill,  by  the  owners  of  the  Hunyadi  Janos 
Springs  to  enjoin  the  sale  of  artificial  Hunyadi  water, 
was  to  extend  the  monopoly  of  such  trade-mark  or  trade- 
name as  the  plaintiff  might  have  to  a  monopoly  in  a  type 
of  bitter  water  by  preventing  manufacturers  from  telling 

etc.;  and  it  was  also  held  that  the  claim  of  the  Carthusian  Monks  to  an 
exclusive  right  as  applied  to  this  liqueur  having  frequently  been  sanctioned 
the  liquidator  appointed  in  France  of  the  property  of  said  Monks  could 
not,  in  this  country,  use  the  word  "Chartreuse"  to  designate  the  liqueur 
manufactured  by  him  at  Grande  Chartreuse,  the  said  Monks  having  validly 
registered  that  name  in  the  United  States  as  a  trade-mark  of  the  liqueur 
manufactured  by  them. 

28  Canal  Company  v.  Clark,  13  Wall.  (80  U.  S.)  311,  323,  20  L.  ed.  581, 
(juoted  in  Standard  Paint  Co.  v.  Trinidad  Asphalt  Mfg.  Co.,  220  U.  S. 
44G,  454,  55  L.  ed. ,  31  Sup.  Ct.  456,  per  Mr.  Justice  McKenna. 

29  Standard  Paint  Co.  v.  Trinidad  Asphalt  Mfg.  Co.,  220  U.  S.  446,  55 

L.  ed. ,  31  Sup.  Ct.  4.56.    See  Lamont,  Coriiss  &  Co.  v.  Hershey  (U.  S. 

C.  C),  140  Fed.  763;  Russia  Cement  Co.  v.  Frauenhar  (U.  S.  C.  C),  126 
Fed.  228;  see  Job  Printers'  Union  v.  Kinsley,  107  111.  654. 

Trade-name  and  trade-secret;  when  party  guilty  of  unfair  trade.  See 
Jacobs  V.  Beecham,  221  U.  S.  263,  55  L.  ed. ,  31  Sup.  Ct.  555,  case  af- 
firms 159  Fed.  129. 

330 


PATENTS,    COPYRIGHTS,    TRADE-MARKS  §  291 

the  public  what  they  were  manufacturing  and  trying  to 
sell.^o 

§  291.  Expiration  of  Patent— Use  of  Generic  Name  — 
Loss  of  Trade-Mark  Rights. 

On  the  expiration  of  a  patent  the  right  to  make  the 
patented  article  and  to  use  the  generic  name  passes  to 
the  public  with  the  dedication  resulting  from  the  expira- 
tion of  the  patent.  On  the  expiration  of  a  patent  one 
who  uses  a  generic  name,  by  which  the  articles  manu- 
factured under  it  are  known,  may  be  compelled  to  indicate 
that  the  ai'ticles  made  by  him  are  made  by  him  and  not 
by  the  proprietor  of  the  extinct  patent.  Where,  during 
the  life  of  a  monopoly  created  by  a  patent,  a  name, 
whether  it  be  arbitrary  or  be  that  of  the  inventor,  has 
become,  by  his  consent,  either  express  or  tacit,  the  iden- 
tifying and  generic  name  of  the  thing  patented,  this  name 
passes  to  the  public  with  the  cessation  of  the  monopoly 
which  the  patent  created;  and  where  another  avails 
himself  of  this  public  dedication  to  make  the  machine 
and  use  the  generic  designation,  he  can  do  so  in  all  forms, 
with  the  fullest  liberty,  by  affixing  such  name  to  the 
machines,  by  referring  to  it  in  advertisements  and  by 
other  means,  subject,  however,  to  the  condition  that 
the  name  must  be  so  used  as  not  to  deprive  others  of 
their  rights  or  to  deceive  the  public,  and,  therefore, 
that  the  name  must  be  accompanied  with  such  indications 
that  the  thing  manufactured  is  the  work  of  the  one  mak- 
ing it,  as  vdW  unmistakably  inform  the  public  of  that 
fact.  In  the  case  so  holding  it  appeared  that  the  Singer 
machines  were  covered  by  patents,  some  fundamental, 
some  accessory,  w^hereby  there  was  given  to  them  a  dis- 
tinctive character  and  form  which  caused  them  to  be 
known  as  the  Singer  machines,  as  deviating  and  separable 
from  the  form  and  character  of  machines  made  by  other 
manufacturers.  The  word  "Singer"  was  adopted  by 
Singer  &  Co.,  or  the  Singer  ]\Ianufacturing  Company  as 

30  Saxlehner  v.  Wagner,  21G  U.  S.  7'),  30  Sup.  Ct.  298,  54  L.  ed.  525,  aff'g 
157  Fed.  745,  85  C.  C.  A.  321. 

331 


§  292  FEDERAL   LEGISLATION — 

designative  of  their  distinctive  style  of  machines,  rather 
than  as  solely  indicating  the  origin  of  manufacture.  The 
patents  which  covered  them  gave  to  the  manufacturers 
of  the  Singer  sewing  machines  a  substantial  monopoly 
whereby  the  name  ''Singer"  came  to  indicate  the  class 
and  type  of  machines  made  by  that  company  or  corpora- 
tion and  constituted  their  generic  description,  and  con- 
veyed to  the  public  mind  the  type  or  kind  of  the  partic- 
ular machines  made  by  them.^^ 

§  292.  Post  Roads  Act  Prohibits  State  Monopolies  in 
Commercial  Intercourse  by  Telegraph. 

The  Post  Roads  Act  is  declared  to  amount  in  effect 
to  a  prohibition  of  all  State  monopolies  in  commercial 
intercourse  by  telegraph. ^^  In  a  case  decided  in  the 
Federal  Supreme  Court  in  1877  ^^  the  State  of  Florida 
granted  to  the  Pensacola  Telegraph  Company  an  exclu- 
sive franchise  and  privilege  for  telegraphic  purposes  over 
a  certain  portion  of  the  territory  of  that  State.  In  passing 
upon  the  injunction  asked  to  restrain  the  Western  Union 
Telegraph  Company  from  constructing  its  lines  over 
that  territory,  Mr.  Chief  Justice  Waite  said:  "The  State 
of  Florida  has  attempted  to  confer  upon  a  single  corpora- 
tion the  exclusive  right  of  transmitting  intelligence  by 
telegraph  over  a  certain  portion  of  its  territory.  *  *  * 
The  State,  therefore,  clearly  has  attempted  to  regulate 
commercial  intercourse  between  its  citizens  and  those 
of  other  States  and  to  control  the  transmission  of  all 
telegraphic  correspondence  within  its  own  jurisdiction.^'* 

"  Singer  Manufacturing  Co.  v.  June  Manufacturing  Co.,  163  U.  S.  169, 
41  L.  ed.  118,  16  Sup.  Ct.  1002.  See  Singer  Manufacturing  Co.  v.  Long, 
18  C.  D.,  p.  412,  52  L.  J.,  chap.  481,  per  James,  L.  J. 

32  Western  Union  Teleg.  Co.  v.  Pennsylvania  Rd.  Co.,  195  U.  S.  540, 
562,  25  Sup.  Ct.  133,  49  L.  ed.  312,  per  Mr.  Justice  McKenna,  quoting 
Chief  Justice  Waite  in  Pensacola  Teleg.  Co.  v.  Western  Union  Teleg.  Co., 
96  U.  S.  1,  11,  24  L.  ed.  708. 

Whether  Post  Roads  Act  includes  telephone  companies.  See  Joyce  on 
Electric  Law  (2d  ed.),  §  45. 

"  Pensacola  Teleg.  Co.  v.  Western  Union  Teleg.  Co.,  96  U.  S.  1,  24  L. 
ed.  708. 

"  Of  July  24,  1866,  14  Stat.  221. 

332 


POST   ROADS   ACT  §  293 

The  statute  in  effect,  amounts  to  a  prohibition  of  all  State 
monopolies  in  this  particular.  It  substantially  declares, 
in  the  interest  of  commerce,  and  the  convenient  trans- 
mission of  intelligence  from  place  to  place  by  the  Govern- 
ment of  the  United  States  and  its  citizens,  that  the  erec- 
tion of  telegraph  lines  shall,  so  far  as  State  interference 
is  concerned,  be  free  to  all  who  will  submit  to  the  condi- 
tions imposed  by  Congress,  and  that  corporations  organ- 
ized under  the  laws  of  one  State  for  constructing  and 
operating  telegraph  lines  shall  not  be  excluded  by  another 
from  prosecuting  their  business  within  its  jurisdiction, 
if  they  accept  the  terms  proposed  by  the  national  govern- 
ment for  this  national  privilege."  ^^ 

§  293.  Railroad  Right  of  Way— Telegraph  Line— Ex- 
clusive Contract— Monopoly.  ^^ 

A  railroad  company  cannot  validly  contract  to  give 
a  telegraph  company  the  exclusive  right,  as  against  all 
other  telegraph  companies,  to  control  its  right  of  way, 
for  all  telegraph  purposes.  Such  a  contract  cannot  be 
enforced  against  another  telegraph  company,  which  has 
legally  accepted  the  provisions  and  benefits  of  the  Post 
Roads  Act "  which  confers  upon  such  accepting  com- 
panies the  right  to  construct,  maintain  and  operate  their 
lines  over  and  along  the  military  and  post  roads  of  the 
United  States,  provided  the  lines  are  so  constructed  and 
maintained  as  not  to  interfere  with  the  ordinary  travel 
on  said  military  or  post  roads.  Such  an  exclusive  con- 
tract would,  it  seems,  tend  to  cripple  and  prevent  com- 
petition, and  be  void  also  at  common  law  as  against 
public  policy  and  in  restraint  of  trade,  nor  is  the  right 
to  make  such  an  exclusive  contract  aided  by  the,  fact 
that  the  railroad  company  derives  its  grant  of  right  to 
construct  and  operate  a  railroad  and  telegraph  line  from 
the  United  States  Government  and  is  subsidized  for  the 

'^  Italics  in  text  are  the  author's. 

Post  Roads  Act  and  hostile  legislation.  See  Joyce  on  Electric  Law  (2d 
ed.),  §§  65-67. 

«  See  Joyce  on  Electric  Law  (2d  ed.),  §§  191-194a,  294. 
"  Act  of  Congress,  July  24,  1866,  chap.  230,  14  Stat.  221. 

333 


§  293  FEDERAL   LEGISLATION — 

better  accomplishment  of  both  these  purposes,  it  appear- 
ing that  said  exclusive  contract  was  made  subsequent  to 
the  enactment  of  the  Post  Roads  Act,  or  that  the  United 
States  Government  in  making  said  grants  included  a 
reservation  of  power  as  to  future  legislation.^^ 

^  United  States:  United  States  v.  Union  Pac.  R.  Co.  &  Western  Union 
Teleg.  Co.,  160  U.  S.  1,  16  Sup.  Ct.  190,  40  L.  ed.  319,  6  Am.  Elec.  Cas.  697; 
Mercantile  Trust  Co.  v.  Atlantic  &  Pacific  R.  Co.  (U.  S.  C.  C),  63  Fed. 
513,  910,  5  Am.  Elec.  Cas.  (two  cases)  207,  219,  227  [in  this  case,  Ross, 
Dist.  J.,  says,  referring  to  the  grant  to  the  railroad  company:  "There  is 
not  a  syllable  in  the  act  indicating  that  it  was  intended  by  Congress  to  be 
used  as  an  instrument  for  the  building  up  or  fostering  any  monopoly  of  any 
character,  or  that  it  should  be  permitted  to  do  any  act  inconsistent  with 
the  objects  for  which  it  was  created"  (Italics  are  ours)];  Pacific  Postal 
Teleg.  Cable  Co.  v.  Western  Union  Teleg.  Co.  (U.  S.  C.  C),  50  Fed.  493, 
50  Am.  &  Eng.  R.  Cas.  665;  United  States  v.  Union  Pac.  Ry.  Co.  (U.  S. 
C.  C),  45  Fed.  221,  3  Am.  Elec.  Cas.  563;  Western  Union  Teleg.  Co.  v. 
Baltimore  &  Ohio  Teleg.  Co.  (U.  S.  C.  C),  23  Fed.  12,  1  Am.  Elec.  Cas. 
721  (Post  Roads  Act  was  not  discussed  in  this  case);  Western  Union  Teleg. 
Co.  V.  Baltimore  &  Ohio  Teleg.  Co.,  19  Fed.  660,  1  Am.  Elec.  Cas.  623  (this 
case  while  holding  the  principle  noted  in  the  text,  was  a  case  of  motion  for 
preliminary  injunction  to  restrain  telegraph  companies  from  erecting  lines 
upon  land  of  railroad  company  and  to  enjoin  the  railroad  company  from 
using  the  right  of  way  for  any  such  purpose,  and  from  violating  the  pro- 
visions of  an  agreement  made  by  the  petitioner  with  the  railroad  company, 
and  the  relief  was  granted  against  the  railroad  company  as  to  protection 
in  the  possession  of  a  telegraph  line  actually  constructed  but  not  granted 
as  to  other  stipulation  where  an  adequate  remedy  at  law  existed;  injunc- 
tion was  denied  as  to  the  telegraph  companies) ;  Western  Union  Teleg.  Co. 
V.  Burlington  &  Southwestern  Ry.  Co.  (U.  S.  C.  C),  11  Fed.  1,  1  Am.  Elec. 
Cas.  402;  Western  Union  Teleg.  Co.  v.  American  Union  Teleg.  Co.,  9  Biss, 
(U.  S.  C.  C),  72,  Fed.  Cas.  No.  17,444,  1  Am.  Elec.  Cas.  288. 

Alabama:  New  Orleans,  Mobile  &  Tex.  R.  Co.  v.  Southern  &  Atlantic 
Teleg.  Co.,  53  Ala.  211,  1  Am.  Elec.  Cas.  290  (in  this  case  the  Post  Roads 
Act  was  merely  set  forth  in  the  pleading). 

Georgia:  Western  Union  Teleg.  Co.  v.  American  Union  Teleg.  Co.,  65 
Ga.  160,  1  Am.  Elec.  Cas.  306,  308,  38  Am.  Rep.  781  (it  was  said  in  this 
case  that  the  question  whether  the  Post  Roads  Act  could  effect  contracts 
executed  prior  to  the  passage  was  "immaterial  to  the  issue."  The  con- 
troversy in  this  case  did  not  arise  upon  any  effort  to  displace  the  lines  or 
wires  established  by  the  defendant,  but  upon  an  interference  with  the  ex- 
clusive right  to  occupy) . 

Illimris:  See  St.  Louis  &  C.  R.  Co.  v.  Postal  Teleg.  Co.,  173  111.  508,  51 
N.  E.  382. 

Nevada:  Western  Union  Teleg.  Co.  v.  Atlantic  &  Pacific  States  Teleg. 
Co.,  5  Nev.  102,  Allen's  Tel.  Cas.  428. 

New  Mexico:  Union  Trust  Co.  of  N.  Y.  v.  Atchison,  Topeka  &  Santa  Fe 
R.  Co.,  8  N.  Mex.  327,  43  Pac.  701,  6  Am.  Elec.  Cas.  171. 

334 


PARTICULAR   INSTANCES 


CHAPTER  XXI 

STATE  AND  MUNICIPAL  LEGISLATION  OR  CONTRACTS — 
PARTICULAR    INSTANCES 


i  294.  Exclusive  Grants  or  Con- 
tracts —  Monopolies  Gen- 
erally. 

295.  Booms — Logs  and  Logging — 

Monopoly. 

296.  Bridges — Monopoly. 

297.  When  Contract  by  City,  as 

Owner  of  Ferry  Franchise 
with  Bridge  Company, 
Creates  no  Monopoly. 

298.  Electric  Lighting — Exclusive 

Right — Contract  Power  of 
City  as  to. 

299.  Electric     Lighting — Control 

of  Streets — E  x  c  1  u  s  i  v  e 
Grants,  etc. — Municipal- 
ities, Towns,  etc. 

300.  Ferries — Monopolies,  Exclu- 

sive Privileges,  etc. 

301.  Ferries — Exclusive    Grant — 

Municipal  Ordinances  — 
Delegated  Authority. 

302.  Exclusive     Right     to     Use 

Wharf  for  Ferry  Purposes. 

303.  Gas— Grant  by  State  of  Ex- 

clusive Privilege  or  Mo- 
nopoly— Police  Power. 

304.  Gas — Grant  by  Municipality 

of  Exclusive  Privilege  or 
Monopoly. 

305.  Municipal  Lease  to  Private 

Corporation  to  Supply  Gas 
— Exclusive  Right  —  Mo- 
nopoly. 

306.  Gas — Void  Grants  and  Con- 

tracts— Monopoly. 

307.  Gas — Purchasers   of   Exclu- 

sive Rights. 

308.  Intoxicating  Liquors — "Dis- 


pensary    System"  —  Mo- 
nopoly. 
(  309.  Irrigation — Monopoly. 

310.  Market  House — Contract  for 

by  City  or  Town — Mo- 
nopolJ^ 

311.  Navigable     Canal — Monop- 

oly. 

312.  Omnibuses — Grant  of  Privi- 

lege to  Run — When  a  Mo- 
nopoly. 

313.  Railroads — Exclusive     Priv- 

ileges. 

314.  School    Text-Book    Statutes 

—  Exclusive  Privilege  — 
Monopoly — Contracts. 

315.  Slaughterhouse    or    Market 

House  —  When  Munici- 
pality or  Village  Cannot 
Create  Monopoly  as  to. 

316.  Street  Railways — Control  of 

Streets — Exclusive  Grants 
— Municipalities. 

317.  Telephone    Companies — Ex- 

clusive Grants  or  Pri\n- 
leges. 

318.  Telegraph    Companies — Ex- 

clusive Grants. 

319.  Toll     Bridges  —   Exclusive 

Grants. 

320.  Toll    Roads    —    Municipal 

Grants — Monopoly. 

321.  Toll      Wharf    —    Exclusive 

Grant. 

322.  Union  Label  on  City  Printing. 

323.  Requirement      That      Only 

Union  Labor  or  Union 
Shops  Bo  Emploj'ed  — 
Award  of  Contract. 

335 


§294 


MUNICIPAL   LEGISLATION    OR    CONTRACTS" 


§  324.  Warehouses — Monopoly. 

325.  Waterworks  or  Water  Sup- 

ply— Power  of  Municipal- 
ity. 

326.  Waterworks  or  Water  Sup- 

ply— Exclusive  Right  of 
Municipality  and  of  Pri- 
vate Corporation  Distin- 
guished. 

327.  Waterworks  or  Water  Sup- 

ply— Grant  by  State  of 
Exclusive  Privilege  or  Mo- 
nopoly. 

328.  Waterworks  or  Water  Sup- 

ply— Grants  by  Munici- 
pality of  Exclusive  Right 
or  Monopoly. 

329.  Waterworks  or  Water  Sup- 

ply— Instances  of  Valid 
Contracts  by  Municipality 
— Exclusive  Privilege  or 
Monopoly. 


§  330.  Waterworks  or  Water  Supply 
— Instances  of  Void  Con- 
tracts —  Exclusive  Privi- 
lege or  Monopoly. 

331.  Waterworks  or  Water  Supply 

— Where  no  Defense  That 
Contract  Creates  Monop- 
oly. 

332.  Injunction  Restraining  Mu- 

nicipality— Water  System. 

333.  Contract  with  State  Water 

Company — Constitutional 
Law — Due  Process. 

334.  Waterways  —  Exclusive 

Right  to  Collect  Tolls- 
Monopoly. 

335.  Consolidation    of    Corpora- 

tions— Exclusive  Privileges 
— Monopoly. 


§  294.  Exclusive  Grants  or  Contracts— Monopolies 
Generally.^ 

A  grant  which  gives  to  one  person,  or  to  an  associa- 
tion of  persons  an  exclusive  right  to  buy,  sell,  make, 
or  use  a  designated  thing  or  commodity,  or  to  pursue  a 
designated  employment  creates  a  monopoly.  The  right 
to  exercise  the  exclusive  pri\41ege  need  not  extend  to  all 
places;  the  monopoly  exists  if  it  operates  in  and  to  the 
hurt  of  one  community.  It  need  not  continue  indef- 
initely, so  as  to  amount  to  a  perpetuity;  the  monopoly 
exists  if  the  privilege  be  exclusive  for  a  period  of  time.^ 
A  grant  conferring  a  privilege  is,  however,  not  necessarily 
a  grant  making  that  privilege  exclusive;  grants  by  the 
State  to  municipal  corporations,  like  grants  to  private 
corporations,  are  to  be  strictly  construed,  and  the  power 
to  grant  an  exclusive  privilege  must  be  expressly  given, 
or,  if  inferred  from  other  powers,  must  be  indispensable 
and  not  merely  convenient  to  them,  so  that  a  grant  of 
an  exclusive  privilege  is  invalid  when  made  by  a  city  in 

1  See  §§  70-74,  219-225,  herein. 

2  Brenham,  City  of,  v.  Brenham  Water  Co.,  67  Tex.  542,  4  S.  W.  143. 

336 


PARTICULAR   INSTANCES  §§  295,  296 

the  absence  of  power  so  to  do  expressly  conferred.^  A 
contract  made  by  a  municipal  corporation  with  a  third 
person  for  the  construction  of  a  public  building,  a  street 
railway,  waterworks,  or  gas  works,  or  for  the  supply  of 
transportation,  water,  or  any  other  public  utility  to  the 
city  and  its  inhabitants  creates  no  special  privilege  or 
immunity  within  the  meaning  of  a  constitutional  provi- 
sion prohibiting  the  legislature  from  making  any  irrevo- 
cable grant  of  special  privileges  or  immunities.  One  who 
makes  such  a  contract  to  supply  gas  or  water,  etc.,  to  a 
municipality  may  be  said  to  acquire  a  monopoly  of  that 
work  and  a  special  privilege  to  perform  it.  But  this 
special  privilege  or  immunity  does  not  arise  by  a  grant 
to  him  by  any  law  of  the  State.  It  is  secured  to  him 
under  his  agreement  to  render  a  public  service.^ 

§  295.  Booms— Logs  and  Logging — Monopoly. 

The  available  booming  extent  of  a  stream  may  be  such 
as  to  reasonably  prevent  the  operation  of  more  than  one 
boom,  so  that  the  effect  of  a  single  location  cannot  well 
be  avoided.  Such  circumstances  would  not  make  a  mo- 
nopoly but  the  location  would  become  the  only  one  upon 
the  stream  by  mere  force  of  necessity.^ 

§  296.  Bridges— Monopoly. 

A  grant  by  the  legislature,  in  consideration  of  certain 
expenses  to  be  incurred  by  the  grantees,  and  in  contem- 
plation of  a  public  benefit,  of  the  exclusive  right  of  erect- 
ing a  bridge  and  taking  tolls,  to  reimburse  such  expenses, 
within  certain  limits,  for  a  limited  time,  is  not  a  monop- 
oly.®   In  the  Charles  River  Bridge  case  it  is  said:  "The 

»  Water,  Light  &  Gas  Co.  v.  Hutchinson,  207  U.  S.  385,  28  Sup.  Ct.  135, 
52  L.  cd.  257,  aff'g  144  Fed.  256,  citing  Citizens'  Street  Ry.  Co.  v.  Detroit, 
171  U.  S.  48,  18  Sup.  Ct.  732,  43  L.  ed.  67,  distinguishing  Vicksburg  v. 
Vicksburg  Waterworks  Co.,  206  U.  S.  496,  27  Sup.  Ct.  762,  51  L.  ed.  1155. 
See  §  74,  herein. 

♦  Omaha  Water  Co.  v.  City  of  Omaha,  147  Fed.  1,  77  C.  C.  A.  267,  12 
L.  R.  A.  (N.  S.)  736  (Const.  Neb.,  Art.  1,  §  16). 

'  Nicomen  Boom  Co.  v.  North  Shore  Boom  &  Dri\-ing  Co.,  40  Wash. 
315,  82  Pac.  412. 

'Enfield  Toll  Bridge  Co.  v  Hartford  &  New  Haven  Rd.  Co.,  17  Conn. 
40,  42  Am.  Dec.  716. 

22  337 


§  296      MUNICIPAL   LEGISLATION    OR   CONTRACTS — 

complainant's  charter  has  been  called  a  monopoly;  but 
in  no  just  sense  can  it  be  so  considered.  *  *  *  The  accom- 
modation afforded  to  the  public  by  the  Charles  River 
bridge,  and  the  annuity  paid  to  the  college,  constitute  a 
valuable  consideration  for  the  privilege  granted  by  the 
charter.  The  odious  features  of  a  monopoly  do  not, 
therefore,  attach  to  the  charter  of  the  plaintiffs."  ^  It 
was  also  said  in  the  same  case  that:  ''To  inquire  into 
the  validity  of  a  solemn  act  of  legislation  is  at  all  times 
a  task  of  much  delicacy  but  it  is  peculiarly  so,  when  such 
inquiry  is  made  by  a  Federal  tribunal,  and  relates  to  the 
act  of  a  State  legislature.  There  are  cases,  however,  in 
the  investigation  of  which  such  an  inquiry  becomes  a 
duty;  and  then  no  court  can  shrink,  nor  desire  to  shrink, 
from  its  performance.  Under  such  circumstances,  this 
duty  will  always  be  performed  with  the  high  respect 
due  to  a  branch  of  the  government,  which,  more  than 
any  other,  is  clothed  with  discretionary  powers,  and  in- 
fluenced by  the  popular  will.  The  right  granted  to  the 
Charles  River  Bridge  Company,  is,  in  its  nature,  to  a 
certain  extent,  exclusive;  but  to  measure  this  extent, 
presents  the  chief  difficulty.  If  the  boundaries  of  this 
right  could  be  clearly  established,  it  would  scarcely  be 
contended  by  anyone,  that  the  legislature  could,  with- 
out compensation,  grant  to  another  company  the  whole, 
or  any  part  of  it.  As  well  might  it  undertake  to  grant  a 
tract  of  land,  although  an  operative  grant  had  been  pre- 
viously made  for  the  same  land.  In  such  a  case  the  second 
grant  would  be  void,  on  the  ground  that  the  legislature 
had  parted  Avith  the  entire  interest  in  the  premises.  As 
agent  of  the  public  it  had  passed  the  title  to  the  first 
grantee;  and  having  done  so,  it  could  convey  no  right 
by  its  second  grant.  The  principle  is  the  same  in  regard 
to  the  question  under  consideration.  If  the  franchise 
granted  to  the  complainants  extended  beyond  the  new 
bridge,  it  was  as  much  above  the  power  of  the  legislature 
to  make  the  second  grant,  as  it  would  be  to  grant  a  part 

■>  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (30  U.  S.)  420,  567,  9 
L.  ed.  773,  per  Mr.  Justice  M'Lean.    See  §  219,  herein. 

338 


PARTICULAR  INSTANCES  §  297 

of  a  tract  of  land  for  which  a  patent  had  been  previously 
and  regularly  issued.  The  franchise,  though  incorporeal 
in  legal  contemplation,  has  body  and  extension;  and 
having  been  granted,  is  not  less  scrupulously  guarded 
by  the  principles  of  law  than  an  interest  in  the  soil.  It 
is  a  substantive  right  in  law,  and  can  no  more  be  resumed 
by  the  legislatuie,  when  once  granted,  than  any  other 
right.  But  would  it  not  be  unsafe,  it  is  suggested,  for 
the  judicial  authority  to  interpose  and  limit  this  exer- 
cise of  legislative  discretion?  *  *  *  It  is  undoubtedly  the 
province  of  the  legislature  to  provide  for  the  public  exi- 
gencies, and  the  utmost  respect  is  always  due  to  their  acts; 
and  the  validity  of  those  acts  can  only  be  questioned 
judicially,  where  they  infringe  upon  private  rights."  ^ 

§  297.  When  Contract  by  City,  as  Owner  of  Ferry 
Franchise  with  Bridge  Company,  Creates  no  Monopoly. 

A  city  owning  a  ferry  franchise  has  power  to  contract 
with  a  bridge  company  not  to  exercise  such  privilege  for 

8  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  559, 
560,  9  L.  ed.  773,  per  M'Lean,  J.  In  this  case  it  is  also  said  that  the  Con- 
stitution of  Massachusetts,  Art.  1  (Bill  of  Rights),  §  6,  "is  not  an  inhibi- 
tion of  all  legislative  grants  of  exclusive  privileges.  *  *  *  It  might  be 
sufficient  to  say,  that  all  the  learned  judges  in  the  State  court,  admitted 
that  the  grant  of  an  exclusive  right  to  take  toll  at  a  ferry,  or  a  bridge,  or 
a  turnpike,  is  not  a  monopoly  which  is  deemed  odious  in  the  law;  nor  one 
of  the  particular  and  exclusive  pri\'ileges,  distinct  from  those  of  the  com- 
munity, which  are  reprobated  in  the  bill  of  rights.  All  that  was  said  by 
the  judges  opposed  to  a  liberal  interpretation  of  this  grant,  was  that  it 
tended  to  promote  monopolies.  *  *  *  No  sound  lawyer  will,  I  presume, 
assert  that  the  grant  of  a  right  to  erect  a  bridge  over  a  navigable  stream, 
is  a  grant  of  common  right."  (See  definitions  of  monopoly,  §§  8,  22,  herein.) 
"  Before  such  grant,  had  all  the  citizens  of  the  State  a  right  to  erect  bridges 
over  navigable  streams?  Certainly  they  had  not.  It  waa  neither  a  mo- 
nopoly; nor,  in  a  legal  sense,  had  it  any  tendency  to  a  monopoly.  It  took 
from  no  citizen  what  he  possessed  before;  and  had  no  tendency  to  take  it 
from  him.  It  took,  indeed,  from  the  legislature  thn  power  of  granting  tho 
same  identical  privilege  or  franchise  to  any  other  persons.  But  this  made, 
it  no  more  a  monopoly  than  the  grant  of  the  pubUc  stock  or  funds  of  a 
State  for  a  valuable  consideration.  Even  in  the  case  of  monopolies,  strictly 
so  called,  if  the  nature  of  the  grant  be  such  that  it  is  for  the  public  good, 
as  in  cases  of  patents  for  inventions,  the  rule  has  always  been  to  give  thera 
a  favorable  construction,  in  support  of  the  patent,  as  Lord  Chief  Justice 
Eyre  said,  n(  res  rnaffis  valeat  qitnm  pcrcnt:  Boulton  v.  Bull,  2  H.  Bl.  463, 

339 


§  298      MUNICIPAL  LEGISLATION   OR  CONTRACTS — 

a  long  period  of  time  and  to  permit  for  a  consideration 
one  of  the  ends  of  its  bridge  to  be  erected  in  certain 
streets  and  in  such  case  no  monopoly  is  created;  especially 
in  view  of  the  public  benefit  derived.^ 

§  298.  Electric  Lighting— Exclusive  Right— Contract 
Power  of  City  as  to.^° 

Wliere  a  city  has  authority,  under  its  charter,  to  con- 
tract for  electric  lights,  and  the  power  granted  is  with- 
out restriction,  it  may  do  so  without  advertising  for 
bids  and  without  submitting  the  matter  to  a  popular 
vote,  where  the  contract  is  reasonable  as  to  duration,  is 
necessary,  and  it  is  not  exclusive.  ^^  Where  a  city  has 
express  or  implied  power  to  contract  for  lights  for  a  speci- 
fied period,  the  contract  is  not  void  for  exclusiveness.^^ 

500."  Charles  River  Bridge  v.  Warren  Bridge,  11  Pet.  (36  U.  S.)  420,  606, 
607,  9  L.  ed.  773,  per  Mr.  Justice  Story,  in  dissenting  opinion. 

8  Laredo,  City  of,  v.  International  Bridge  &  Tramway  Co.,  66  Fed.  246, 
14  C.  C.  A.  1,  30  U.  S.  App.  1 10.  Period  or  duration  of  contract  was  twenty- 
five  years. 

i»  See  Joyce  on  Electric  Law  (2d  ed.),  §§  189,  231-271. 

"  Reid  V.  Trowbridge,  78  Miss.  542,  29  So.  167.  Ten  years  held  not 
an  unreasonable  time  for  duration  of  contract.  Compare  Morrow  County 
Illuminatmg  Co.  v.  Village  of  Gilead,  10  Ohio  S.  &  C.  P.  Dec.  235. 

12  Davenport  Gas  &  Electric  Co.  v.  City  of  Davenport,  124  Iowa,  22, 
98  N.  W.  892.  The  ordinance  in  question  authorized  the  plaintiff  "to 
erect  and  maintain  a  gas,  electric  light,"  etc.,  plant  for  the  period  of  twenty- 
five  years.  "The  act  applied  to  all  cities  and  towns  regardless  of  popula- 
tion. In  very  many,  if  not  in  a  majority,  of  them,  the  grant  of  a  franchise 
followed  by  its  use,  while  not  exclusive  in  terms,  would  be  so  in  fact,  be- 
cause of  the  expense  of  the  plant.  *  *  ♦  We  have  examined  the  authorities 
relied  upon  by  the  appellant  to  maintain  its  contention  that  a  city  may 
not  enter  into  an  exclusive  contract  for  a  long  period  of  time,  and  find  the 
decisions  based  upon  the  want  of  power  either  express  or  imphed.  *  *■  * 
All  contracts  of  this  kind  must,  in  their  very  nature,  be  exclusive."  Id., 
30-32,  per  Sherwin,  J. 

"Cases  are  not  infrctjuent  where  under  a  general  power  to  cause  the 
streets  of  a  city  to  be  lighted,  or  to  furnish  its  inhabitants  with  a  supply 
of  water,  without  limitation  as  to  time,  it  has  becm  held  that  the  city  has 
no  right  to  grant  an  exclusive  franchise  for  a  period  of  years;  but  these 
cases  do  not  touch  upon  the  question  how  far  the  city,  in  the  exercise  of 
undoubted  power  to  make  a  particular  contract,  can  hedge  it  about  with 
limitations  designed  to  do  little  more  than  bind  the  city  to  carry  out  the; 
contract  in  good  faith,  and  with  decent  regard  for  the  rights  of  the  other 
party.    The  more  prominent  of  these  cases  are  Minturn  v.  Larue,  23  How. 

340 


PARTICULAR   INSTANCES  §  299 

A  contract  between  a  city  and  an  electric  light  company 
providing  for  the  lighting  of  its  streets  for  a  terra  of  ten 
years,  and  granting  the  corporation  the  privilege  of  con- 
structing and  operating  in  the  city  a  commercial  electric 
light  and  power  plant  for  the  purpose  of  furnishing  light 
and  power  to  the  residents  of  the  city  is  not  invalid  on 
the  ground  that  it  tends  to  create  a  monopoly.  ^^ 

§  299.  Electric  Lighting— Control  of  Streets— Exclu- 
sive Grants,  etc. — Municipalities,  Towns,  etc.^^ 

The  paramount  control  of  the  streets  and  highways 
is  primarily,  in  the  absence  of  any  delegation  of  such 
power,  vested  in  the  sovereign  power  of  the  State  as 
represented  by  the  legislature;  municipal  corporations 
are  only  creatures  of  the  legislature  and  are,  as  we  have 
stated  elsewhere,  confined  and  limited  in  their  powers 
to  those  expressly  granted  to  them  or  to  those  necessarily 
imphed.  To  enable  a  municipality  to  grant  an  exclusive 
franchise  to  use  the  streets,  it  must  be  clothed  by  the 
legislature  with  a  delegation  of  its  sovereign  rights,  vested 
in  such  sovereign  power,  over  streets.  So  a  municipality, 
in  the  absence  of  a  delegation  of  such  power,  cannot 
confer  upon  an  electrical  company  an  exclusive  right  to 
construct  and  maintain  an  electrical  line  upon  the  streets.  ^^ 

(65  U.  S.)  435,  17  L.  ed.  173;  Wright  v.  Nagle,  101  U.  S.  791,  25  L.  ed.  971; 
State  V.  Cincinnati  Gaslight  &  Coke  Co.,  18  Ohio  St.  262;  Logan  v.  P\'ne, 
43  Iowa,  524;  Jackson  Co.  Horse  Railroad  v.  Rapid  Transit  Railway  Co., 
24  Fed.  306;  Norwich  Gas  Co.  v.  Norwich  City  Gas  Co.,  25  Conn.  19; 
Saginaw  Gas  LigQt  Co.  v.  Saginaw,  28  Fed.  529;  Grand  Rapid.s  Electric 
Light  and  Power  Co.  v.  Grand  Rapids  Edison,  etc.,  Gjis  Co.,  33  Fed.  659; 
Gale  V.  Kalamazoo,  23  Michigan,  344."  Walla  Walla  City  v.  Walla  Walla 
Water  Co.,  172  U.  S.  1,  18,  43  L.  ed.  341,  19  Sup.  Ct.  77,  per  Brown,  J. 
i»  Denver,  City  of,  v.  Hubbard,  17  Colo.  App.  346,  68  Pac.  993. 
Municipal  lighting — Police  and  municipal  powers.  See  1  Joyce  on 
Electric  Law  (2d  ed.),  §§  189,  231-271. 

»«  See  Joyce  on  Electric  Law  (2d  ed.),  §§  189,  231-271. 
1'  Grand  Rapids  Electric  Light  &  Power  Co.  v.  Grand  Rapids  Edison 
Electric  Light  &  Fuel  Gas  Co.  (U.  S.  C.  C),  33  Fed.  659.  It  is  said  by  the 
court,  per  Jackson,  J.,  that:  "To  confer  exclusive  rights  and  privileges, 
either  in  the  streets  of  a  city  or  in  the  public  highways,  necessarily  involves 
the  a.ssertion  and  exercise  of  exclusive  potrers  and  control  over  the  same. 
Nothing  short  of  the  ivhok  sovereign  power  of  the  State  can  confer  exclusive 

341 


§  299      MUNICIPAL   LEGISLATION   OR   CONTRACTS — 

It  is  held  that  if  a  town  council  has  no  power  to  grant 
an  exclusive  franchise  for  a  number  of  years  for  the  use 
of  its  streets  by  a  private  corporation  for  the  conveyance 
of  electricity  for  public  use  in  the  city,  such  exclusive 
grant  would  be  void  and  would  not  prevent  the  town 
from  granting  to  another  corporation  within  -said  term 
the  pri\dlege  of  occupying  the  streets  for  the  same  pur- 
pose. ^^     And  in  1890  it  was  decided  in  Massachusetts 
that  under  the  then  existing  statutes  no  power  existed 
in  cities  and  towns  to  construct  and  maintain  electric 
lighting  plants  to  furnish  light  for  the  public  streets  and 
not  only  for  this  but  to  supply  the  inhabitants  of  the 
same  with  such  lights.  ^^     In  Maine,  prior  to  1895  the 
legislature  reserved  to  itself  the  right,  in  each  instance, 
to  determine  whether  the  public  good  demanded  that 
franchises,  such  as  the  right  to  use  the  streets  to  supply 
cities  or  towns  with  gas  or  electricity  should  be  granted 
at  all  to  anyone,  and  where  such  franchises  had  been 
previously   granted   and   lawfully  exercised   in   a  given 
place  to  determine  whether  or  not  it  would  be  for  the 
public  good  to  permit  indiscriminate  or  destructive  com- 
petition.   But  in  1905  the  legislature  modified  its  poUcy 
to  the  extent  that: — In  towns  where  no  gas  or  electric 
company  was  supplying  or  was  authorized  to  supply,  gas  or 
electric    light,    new    corporations    organized    thereunder 
could  supply  either  gas  or  electricity  by  first  obtaining  the 
statutory  permit  from  the  municipal  officers,  and  without 
special  legislative  authority.    But  that : — In  towns  where 
a  gas  or  electric  company  was  supplying,  or  was  authorized 
to  supply,  either  or  both  kinds  of  light,  another  corpora- 
rights  and  privileges  in  public  streets,  dedicated  or  acquired  for  public  use, 
and  which  are  held  in  trust  for  the  public  at  large";  an  exclusive  right  was 
granted  for  fifteen  years.    See  §  316,  herein. 

Powers  of  municipal  corporations.    See  §§  277-281,  herein. 

Delegation  of  power — municipal,  quasi-municipal  and  subordinate  agencies. 
See  Joyce  on  P'ranchises,  §§  185-203. 

18  Clarksburg  p:iectric  Light  Co.  v.  City  of  Clarksburg,  47  W.  Va.  739, 
35  S.  E.  994,  .50  L.  R.  A.  142. 

"  Spaulding  v.  Inhabitants  of  Peabody,  153  Mass.  129,  26  N.  E.  421. 
But  compare  1  Joyce  on  Electric  Law  (2d  ed.),  §  244. 

342 


PARTICULAR    INSTANCES  §  300 

tion,  organized  under  the  general  law,  could  not  operate 
until  the  legislature  had  determined  whether  the  public 
good  required  it,  and  had  authorized  it,  just  as  it  did  prior 
to  1895;  and  it  is  held  in  that  State  that  where  a  person, 
firm,  or  corporation,  is  already  authorized  to  do  an 
electric  lighting  business  in  a  town,  another  corporation, 
organized  under  the  laws  of  1895,  could  not  lawfully  do  a 
gas  lighting  business  in  the  same  town,  until  specially 
authorized  by  the  legislature,  and  that  the  result  was  not 
different,  even  if  the  electric  light  company  had  not  done 
or  was  not  doing  business  as  such,  although  it  is  also  de- 
cided that  the  permissive  rights  given  by  the  laws  of  1885, 
"regulating  the  erection  of  posts  and  Unes  for  the  pur- 
poses of  electricity"  were  not  franchises. ^^  If  a  statute 
relates  wholly  to  the  erection  and  maintenance,  by 
municipal  corporations,  of  electric  appliances  for  lighting 
public  streets  and  places  it  is  exclusive  in  that  it  does 
not  authorize  the  erection  of  poles  and  appliances  by  a 
private  electric  light  company.  ^^ 

§  300.  Ferries — Monopolies,  Exclusive  Privileges,  etc. 

Under  a  North  Carolina  decision  public  ferries  are  not 
monopolies,  but  franchises  granted  in  consideration  of 
public  services.  They  may  be  exclusive,  but  are  simply 
licenses  revocable  at  will.-''    So  in  the  same  State  the  right 

i«  Twin  Village  Water  Co.  v.  Damariscotta  Gaslight  Co.,  98  Me.  325, 
56  Atl.  1112. 

Under  the  provision  of  §  1,  chap.  102,  of  the  PubUc  Laws  of  1895,  that 
no  corporation  organized  thereunder  "shall  have  authorit\-,  without 
special  act  of  the  legislature,  to  make,  generate,  sell,  distribute  or  supply 
gaa  or  electricity,  or  both,  for  any  purpose,  in  or  to  any  city  or  town,  in  or 
to  which  another  company,  person  or  firm,  are  making,  generating,  selling, 
distributing  or  supplying,  or  are  authorized  to  make,  generate,  sell,  dis- 
tribute or  supply  gas  or  electricity,  or  both,  mthout  the  consent  of  such 
other  company,  person  or  firm,"  it  is  held:  that  authority  in  one  company 
to  supply  either  gas  or  electricity,  or  both,  is  prohibitive  of  the  right  of 
another  company  to  supply  either,  unless  by  consent  or  by  special  legis- 
lative authority.  Twin  Village  Water  Co.  v.  Damariscotta  Gas  Light  Co., 
98  Me.  325,  56  Atl.  1112. 

"State,  Myers  v.  Hudson  Co.  Elec.  Co.,  60  N.  J.  L.  350,  37  Atl.  618, 
N.  J.  Pub.  L.,  1894,  p.  477. 

»  Spease  Ferry,  In  re,  138  N.  C.  219,  50  S.  E.  625.  See  the  following 
cases: 

343 


'§300      MUNICIPAL   LEGISLATION   OR   CONTRACTS — 

to  operate  a  public  ferry  is  a  public  franchise,  a  license  or 
gratuity  subject  to  legislative  control,  otherwise  if  the 
grant  were  so  exclusive  as  to  amount  to  a  monopoly  it 
would  be  within  the  prohibition  of  the  Constitution.  ^^ 
Again,  a  statute  which  confers  upon  a  private  corporation 
the  exclusive  right  of  transporting  passengers  across  a 
navigable  river  for  a  distance  of  six  miles  from  a  certain 
point  opposite  a  large  trading  town,  in  consideration  of 
a  reduction,  by  one-half,  of  the  former  toll  rates  paid 
by  the  residents  of  defined  parts  of  two  counties,  while 
full  rates  are  to  be  paid  by  all  others  is  obnoxious  to  a 
constitutional  inhibition  against  monopolies. -^  Where  a 
party  has  his  option  to  set  up  a  franchise,  such  as  that  of 
a  ferry,  at  one  place  or  another,  with  an  exclusive  right 
within  a  given  distance  of  either,  and  he  elects  his  situa- 
tion, he  cannot  afterwards  remove  the  same,  although 
his  privilege  has  been  destroyed  without  any  fault  or 

Arkansas:  Murray  v.  Menefee,  20  Ark.  561  (privilege  exclusive  so  long 
as  terms  complied  with). 

Kentucky:  Combs  v.  Sewell,  23  Ky.  L.  Rep.  169,  60  S.  W.  933  (under 
Ky.  Stat.,  §  1820,  when  order  granting  another  ferry  right  not  void  even 
though  privilege  described  as  "exclusive"). 

Missouri:  Carroll  v.  Campbell,  110  Mo.  557,  19  S.  W.  809,  aff'g  108  Mo. 
550,  17  S.  W.  884  (city  ordinance  granting  exclusive  privilege  for  term  of 
years  vaUd  as  mere  temporary  license  even  though  void  under  Mo.  Const., 
Art.  4,  §53). 

North  Dakota:  Patterson  v.  Wollmann,  5  N.  Dak.  608,  67  N.  W.  1040, 
33  L.  R.  A.  536  (nature  of  privilege  is  exclusive;  statute  granting  same  for 
certain  term  not  within  prohibition  of  Const.,  §  20,  prohibiting  granting 
privileges  or  immunities  to  special  classes,  etc.). 

Pennsylvania:  Bridgewater  Ferry  Co.  v.  Sharon  Bridge  Co.,  145  Pa.  St. 
404,  29  Wkly.  N.  C.  141,  22  Pitts.  L.  J.  (N.  S.)  143,  48  Phila.  Leg.  Int.  516, 
22  Atl.  1039  (construction  of  certain  statutes  relating  to  exclusive  use  of 
ferry  or  bridge  franchises  within  limited  distance). 

Tennessee:  Hydcs  Ferry  Turnpike  Co.  v.  Davidson  County,  91  Tenn. 
291,  18  S.  W.  620  (when  legislature  has  power  to  grant  rival  ferry  franchise 
over  one  not  expressly  exclusive). 

West  Virginia:  Hostler  v.  Marlowe,  44  W.  Va.  707,  30  S.  E.  146  (extent 
of  inclusion  and  exclusion  of  grant  of  ferry  franchise  since  W.  Va.  Act  of 
March  25,   1882). 

As  to  ferries;  nature,  extent  and  instances  of  rights  granted.  See  Joyce  on 
Franchises,  pp.  1050,  1051. 

"  Robinson  v.  Lamb,  126  N.  C.  492,  36  S.  E.  29. 

-^  Washington  Toll  Bridge  Co.  v.  Commissioners  of  Beaufort-,  81  N.  C. 
491. 

344 


PARTICULAR    INSTANCES  §  301 

negligence  on  his  part,  to  the  other  place  where  he  might 
have  chosen  his  location,  and  then  claim  the  exclusion 
to  which  he  might,  had  he  so  elected,  have  been  entitled 
from  the  latter  place. -^ 

§301.  Ferries  ^Exclusive  Grant— Municipal  Ordi- 
nances—Delegated Authority. 

In  1838,  the  legislature  of  the  Territory  of  Iowa  author- 
ized a  certain  Fanning,  his  heirs  and  assigns,  to  establish 
and  keep  a  ferry  across  the  Mississippi  river,  at  the  town 
of  Dubuque,  for  the  term  of  twenty  years;  and  enacted 
further,  that  no  court  or  county  commissioners  should 
authorize  any  person  to  keep  a  ferry  within  the  limits 
of  the  town  of  Dubuque.  In  1840,  Fanning  was  author- 
ized to  keep  a  horse-ferry  boat  instead  of  a  steamboat. 
In  1847,  the  General  Assembly  of  the  State  of  Iowa 
passed  an  act  to  incorporate  the  city  of  Dubuque,  the 
fifteenth  section  of  which  enacted  that  the  ''city  council 
shall  have  power  to  license  and  establish  ferries  across 
the  Mississippi  river,  from  said  city  to  the  opposite  shore, 
and  to  fix  the  rates  of  the  same."  In  1851,  the  mayor  of 
Dubuque,  acting  by  the  authority  of  the  city  council, 
granted  a  license  to  Gregoire  (whose  agent  Bogg  was) 
to  keep  a  ferry  for  six  years  from  the  1st  of  April,  1852, 
upon  certain  payments  and  conditions.  It  was  held 
that  the  right  granted  to  Fanning  was  exclusive  of  such 
a  license  as  this;  that  the  prohibition  to  license  another 
ferry  did  not  extend  to  the  legislature,  nor  to  the  city 
council,  to  whom  the  legislature  had  delegated  its  power; 
and  that  it  was  not  necessary  for  the  city  council  to  act 
by  an  ordinance  in  the  case.  Corporations  can  make 
contracts  through  their  agents  without  the  formalities 
which  the  old  rules  of  law  required.-^ 

"  Mills  V.  County  of  St.  Clair,  7  111.  197. 

"  Fanning  v.  Gregoire,  16  How.  (57  U.  S.)  524,  14  L.  ed.  1043,  cited  in 
Williams  v.  Wingo,  177  U.  S.  601,  603,  20  Sup.  Ct.  793,  44  L.  ed.  905; 
Wheeling  &  Belmont  Bridge  v.  'WTieeling  Bridge  Co.,  138  U.  S.  287,  292, 
34  L.  ed.  967,  11  Sup.  Ct.  301;  Wiggins  Ferry  Co.  v.  East  St.  Louis,  107 
U.  S.  365,  374,  377,  27  L.  ed.  419,  2  Sup.  Ct.  257;  Conway  v.  Taylor's  Ex- 
ecutoi-s,  1  Blank  (60  U.  S.).  603,  630,  634,  17  L.  ed.  101;  Minturn  v.  Larue, 

345 


§§  302,  303   MUNICIPAL   LEGISLATION    OR   CONTRACTS— 

§  302.  Exclusive  Right  to  Use  Wharf  for  Ferry  Pur- 
poses. 

The  legislature  may  grant  the  exclusive  right  to  hold 
and  use  the  end  of  a  wharf  for  ferry  purposes. ^^ 

§  303.  Gas— Grant  by  State  of  Exclusive  Privilege  or 
Monopoly— Police  Power. 

An  exclusive  privilege  or  monopoly  to  make  and  vend 
gas  may  be  granted  when  such  grant  does  not  violate 
any  constitutional  provision.  ^^  So  the  legislature  may, 
in  the  absence  of  a  constitutional  prohibition,  grant  an 
exclusive  right  to  a  private  corporation  to  manufacture 
and  sell  gas  within  a  municipal  corporation,  even  though 
it  may  create  a  monopoly  and  prevent  competition  and 
operate  to  the  public  detriment. ^^  And  a  legislative 
grant  of  an  exclusive  right  to  supply  gas  to  a  municipality 
and  its  inhabitants  by  means  of  pipes  and  mains  laid 
through  the  public  streets,  and  upon  condition  of  perform- 
ance of  the  service  by  the  grantee,  is  no  infringement  of 
that  clause  in  the  Bill  of  Rights  of  Kentucky,  which 
declares  "That  all  freemen,  where  they  form  a  social 
compact,  are  equal  and  that  no  man,  or  set  of  men,  are 
entitled  to  exclusive,  separate  public  emoluments  or  priv- 
ileges from  the  community,  but  in  consideration  of  public 
services."  ^^  Again,  a  State  statute  which  grants  and 
vests  exclusive  permission  and  authority  to  and  in  a  gas 
company  to  lay  pipes,  etc.,  in  the  streets  by  and  with  per- 

23  How.  (64  U.  S.)  435,  437,  16  L.  ed.  574.  Case  of  municipal  charter, 
ferry  regulation  and  grant  not  exclusive;  the  difference  is  pointed  out  be- 
tween charter  in  this  case  and  those  grants  which  are  exclusive. 

26  Broadway  &  Locust  Point  Ferry  Co.  v.  Hankey,  31  Md.  346. 

28  Crescent  City  Gaslight  Co.  v.  New  Orleans  Gashght  Co.,  27  La.  Ann. 
138. 

^  State  V.  Milwaukee  Gashght  Co.,  29  Wis.  454. 

M  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115  U.  S.  683,  6  Sup.  Ct.  265, 
29  L.  ed.  510. 

A  grant  of  an  exclusive  right  to  manufacture  and  supply  gas  to  a  city 
given  by  charter  to  a  corporation  is  mvalid  as  contrary  to  a  constitutional 
provision  "that  no  man  or  set  of  men  are  entitled  to  exclusive,  separate, 
public  emoluments  or  privileges  from  the  community,  but  in  consideration 
of  public  service."  Citizens'  Gashght  Co.  v.  Louisville  Gas  Co.,  81  Ky. 
263,  5  Ky.  L.  Rep.  72;  Const.  (Bill  of  Rights),  §  3. 

346 


PARTICULAR   INSTANCES  §  304 

mission  of  the  common  council  is  not  unconstitutional 
and  void  either  as  creating  a  monopoly  or  as  creating  a 
corporation  by  special  act.^^  In  granting  the  exclusive 
franchise  to  supply  gas  to  a  municipality  and  its  inhab- 
itants, a  State  legislature  does  not  part  with  the  police 
power  and  duty  of  protecting  the  public  health,  the  pub- 
lic morals,  and  the  public  safety,  as  one  or  the  other 
may  be  involved  in  the  exercise  of  that  franchise  by  the 
grantee.^" 

§  304.  Gas— Grant  by  Municipality  of  Exclusive  Privi- 
lege or  Monopoly. 

A  city  may  grant  a  privilege  to  lay  gas  pipes,  etc.,  to 
supply  the  city  with  gas  along  certain  streets  for  a  term 
the  period  of  duration  of  which  is  not  unreasonable  and 
may  contract  with  the  grantee  for  the  supply  of  gas  to 
the  city  and  such  a  grant  is  held  not  to  confer  a  monopoly 
for  supplying  the  city  with  gas  nor  to  confer  an  exclusive 
right  to  the  use  of  the  streets."  But  a  right  granted  for 
fifteen  years  by  a  city  council  to  lay  gas  pipes  in  the  city 
streets  is  held  not  exclusive.^-  And  the  right  of  a  mu- 
nicipality to  grant  an  exclusive  right  to  gas  and  electric 
companies  to  occupy  and  use  the  city's  streets  and  alleys 
is  denied  in  Oklahoma. ^^ 

»  People  V.  Bowen,  30  Barb.  (N.  Y.)  24. 

30  Louisville  Gas  Co.  v.  Citizens'  Gas  Co.,  115  U.  S.  683,  29  L.  ed."510' 
6  Sup.  Ct.  265. 

"  Vincennes,  City  of,  v.  Citizens'  Gaslight  Co.,  132  Ind.  114,  31  N.  E. 
573,  16  L.  R.  A.  485.    The  grant  was  for  twenty-five  years. 

Powers  of  municipal  corporations;  monopolies;  exclusive  rights.  See 
§§  277-281,  herein. 

Control  of  streets  hj  city.    See  §  299,  herein. 

»2  Norwich  Gaslight  Co.  v.  Norwich  City  Gas  Co.,  25  Conn.  19. 

"  Territory  v.  Dc Wolfe,  13  Okla.  454,  74  Pac.  98. 

"  But  aside  from  these  general  considerations,  the  decided  weight  of  ju- 
dicial authority  is  against  the  right  of  the  common  council  *  *  *  to  confer 
upon  complainant  the  exclusive  franchise  which  the  ordinance  *  *  * 
attempted  to  grant.  Thus  in  Dillon  on  Municipal  Corporations  (2d  ed.), 
§  547,  it  is  said:  'A  general  grant  of  power  in  the  charter  of  a  city  to  cause 
it  to  be  lighted  with  gas,  while  it  carries  with  it,  by  implication,  all  such 
powers  as  are  clearly  necessary  for  the  exercise  of  the  authority  expressly 
conferred,  does  not  authorize  the  city  council  to  grant  to  any  person  or 
corporation  an  exclusive  right  to  use  the  streets  of  the  city  for  the  purpose 

347 


§  305      MUNICIPAL   LEGISLATION    OR   CONTRACTS — 

§  305.  Municipal  Lease  to  Private  Corporation  to  Sup- 
ply Gas— Exclusive  Right— Monopoly. 

AMiere  gas  works  are  the  property  of  a  city,  acting  in 
its  business  and  not  in  its  governmental  capacity,  and  it 
has  by  statute  a  right  to  lease  such  works,  it  may,  through 
the  city  council,  lease  them  to  a  private  corporation  for 
a  long  period  of  time  and  give  to  the  lessee  the  exclusive 
right  to  supply  the  residents  with  gas  and  covenant  in  its 
lease  that  it  will  do  no  act  itself,  by  ordinance  or  other- 
wise, which  will  in  any  way  interfere  with,  limit,  restrict 
or  imperil  the  exclusive  right  so  vested  in  the  lessee. 
Such  a  lease  confers  no  monopoly,  in  respect  to  private 
lighting,  upon  the  lessee,  nor  is  it  against  public  policy.^'' 
It  is  also  held  in  this  case  that  if  a  city  engages  in  the 
business  of  supplying  its  citizens  with  light  in  the  streets 
and  public  places  it  acts  as  a  business  corporation,  as  no 
municipal  obligation  so  to  do  exists.  "In  regard  to  the 
conferring  of  a  monopoly,  the  appellants  cite  the  pro- 
visions in  the  lease  that  'the  city  of  Philadelphia  agrees 
that  during  the  term  of  this  contract  it  will  do  nothing 
by  ordinance  or  otherwise  which  will  in  any  way  inter- 

of  laying  down  gas  pipes  for  a  term  of  years,  and  thereafter  until  the  works 
shall  be  purchased  from  the  grantee  by  the  city.  The  court  admitted  that 
the  power  to  light  the  city  would  authorize  the  council  to  contract  for  gas, 
and  to  grant  the  contracting  party  the  use  of  the  streets,  but  denied  its 
authority  to  make  such  use  exclusive  for  a  determinate  future  period,' 
citing  the  well-considered  case  of  the  State  v.  Cincinnati  Gaslight  &  Coke 
Co.,  18  Oliio  St.  262,  which  has  not  only  been  followed  in  Ohio  (see  Cin- 
cinnati Street  Rd.  Co.  v.  Smith,  29  Ohio  St.  291),  but  recognized  with 
approval  by  the  Supreme  Court  of  the  United  States  (see  New  Orleans 
Gas  Co.  V.  Louisiana  Light  Co.,  115  U.  S.  650,  659,  29  L.  ed.  516,  6  Sup. 
Ct.  252).  To  the  same  effect  see  Dillon  on  Munic.  Corp.  (2d  ed.),  §§  61, 
548,  549;  Cooley's  Const.  Lim.,  Marg.,  pp.  38,  207,  208;  Norwich  Gas- 
light Co.  V.  Norwich  City  Gas  Co.,  25  Conn.  19  (this  case  has  been  qual- 
ified in  so  far  as  it  denied  to  the  legislature  itself  the  power  to  grant  an 
exclusive  franchise,  but  in  respect  to  the  city's  power  to  do  so  it  has  not 
been  questioned);  Saginaw  Gaslight  Co.  v.  Saginaw,  28  Fed.  529;  Rich- 
mond County  Gashght  Co.  v.  Middletown,  59  N.  Y.  228."  Grand  Rapida 
Electric  Light  &  Power  Co.  v.  Grand  Rapids  Edison  Electric  Light  &  Fuel 
Co.  (U.  S.  C.  C),  33  Fed.  659,  per  Jackson,  J. 

'*  Bailey  v.  City  of  Philadelphia,  184  Pa.  St.  594,  41  Wkly.  N.  C.  529, 
39  Atl.  494,  63  Am.  St.  Rep.  812,  39  L.  R.  A.  837.  Duration  of  contract 
was  thirty  years. 

348 


PARTICULAR   INSTANCES  §  306 

fere  with,  or  limit,  restrict  or  imperil  this  exclusive 
right  hereby  vested  in  the  said  United  Gas  Improvement 
Company,  its  successors  or  assigns,'  and  claim  that  this 
creates  a  monopoly  which  is  void  on  the  ground  of  pubhc 
policy.  To  this  objection  it  would  be  a  sufficient  answer 
that,  as  already  held,  the  city  in  this  matter  is  acting 
in  its  business,  not  its  governmental,  capacity,  and  the 
owner  of  business  property,  even  though  a  municipal 
corporation,  may  in  dealing  with  it  make  such  terms  as 
in  its  discretion  it  deems  best  for  its  interest.  *  *  *  But 
in  the  provision  of  the  lease  now  under  consideration  the 
city  does  not  assume  to  grant  any  franchise.  It  could 
not  do  so  if  it  would.  "WTiat  the  city  does  is  to  covenant 
that  it  will  do  no  act  in  derogation  of  the  right  of  the 
lessee  under  the  grant  to  operate  the  gas  works  and  supply 
the  city  and  the  citizens  with  light  therefrom.  The 
franchise  of  the  lessee  to  furnish  light  is  not  derived  from 
the  city  but  from  the  legislature,  and  whether  it  is  exclu- 
sive or  not  at  present,  or  shall  be  exclusive  or  not  in  the 
future,  does  not  and  will  not  depend  on  the  city,  but  on 
the  legislature.  All  that  the  city  does  is  to  agree  that  it 
will  do  no  act  itself  whereby  the  privileges  granted  by  it 
to  the  lessee,  and  intended  to  be  exclusive  so  far  as  it  is 
concerned,  shall  be  limited  or  interfered  with.  This  was 
clearly  within  its  powers  in  dealing  with  its  business 
property."  ^^ 

§  306.  Gas — Void  Grants  and  Contracts — Monopoly. 

It  is  held  in  an  early  case  that  the  State  has  no  author- 
ity to  grant  the  sole  and  exclusive  pri\^lege  of  making 
or  vending  illuminating  gas  or  any  commodity,  as  such 
a  grant  is  void  as  a  monopoly.  ^^  A  provision  contained 
in  a  contract  between  a  town  board  of  improvement  and 
a  gas  company  that  no  other  gas  or  electric  light  company 

» Id.,  605,  606,  per  Mitchell,  J. 

"St.  Ixiuis  Gaslight  Co.  v.  St.  I^uis  Gas,  Fuel  &  Power  Co.,  16  Mo. 
App.  52,  held  void  under  common  law  and  under  Const,  of  1820  of  Mo., 
Art.  13,  §  20,  providing  "That  no  title  of  nobility,  hereditaxy  emolument, 
privilege,  or  distinction,  shall  be  granted." 

349 


§§  307-309   MUNICIPAL   LEGISLATION   OR   CONTRACTS 

shall  have  the  consent  of  such  board  to  extend  its  mains 
or  to  lay  its  pipes  or  conductors  within  the  town  during 
the  term  of  agreement  is  void  as  tending  to  create  a 
monopoly."''^ 

§  307.  Gas — Purchasers  of  Exclusive  Rights. 

The  exercise  of  a  charter  right  in  purchasing  the  right 
of  another  to  occupy  the  city  streets  and  supply  it  with 
gas  does  not  give  the  purchaser  an  exclusive  right,  even 
though  said  purchaser  had  also  a  grant  from  the  city 
council  to  use  the  city  streets  for  laying  gas  pipes.  ^^ 

§  308.  Intoxicating  Liquors — "  Dispensary  System  *' 
— Monopoly. 

The  control  of  the  sale  of  liquor  within  a  county  under 
the  *' dispensary  system"  of  North  Carolina  is  not  such 
a  monopoly  as  contemplated  by  the  inhibition  contained 
in  the  Constitution  of  that  State. ^^ 

§  309.  Irrigation — Monopoly. 

While  under  an  irrigation  statute  the  person  making 
the  first  application  for  the  use  of  water  is  given  an 
exclusive  right  to  the  water,  so  long  as  he  applies  it  to 
the  beneficial  use,  and  is  granted,  therefore,  in  a  certain 
sense,  a  monopoly  of  the  use  of  the  water  which  he  has 
been  allowed  to  appropriate,  still,  this  monopoly  or 
privilege,  while  exclusive  in  its  nature,  is  not  a  special 
privilege  or  immunity  a  grant  of  which  is  within  a  con- 
stitutional prohibition.  The  privilege  granted  is  not 
"special."  "" 

"  Parfitt  V.  Ferguson,  38  N.  J.  Supp.  466,  3  App.  Div.  176. 

'8  Norwich  Gaslight  Co.  v.  Norwich  Gas  Co.,  25  Conn.  19.  "Could  it 
aid  such  a  corporation  in  a  claim  to  an  exclusive  right  to  use  the  public 
highways,  that  it  was  also  authorized  to  purchase  the  effects  of  same  person 
who  had  formerly  been  engaged  in  the  same  business?"  Id.,  33,  per  Hin- 
man,  J. 

;  ^^  Guy  V.  Board  of  Commissioners  of  Cumberland  County,  etc.,  122 
N.  C.  471,  29  S.  E.  771.  See  also  Plumb  v.  Christie,  103  Ga.  686,  30  S.  E. 
759,  42  L.  R.  A.  181;  Gar.sed  v.  City  of  Greensboro,  126  N.  C.  159,  160, 
35  S.  E.  254;  State  v.  Aiken,  42  S.  C.  222,  26  L.  R.  A.  345,  20  S.  E.  221. 

«  Farmers'  Canal  Co.  v.  Frank,  72  Neb.  136,  157-160,  100  N.  W.  286; 
Const.,  §  15,  Art.  3. 

350 


PARTICULAR    INSTANCES  §§310,311 

§  310.  Market  House  ^Contract  for,  by  City  or  Town 
—  Monopoly. 

It  is  within  the  power  of  a  city  or  town  to  provide,  by 
contract  with  its  citizens,  a  market  house  and  exclude 
with  certain  reasonable  exceptions,  the  sale  of  fish  at 
other  places,  it  appearing  that  under  the  contract,  the 
market  house  was  to  remain  under  the  full  control  of  the 
municipal  authorities,  and  that  reasonable  accommodation 
had  been  provided  for  the  vendors,  with  reasonable  charges 
for  the  stalls.  A  contract  of  such  a  character  does  not 
contravene  a  constitutional  provision  prohibiting  per- 
petuities and  monopolies.''^  In  a  Michigan  case  a  con- 
tract was  made  between  one  Gale  and  the  municipal  cor- 
poration, under  and  by  the  terms  of  which  the  former 
agreed  to  erect  a  suitable  market  building  for  the  town, 
and  place  the  same  under  the  control  of  the  president 
and  trustees  of  the  village  for  ten  years  at  a  stipulated 
rent.  The  president  and  trustees  agreed  that,  during  the 
continuance  of  the  contract,  there  should  be  no  other 
public  market.  It  was  held.  Judge  Cooley  delivering 
the  opinion  of  the  court,  that  this  contract  was  invalid; 
that  the  governing  authority  could  not  abdicate  any  of 
its  legislative  powers,  nor  preclude  itself  from  meeting 
in  the  proper  way,  emergencies  as  they  might  arise;  and 
that  the  contract  created  or  vested  a  monopoly.  ^^ 

§311.  Navigable  Canal —Monopoly. 

The  legislature  may  charter  a  company  to  construct  a 
work  of  public  improvement  such  as  a  navigable  canal 
along  the  valley  of  a  stream,  and  no  euch  monopoly  is 
created  thereby  as  to  exclude  chartering  a  company  to 
construct  a  railroad  along  the  same  valley.^' 

«'  State  V.  Perry,  151  N.  C.  661,  65  S.  E.  915.    See  §  315,  herein. 

"  Gale  V.  Kalamazoo,  23  Mich.  344,  principle  of  case  applied  by  Jack- 
son, J.,  in  Grand  Rapids  Electric  Light  &  Power  Co.  v.  Grand  Rapidir 
Edison  Light  &  Fuel  Gas  Co.  (U.  S.  C.  C),  33  Fed.  659.  See  §315, 
herein. 

"Tuckahoe  Canal  Co.  v.  Tuckahoe  Rd.  Co.,  11  Leigh  (Va.),  42,  36 
Am.  Dec.  374. 

351 


§§  312-314   MUNICIPAL   LEGISLATION    OR   CONTRACTS — 

§  312.  Omnibuses — Grant  of  Privilege  to  Run — When 
a  Monopoly. 

A  city  cannot  grant  an  exclusive  privilege  to  one  per- 
son to  solely  run  omnibuses  in  the  city  where  such  grant 
is  not  expressly  authorized  by  the  city  charter  and  it 
tends  to  create  a  monopoly.'*^ 

§  313.  Railroads — Exclusive  Privileges. 

A  statute  which  authorizes  any  railroad  company 
which  may  have  acquired  more  than  three-fourths  of 
the  capital  stock  of  any  other  railroad  company  to  take 
the  outstanding  stock  by  condemnation  proceedings,  if 
necessary,  upon  a  judicial  finding  that  such  an  acquisi- 
tion will  be  for  the  public  interest,  does  not  confer  exclu- 
sive privileges  upon  any  set  of  men  in  violation  of  a  state 
constitutional  provision  ''that  no  man  or  set  of  men  are 
entitled  to  exclusive  public  emoluments  or  privileges 
from  the  community."  Such  a  statute  is  for  the  benefit 
of  all  railroads  to  which  its  terms  may  apply.  ''Railroad 
companies  constitute  a  peculiar  class  of  artificial  persons 
which  can  properly  be  invested  with  special  privileges  of 
a  kind  calculated  to  promote  the  public  good."  '^^  And 
a  statute  which  provides  that  no  person  shall  acquire 
title  by  adverse  possession  to  lands  of  a  railroad  corpora- 
tion, wjiere  such  lands  lie  within  the  limits  of  the  road- 
way of  such  corporation  as  shown  by  the  recorded  survey, 
does  not  grant  a  special  privilege  to  a  private  corporation 
contrary  to  a  constitutional  provision  prohibiting  grants 
of  such  privileges.  The  exception  is  not  a  grant  of  a 
privilege  to  a  private  corporation,  but  an  exception  of 
land  set  apart  for  public  use  and  is  within  the  range  of 
legislative  authority.^® 

§  314.  School  Text-Book  Statutes— Exclusive  Privi- 
lege— Monopoly — Contracts. 

It  is  held  in  Alabama  that  a  statute  authorizing  the 

"  Logan  &  Sons  v.  Pyne,  43  Iowa,  524. 

*'  New  York,  New  Haven  &  Hartford  R.  Co.  v.  Offield,  77  Conn.  417, 
59  Atl.  510,  quotation  per  Baldwin,  J. 

«  Dronin  v.  Boston  &  Maine  Rd.  Co.,  74  Vt.  343,  52  Atl.  957;  Con-st., 
Art.  7,  chap.  1. 

352 


PARTICULAR   INSTANCES  §  314 

adoption  and  establishment  of  a  uniform  series  of  text- 
books to  be  used  in  the  public  free  schools  of  the  State, 
and  conferring  upon  the  publishers  of  the  book  adopted 
by  the  State  Text-Book  Commission  the  exclusive  priv- 
ilege of  supplying  said  books,  does  not  violate  the  pro- 
visions of  the  Constitution  of  that  State  against  monop- 
olies, since  the  purpose  of  the  statute  was  not  to  confer 
any  pecuniary  benefit  upon  the  State  or  school  officials 
or  publishers,  but  to  confer  a  benefit  upon  the  public."^ 
It  is  decided  in  Tennessee  that:  (1)  The  "Uniform  Text- 
book Act"  of  that  State  which  authorizes  the  selection 
and  adoption,  through  a  commission,  of  a  uniform  series 
of  text-books  for  the  public  schools  of  the  State,  and 
provides  for  conveniently  furnishing  the  same  to  patrons 
at  reasonable  prices,  and  for  the  enforcement  under 
penalties,  of  the  use  in  the  public  schools  of  the  particular 
books   adopted   is   a   constitutional   and   valid   statute. 

(2)  That  feature  of  the  act  does  not  render  it  obnoxious 
to  the  constitutional  provisions  against  monopoly  and 
special  class  legislation  which  authorizes  a  commission 
appointed  by  the  governor  to  select  and  adopt  a  uniform 
series  of  text-books  for  the  public  schools  of  the  State, 
and  to  contract  with  the  publisher  or  publishers  who  will 
furnish  the  books  cheapest  to  provide  and  sell  them  at 
fixed  prices  to  patrons  of  the  schools,  and  which  provides 
further  for  the  enforcement,  under  penalties,  of  the  use 
in  the  public  schools  of  the  particular  books  thus  adopted. 

(3)  The  privilege  which  a  publisher  acquires  under  a  con- 
tract w^th  the  State  to  furnish  the  patrons  of  the  public 
schools  with  a  uniform  series  of  text-books,  to  be  used 
therein,  is  not  of  a  monopolistic  nature,  where  the  pur- 
chaser obtains  that  privilege  in  open  and  free  competition 
with  all  other  publishers  by  consenting  to  furnish  the 
books  at  a  less  price  than  others.  (4)  If  it  be  a  monop- 
oly, it  is  one  for  the  benefit  of  the  State  and  its  citizens 
and  not  prohibited  by  the  Constitution.  (5)  The  monop- 
oly prohibited  by  the  Constitution  is  a  privilege  farmed 

"  Dickinson  v.  Cunningham,  140  Ala.  527,  37  So.  345;  Act   March  4, 
1903  (Acts  1903,  p.  167). 

23  353 


§  314      MUNICIPAL   LEGISLATION   OR   CONTRACTS — 

out  to  the  highest  bidder  or  conferred  because  of  a  favorit- 
ism to  the  donee,  and  not  one  awarded  to  the  lowest 
bidder  or  for  the  convenience  and  benefit  of  the  pubhc.^* 
Under  a  Washington  decision  it  is  within  the  power  of 
the  legislature  to  enact  laws  authorizing  boards  of  edu- 
cation to  enter  into  contracts  providing  for  the  exclusive 
use  of  certain  text-books  during  a  limited  period  of  time 
and  contracts  made  under  such  statutes  are  not  uncon- 
stitutional on  the  ground  of  being  creative  of  a  monopoly 
and  therefore  opposed  to  public  policy/^  In  a  Minnesota 
case  it  is  said  that:  ''An  exclusion  directed  against  the 
use  of  any  particular  class  of  books  in  the  public  schools, 
or  a  refusal  of  the  State  to  purchase  them  is  in  no  legal 
sense  a  restriction  upon  the  right  of  the  owner  to  sell,  or 
any  interference  with  his  right  of  property  therein."  ^° 
In  Mississippi  where,  as  a  result  of  competitive  bidding 
in  conformity  with  the  law,  a  contract  for  copyrighted 
school  books  is  based  upon  a  bid  below  the  normal  cost 
of  production,  such  contract,  whether  made  with  the  State 
or  any  of  its  statutory  agencies,  is  not  a  monopoly  or 
trust  under  a  statute  which  makes  the  doing  of  that  which 
shall  destroy  or  attempt  to  destroy  competition  in  the 
manufacture  or  sale  of  a  commodity  by  offering  the  same 
for  sale  at  a  price  below  the  normal  cost  of  production, 
a  trust,  or  combine.  ^^  In  an  Indiana  case  it  is  asserted 
that:  ''The  statute  is  not  within  the  constitutional  pro- 
vision directed  against  monopolies.  *  *  *  There  is  no 
exclusion  of  bidders,  no  limitation  of  the  right  to  furnish 
school  books  to  the  people  of  the  State  to  any  class;  on 
the  contrary,  all  who  are  prepared  to  supply  such  books 
as  the  statute  makes  the  standard  are  invited  to  compete 
for  the  contract.  No  special  privilege  is  granted  to  any- 
one, no  right  denied  to  anyone,  for  all  are  invited  to  enter 
the  field  as  competitors.  *  *  *  If  no  copyrighted  books 

«  Leeper  v.  State,  103  Tenn.  500,  63  S.  W.  962,  48  L.  R.  A.  167  (Acts, 
1899,  chap.  205). 

«  Rand,  McNally  &  Co.  v.  Hartrauft,  29  Wash.  591,  70  Pac.  77. 

^  See  Curryer  v.  Merrill,  25  Minn.  1,  7,  33  Am.  Rep.  450,  per  Cornell,  J. 

"  Johnson  Pubhshing  Co.  v.  Mills,  79  Miss.  543,  31  So,  101. 

354 


PARTICULAR   INSTANCES  §§  315,  316 

can  be  bought,  then  new  discoveries  and  new  methods, 
however  important,  may  be  denied  the  children  of  our 
common  schools,  and  this  without  sufficient  reason,  for 
no  rule  of  law  prohibits  the  purchase  for  public  use  of 
articles  protected  by  letters  patent  or  by  copyright.  *  *  * 
We  conclude  our  discussion  of  this  phase  of  the  subject 
by  affirming,  that  the  statute  cannot  be  considered  as 
creating  a  monopoly,  because  it  does  require  that  a  cer- 
tain class  of  books  shall  be  used,  and  in  doing  this  does 
favor  some  publishers  to  the  exclusion  of  others."  ^^ 

§  315.  Slaughterhouse  or  Market  House— When 
Municipality  of  Village  Cannot  Create  Monopoly  as  to. 

Where  a  municipality  has  no  authority  to  pass  an 
ordinance  granting  an  exclusive  right  for  a  specified 
period  to  the  owners  of  a  designated  building  for  the 
slaughtering  of  all  animals  intended  for  sale  and  con- 
sumption within  the  city,  and  such  ordinance  or  contract 
tends  to  creates  a  monopoly,  it  is  void.^^  Nor  can  a  vil- 
lage, possessing  the  usual  powers  only,  create  a  monopoly 
giving  to  a  certain  person  the  right  to  build  and  control  a 
market  house. ^"^ 

§  316.  Street  Railways— Control  of  Streets— Exclusive 
Grants — Municipalities. 

The  authority  to  make  use  of  the  public  streets  of  a 
city  for  railroad  purposes  primarily  resides  in  the  State 
and  is  part  of  the  sovereign  power;  and  the  right  or 
privilege  of  constructing  and  operating  railroads  in  the 
streets,  which  for  convenience  is  called  a  ''franchise," 
must  always  proceed  from  that  source,  whatever  may  be 
the  agency  through  which  it  is  conferred.  ^=     And  if  a 

"  State  ex  rel.  Clark  v.  Haworth,  122  Ind.  462,  470-472,  23  N.  E.  946, 
7  L.  R.  A.  240,  per  Elliott,  J. 

"  Chicago,  City  of,  v.  Rumpff,  45  III.  90.    See  §  310,  herein. 

"  Gale  V.  Village  of  Kalamazoo,  23  Mich.  344. 

"  Adee  v.  Nassau  Electric  R.  Co.,  72  N.  Y.  Supp.  992,  1000,  65  App. 
Div.  529,  per  Woodward,  J.,  case  affirmed  (mem.)  177  N.  Y.  548,  69  N.  E. 
1120.  See  also  Beekman  v.  Third  Ave.  Rd.  Co.,  153  N.  Y.  144,  152,  47 
N.  E.  277,  per  O'Brien,  J.;  Fanning  v.  Osborne,  102  N.  Y.  441,  7  N.  E. 
305.    See  §  299,  herein. 

355 


§  316      MUNICIPAL   LEGISLATION   OR   CONTRACTS — 

city  has  no  power,  either  inherent  or  derived  from  the 
legislature  to  confer  an  exclusive  privilege  to  construct 
and  operate  a  street  railway  within  its  limits  it  cannot 
validly  make  such  grant:  ''Any  grant  of  power  in  general 
terms  read  literally  can  be  construed  to  be  unlimited,  but 
it  may,  notwithstanding,  receive  limitation  from  its  pur- 
pose— from  the  general  purview  of  the  act  which  confers 
it."  ^^  Again,  a  city  cannot  in  the  absence  of  power 
grant  by  ordinance  a  franchise  in  perpetuity  or  exclusive 
franchise  to  a  street  railway  company  and  even  if  it  has 
such  power  it  may  be  precluded  by  a  constitutional  pro- 
vision prohibiting  the  "making  any  irrevocable  grant  of 
special  privileges  or  immunities."  In  Florida  it  has  been 
held  that,  under  the  statute  of  that  State  conferring 
upon  cities  a  general  control  over  streets,  a  city  has  no 
power  to  grant  an  exclusive  privilege  to  a  street  railway 
company  to  use  all  the  streets  for  the  construction  and 
operation  of  its  line  for  a  number  of  years.  °^  It  is  decided 
in  a  Missouri  case  that  the  city  of  St.  Louis  was  given 
no  power,  under  its  charter,  to  grant  to  a  street  railway 
company  an  exclusive  right  to  the  use  of  its  streets. ^^ 
A  grant  by  the  municipal  authorities  of  the  right  to  con- 
struct a  street  railway  to  be  operated  by  ''animal  power 
only,"  and  providing  that  the  city  shall  not,  for  a  period 
of  thirty  years,  grant  any  privileges  to  any  other  cor- 
poration "which  will  impair  or  destroy  the  rights  and 
privileges  herein  granted,"  has  been  held  not  to  preclude 
such  authorities  from  making  another  grant,  before  the 
expiration  of  the  time,  to  another  company,  of  the  right 
to  construct  a  street  railway  to  be  operated  by  other 
means  than  animal  power.^°    But  a  city  has  power  to 

w  Citizens'  St.  Ry.  Co.  v.  Detroit  Ry.,  171  U.  S.  48,  5.5,  43  L.  ed.  67, 
18  Sup.  Ct.  732. 

"  Birmingham  &  Pratt  Mines  St.  Ry.  Co.  v.  Birmingham  St.  Ry.  Co., 
79  Ala.  465,  58  Am.  Rep.  615;  Const.,  Art.  1,  §  23. 

'8  Florida  Central  &  P.  R.  Co.  v.  Ocala  St.  &  S.  R.  Co.,  39  Fla.  306,  22 
So.  692,  7  Am.  &  Eng.  R.  Cas.  (N.  S.)  686. 

"  Grand  Ave.  Ry.  Co.  v.  People's  Ry.  Co.,  132  Mo.  34,  33  S.  W.  472. 

««  Teachout  v.  Des  Moines  Broad  Gauge  St.  Ry.  Co.,  75  Iowa,  722,  38 
N.  W.  145. 

356 


PARTICULAR   INSTANCES  §  310 

grant  a  franchise  for  a  street  railway  along  a  street  upon 
which  there  is  a  street  railway  operated  under  an  exist- 
ing franchise,  when  the  charter  of  said  city  provides 
that  "no  exclusive  franchise  or  privilege  shall  be  granted 
for  the  use  of  any  street,  alley  or  highway  or  other  public 
place  or  any  part  thereof,"  and  all  ordinances  granting 
franchises  prior  to  the  adoption  of  such  charter  provider 
that  the  franchises  thereby  granted  shall  not  be  deemed 
exclusive.^ ^  And  the  exclusive  right  to  construct  and 
operate  a  horse  railway  in  a  city  is  not  infringed  by  con- 
structing a  road  in  the  same  city,  to  be  operated  by 
steam.^-  Again,  an  ordinance  granting  a  franchise  for  the 
construction  of  a  system  of  street  railways,  which  author- 
izes the  grantees  to  acquire  existing  railway  lines  and 
surrender  their  franchises,  for  the  purpose  of  operating 
a  new  system  under  the  proposed  franchise,  does  not 
violate  a  State  Constitution  prohibiting  monopolies  and 
trusts,  by  reason  of  the  fact  that  portions  of  the  existing 
lines  in  operation,  and  which  may  be  absorbed  under  the 
proposed  ordinance,  are  parallel  and  competing  lines, 
which  the  grantees  of  the  new  franchise  would  thus  be 
enabled  to  combine  and  consolidate.^^  WTiile  a  city  is 
exercising  legislative  power  delegated  to  it  by  the  State 
in  granting  franchises  to  street  railway  corporations  to 
use  and  occupy  city  streets,  still  they  are  not  grants  of 
corporate  powers  or  privileges  contrary  to  a  constitutional 
provision  prohibiting  the  enacting  of  any  special  or  private 
law  granting  corporate  powers  or  pri\aleges.  They  are 
not  franchises  essential  to  corporate  existence,  and 
granted  as  part  of  the  organic  act  of  incorporation,  but 
are  such  as  may  be  sold  and  assigned,  if  assignable,  or 
lost  by  forfeiture,  and  yet  not  thereby  affect  the  corporate 
existence  of  the  street  railway.^* 

8'  Wood  V.  City  of  Seattle,  23  Wash.  1,  62  Pac.  135,  52  L.  R.  A.  369. 

«2  Denver  &  S.  Ry.  Co.  v.  Denver  City  Ry.  Co.,  2  Colo.  673. 

"Wood  V.  City  of  Seattle,  23  Waah.  1,  62  Pac.  135,  52  L.  R.  A. 
369. 

"  Linden  Land  Co.  v.  Milwaukee  Electric  Ry.  &  Light  Co.,  107  Wis. 
493,  83  N.  W.  851. 

357 


§§  317,  318   MUNICIPAL   LEGISLATION    OR   CONTRACTS— 

§  317.  Telephone    Companies— Exclusive    Grants   or 
Privileges. 

Where  a  municipality  has  not  by  ordinance  or  contract 
attempted  to  give  an  exclusive  right  to  the  use  of  its 
streets  to  a  telephone  company  to  whom  it  had  granted 
an  easement  therein,  its  refusal  to  grant  the  same  rights 
to  another  telephone  company  under  its  charter  empower- 
ing it  to  authorize  or  prohibit  the  use  of  electricity  in  or 
upon  any  of  its  streets  would  not  raise  any  question  as 
to  the  violation  of  the  State  Constitution  prohibiting  the 
passing  of  any  law  granting  'Ho  any  citizen,  class  of  citi- 
zens, or  corporation  other  than  municipal,  privileges  or 
iimnunities  which,  upon  the  same  terms,  shall  not  equally 
belong  to  all  citizens  or  corporations."  ^^    But  a  franchise 
or  right  by  contract  given  by  a  city  to  a  telephone  com- 
pany for  the  exclusive  use  of  the  streets  for  a  period  of 
five  years  is  illegal  where  it  is  provided  by  statute  that 
no  council  shall  have  power  to  grant  to  any  person  ''an 
exclusive  right  of  exercising  within  the  municipality  any 
trade  or  calling,  or  to  impose  a  special  tax  on  any  person 
exercising  the  same,  or  to  require  a  license  to  be  taken 
out  for  exercising  the  same  unless  authorized  or  required 
by  statute  so  to  do."  «''    Again,  where  a  State  law  author- 
ized a  telephone  company  to  lay  conduits  in  the  streets 
of  any  city  in  which  it  maintained  its  lines,  providing  that 
such  conduits  or  ducts  should  not  interfere  with  the  ordi- 
nary use  of  the  streets  by  the  public,  and  that  their  con- 
struction should  be  subject  to  municipal  regulation  it 
was  held  that  the  company  had  no  right  to  lay  conduits  or 
ducts  for  its  exclusive  use  and  under  its  exclusive  control. ^^ 

§  318.  Telegraph  Companies— Exclusive  Grants. 

Although  it  is  not  within  the  power  of  a  State  to  grant 

•f*  State  (ex  rel.  Spokane  &  British  Columbia  Teleph.  &  Teleg.  Co.)  v. 
City  of  Spokane  (1901),  24  Wash.  53,  63  Pac.  1116.  See  American  Teleph. 
&  Teleg.  Co.  v.  Morgan  County  Teleph.  Co.,  138  Ala.  597,  36  So.  178. 
See  §292,  herein. 

«  Robinson,  In  re,  v.  City  of  St.  Thomas,  23  Ont.  Rep.  489. 

"  State,  Southern  N.  E.  Teleph.  Co.  v.  Tervers,  71  Conn.  657,  42  Atl. 
1083. 

358 


PARTICULAR   INSTANCES  §318 

an  exclusive  right  to  a  telegraph  company  as  against  a 
corporation  deriving  its  rights  under  an  act  of  Congress,®* 
still  the  principles  of  the  common  law  are  operative  upon 
all  interstate  commercial  transactions  except  so  far  as 
they  are  modified  by  congressional  enactment,  and  this 
applies  to  telegraph  companies;  ®^  and  exclusive  franchises 
may  be  conferred  upon  individuals  or  corporations  by 
the  legislature  where  no  restriction  upon  this  power  is 
imposed  by  the  State  Constitution  except  as  to  particular 
privileges  specified  therein.™  Again,  where  the  Constitu- 
tion of  a  State  empowers  the  legislature  to  grant  exclusive 
privileges  and  franchises  for  a  limited  period,  it  is  de- 
clared that  no  serious  question  can  arise  but  that  such 
State  possesses  the  absolute  right  to  confer  such  priv- 
ileges upon  a  telegraph  corporation  created  by  it  to  con- 
struct and  operate  its  lines  within  its  borders;  that  the 
exclusiveness  of  a  privilege  often  constitutes  the  only 
inducement  for  corporate  undertakings;  that  it  has  been 
a  common  practice  in  all  the  States  to  encourage  enter- 
prises having  for  their  object  the  promotion  of  the  pub- 
lic good,  such  as  the  construction  of  bridges,  turnpikes, 
railroads,  and  canals,  by  granting,  for  limited  periods, 
exclusive  privileges  in  connection  with  them;  and  that 
such  rights  so  far  from  being  encroachments  upon  any 
rights  or  powers  of  the  United  States  are  held  to  constitute 
contracts  within  the  protection  of  the  Federal  Constitu- 
tion.''^ An  agreement  between  a  State,  which  is  the 
owner  of  a  railroad,  and  a  telegraph  company,  by  which 

•wPensacola  Teleg.  Co.  v.  WeBtem  Union  Teleg.  Co.,  96  U.  S.  1,  24  L. 
ed.  708.    See  §  292,  herein. 

M  Western  Union  Teleg.  Co.  v.  Call  Pub.  Co.,  181  U.  S.  92,  101,  102, 
45  L.  ed.  765,  21  Sup.  Ct.  561,  per  Mr.  Justice  Brewer,  a  case  as  to  unjust 
discrimination  in  charges.  The  telegraph  company  claimed  that  the 
services  it  rendered  wore  a  matter  of  interstate  commerce,  over  which 
Congress  had  sole  jurisdiction  with  the  right  to  alone  prescribe  rules  and 
regulations;  that  Congress  had  not  prescribed  any  regulations;  that  there 
was  no  national  common  law;  that  the  statute  or  common  law  of  the  State 
was  wholly  immaterial. 

'«  California  State  Teleg.  Co.  v.  Alta  Teleg.  Co.,  22  Cal.  398. 
"  Pensacola  Teleg.  Co.  v.  Western  Union  Teleg.  Co.,  96  U.  S.  1,  16,  24 
L.  ed.  708,  per  Mr.  Justice  Field  in  dissenting  opinion. 

359 


§§  319-321   MUNICIPAL  LEGISLATION   OR   CONTRACTS — 

the  latter  agrees  to  erect  and  equip  a  line  of  telegraph, 
upon  poles  already  in  place,  to  be  used  entirely  by  the 
State,  the  cost  of  the  line  and  equipment,  wherever  it  is 
not  already  in  place,  to  be  paid  by  the  State,  sunply  gives 
the  State  the  exclusive  use  of  such  hne,  the  ownership 
being  in  the  telegraph  company.'^^ 

§  319.  Toll  Bridges— Exclusive  Grants. 

A  grant  of  a  right  to  erect  and  keep  up  a  toll  bridge 
to  the  exclusion  under  penalty  of  all  other  bridges  or 
ferries  within  a  certain  distance  does  not  preclude  a  grant 
to  a  railroad  company  of  a  right  to  carry  passengers  over 
their  bridge  even  though  said  bridge  is  within  the  pro- 
hibited limits." 

§  320.  Toll  Roads— Municipal  Grant— Monopoly. 

An  ordinance  of  a  police  jury  of  a  parish  authorizing  a 
plank  road  company  to  construct,  maintain  and  operate 
a  toll  road  in  the  parish  upon  the  site  of  a  free  road  or 
pubUc  highway  which  was  then  and  had  been  for  many 
years  a  toll  road  does  not  contravene  a  constitutional 
provision  as  conferring  a  monopoly  upon  said  company.'^'* 

§  321.  Toll  Wharf— Exclusive  Grant. 

The  legislature  may  grant  to  a  single  individual  or 
association  the  exclusive  right  to  erect  and  keep  a  public 
toll  wharf  wdthin  certain  prescribed  limits,  as  such  an 
improvement  is  beneficial  to  the  public.'^ 

"  Western  Union  Teleg.  Co.  v.  Atlantic  R.  Co.,  91  U.  S.  283,  23  L.  ed. 
350. 

"  McRee  v.  Wilmington  &  Raleigh  Rd.  Co.,  47  N.  C.  186.  See  also 
Washington  Toll  Bridge  Co.  v.  Commissioners  of  Beaufort,  81  N.  C.  491. 

Toll  bridges;  legislature  may  grant  franchises  for.  See  Joyce  on  Franchises, 
§  145. 

Toll  bridges;  power  of  police  juries  over.    See  Joyce  on  Franchises,  §  201. 

''*  St.  Joseph  Plank  Road  v.  Kline,  106  La.  325,  30  So.  854;  Const.,  Art. 
48. 

"  Martin  v.  O'Brien,  34  Miss.  21,  nor  contrary  to  Const.,  Art.  1,  §  1, 
"that  no  man  or  set  of  men  are  entitled  to  exclusive,"  etc.,  privileges. 

As  to  right  of  exclusive  occupation  of  wharf  and  public  use  thereof.  See 
Thousand  Islands  Steamboat  Co.  v.  Visgar,  83  N.  Y.  Supp.  325,  86  App. 
Div.  126.    See  Davidson,  The  (U.  S.  D.  C),  122  Fed.  1006. 

360 


PARTICULAR   INSTANCES  §§  322,  323 

§  322.  Union  Label  on  City  Printing. 

A  city  has  no  power  to  pass  an  ordinance  requiring  all 
city  printing  to  bear  a  union  label,  where  such  an  ordi- 
nance is  clearly  in  conflict  with  the  spirit,  purpose  and 
letter  of  the  charter.  It  is  also  void  as  class  legislation, 
contrary  to  public  policy  and  the  Constitution  because 
plainly  discriminative  in  its  character:  such  ordinances 
tend  to  create  a  monopoly,  are  class  legislation,  discrimi- 
native in  their  character;  they  prevent  parties  from  an 
equal  enjoyment  of  their  property  and  business  and  de- 
prive persons  of  their  property  rights,  in  violation  of 
the  Constitution,  by  restricting  trade  and  the  free  use  of 
property  on  equal  terms  with  others.^^  And  a  municipal 
corporation  has  no  power  to  adopt  an  ordinance  provid- 
ing that  all  of  a  designated  kind  of  work  shall  be  given 
exclusively  to  persons  of  a  specified  class,  even  though  it 
is  not  required  by  its  charter  to  let  contracts  for  public 
work  to  the  lowest  bidders,  and  though  clothed  as  to  such 
matters  with  the  broadest  discretionary  powers.  Such 
an  ordinance  tends  to  encourage  monopoly  and  defeat 
competition,  is  ultra  vires  and  illegal,  and  all  contracts 
made  in  pursuance  thereof  are  void.''  Nor  can  a  board 
of  supervisors  require  bidders  on  a  printing  contract  to 
use  a  union  label,  as  such  a  requirement  is  unlawful  and 
against  pubUc  poUcy  as  tending  to  create  a  monopoly 
by  restricting  competition  to  a  certain  class  of  printers."^ 

§  323.  Requirement  That  Only  Union  Labor  or  Union 
Shops  Be  Employed— Award  of  Contract. 

A  city  cannot  by  ordinance  require  that  only  union 
labor  be  employed  upon  public  improvements  as  such 
requirement  restricts  competition,  discriminates  between 
classes  of  citizens  and  increases  the  art  of  the  work,  espe- 

«  Marshall  &  Bruce  Co.  v.  City  of  Nashville,  109  Tenn.  495,  71  S.  W. 
815.    The  court  cites  and  considers  numerous  cases. 

"  Atlanta,  City  of,  v.  Stein,  HI  Ga.  789,  36  S.  E.  932,  51  L.  R.  A.  335; 
case  of  "  an  ordinance  requiring  the  union  label  of  the  Allied  Printing 
Trades  Council  on  all  city  printing." 

"  People  ex  rel.  Single  Paper  Co.,  Ltd.,  v.  Edgcorab.  98  N.  Y.  Supp.  965, 
112  App.  Div.  604. 

361 


§§  324,  325  MUNICIPAL  legislation  or  contracts — 

cially  so  where  by  the  Constitution  and  laws  of  the  State 
any  man  has  the  right  to  employ  a  workman  to  perform 
labor  for  him  whether  such  workmen  are  or  are  not 
members  of  a  labor  union  and  any  workman  has  the 
right  to  contract  for  the  performance  of  labor  irrespective 
of  the  question  of  whether  or  not  he  belongs  to  a  labor 
union. ^^  So  a  city  had  no  power  to  adopt  a  resolution 
which  restricts  the  rights  of  the  public  and  tends  to  a 
limitation  of  the  general  right  of  the  city  officials  to  con- 
tract for  printing,  where  such  resolution  excludes  all 
persons  or  corporations  from  contracting  with  the  city, 
not  of  a  specified  class,  and  such  fact  tends  to  create  a 
monopoly.^"  Nor  can  a  city  validly  provide  by  ordinance 
that  contracts  for  city  printing  be  awarded  to  a  specified 
class  such  as  union  shops  only,  as  such  an  ordinance 
tends  to  create  a  monopoly.^^ 

§  324.  Warehouses— Monopoly. 

A  monopoly  in  the  warehouse  business  in  a  locality  is 
not  shown  by  the  fact  that  the  business  was  restricted 
to  locations  upon  the  lands  of  a  railway  company,  when 
it  further  appears  that  for  years  various  persons  owned 
and  operated  warehouses  thereon,  among  them  one  of  the 
plaintiffs,  and  that  the  right  was  open  to  the  plaintiffs 
to  engage  in  the  business  upon  the  same  terms  and  with 
like  facilities  as  were  enjoyed  by  existing  warehouses.^^ 

§  325.  Waterworks  or  Water  Supply— Power  of  Mu- 
nicipality. 

It  is  held  that  the  erection  of  waterworks  to  supply 
a  city  and  its  inhabitants  with  water  is  one  of  the  legiti- 

7»  Fiske  V.  The  People  ex  rel.  Raymond,  188  111.  206,  58  N.  E.  985,  52 
L.  R.  A.  291,  work  was  curbing,  grading,  etc.,  of  streets  or  avenues. 

«>  Paterson  Chronicle  Co.  v.  Mayor,  etc.,  of  Paterson,  66  N.  J.  L.  129, 
48  Atl.  589.  Printing  limited  to  offices  and  newspapers  recognizing  the 
Typographical  Union,  etc. 

"  Holden  v.  City  of  Alton,  179  111.  318,  53  N.  E.  556. 

82  Northwestern  Warehouse  Co.  v.  Oregon  Railway  &  Navigation  Co., 
32  Wash.  218,  73  Pac.  388;  Const.  Wash.,  Art.  12,  §  22,  quoted  under  §  259, 
herein. 

362 


PARTICULAR    INSTANCES  §  320 

mate  and  ordinary  powers  of  a  municipal  corporation  and 
the  exercise  of  this  power  within  the  limits  of  its  charter 
needs  no  enabling  act  by  the  legislature.^^  But  it  is  also 
decided  that  a  municipality  has  no  implied  power  from 
the  mere  fact  of  its  creation  to  engage  in  the  business  of 
supplying  its  citizens  with  water  for  pay.  It  cannot  do 
so  except  by  express  legislative  authority. ^^  Although 
an  attempt  by  a  city  to  make  exclusive  a  franchise  for 
waterworks  may  be  invalid,  still  the  valid  part  of  the 
grant  may  be  enforced.^^ 

§326.  Waterworks  or  Water  Supply— Exclusive  Right 
of  Municipality  and  of  Private  Corporation  Distin- 
guished. 

An  exclusive  right  in  a  municipal  corporation  to  operate 
waterworks  is  distinguished  from  such  an  exclusive  right 
lield  by  a  private  corporation,  in  this,  that  in  the  former 
case  the  right  is  exercised  by  and  for  the  people,  not 
for  profit  but  for  the  public  welfare,  and  the  correction  of 
its  oppressions  and  abuses  of  its  management  is  in  their 
hands;  while  in  the  latter  case,  the  right  is  exercised  for 
private  gain,  with  every  incentive  to  oppress  those  who, 
under  a  contract  giving  an  exclusive  right  or  monopoly 
to  a  water  company  to  furnish  a  city  with  water  for  a 
term  of  years,  would  be  powerless  to  relieve  themselves 
if  the  contract  should  be  held  valid.^^  While  a  munic- 
ipal corporation,  being  a  mere  agent  of  the  State,  stands 

"  Memphis,  City  of,  v.  Memphis  Water  Co.,  5  Heisk.  (52  Tenn.)  495. 
See  §  328,  herein. 

Powers  of  municipal  corporations;  monopolies,  etc.    See  §§  277-281,  herein. 

8*  White  V.  City  of  Meadville,  177  Pa.  St.  643,  35  Atl.  695.  See  §  328, 
herein. 

Franchise  to  construct  waterworks  can  be  conferred  only  through  direct  or 
delegated  authority  from  the  State,  and  it  is  quasi-public  in  its  nature.  Wash- 
bum  Waterw'orks  Co.  v.  City  of  Washburn,  129  Wis.  73,  80,  108  N.  W. 
194,  per  Kcrwin,  J. 

8s  Gadsden,  City  of,  v.  Mitchell,  145  Ala.  137,  40  So.  557.  See  Cedar 
Rapids  Water  Co.  v.  City  of  Cedar  Rapids,  118  Iowa,  234,  91  N.  W.  1031. 

«« Brenham,  City  of,  v.  Brenham  Water  Co.,  67  Te.x.  542,  4  S.  W.  143, 
distinguished  in  Waco  Water  &  Light  Co.  v.  City  of  Waco  (Tex.  Civ.  App., 
1894),  27  S.  W.  675.  See  also  Altgeit  v.  City  of  San  Antonio,  81  Tex.  436, 
17  S.  W.  75. 

363 


§§  327,  328   MUNICIRAL   LEGISLATION   OR   CON'TOACTS— 

in-  its  governmental  or  public  character,  in  no  contract 
relation  wdth  its  sovereign,  at  whose  pleasure  its  charter 
may  be  amended,  changed  or  revoked  without  the  im- 
pau'ment  of  any  constitutional  obligation,  still  such  a 
corporation  in  respect  of  its  private  or  proprietary  rights 
and  interests,  may  be  entitled  to  constitutional  protec- 
tion.^^ 

§  327.  Waterworks  or  Water  Supply— Grant  by  State 
of  Exclusive  Privilege  or  Monopoly. 

The  State  legislature  has  the  power  in  the  absence  of 
a  constitutional  provision  forbidding  it,  to  grant  an 
exclusive  privilege  to  a  city  or  to  a  water  company  for 
a  long  period  of  time  to  erect  waterworks  and  such  grant 
is  not  a  monopoly.^^  And  the  right  to  dig  up  and  use 
the  streets  and  alleys  of  New  Orleans  for  the  purpose 
of  placing  pipes  and  mains  to  supply  the  city  and  its 
inhabitants  with  water  is  a  franchise  belonging  to  the 
State,  which  she  could  grant  to  such  persons  or  corpora- 
tions, and  upon  such  terms,  as  she  deemed  best  for  the 
public  interests,  and  as  the  object  to  be  attained  was  a 
public  one,  for  which  the  State  could  make  provision  by 
legislative  enactment,  the  grant  of  the  franchise  could 
be  accompanied  with  such  exclusive  privileges  to  the 
grantee,  in  respect  of  the  subject  of  the  grant,  as  in  the 
judgment  of  the  legislative  department  would  best  pro- 
mote the  public  health  and  the  public  comfort,  or  the 
protection  of  public  and  private  property .^^ 

§  328.  Waterworks  or  Water  Supply— Grant  by  Mu- 
nicipality of  Exclusive  Right  or  Monopoly. 

It  is  held  that  a  city  may,  without  violating  a  constitu- 
tional   provision    against   perpetuities    and   monopolies, 

«'  New  Orleans  v.  New  Orleans  Waterworks  Co.,  142  U.  S.  79,  12  Sup. 
Ct.  142,  35  L.  ed.  943. 

8«  Memphis,  City  of,  v.  Memphis  Water  Co.,  5  Heisk.  (52  Tenn.)  495. 
Duration  of  grant  was  thirty  years. 

89  New  Orleans  Waterworks  Co.  v.  Rivers,  115  U.  S.  674,  679,  680,  29 
L.  ed.  525,  6  Sup.  Ct.  273;  per  Harlan,  J.,  case  controlled  by  New  Orleans 
Gas  Co.  V.  Louisiana  Light  Co.,  115  U.  S.  650,  29  L.  ed.  516,  6  Sup.  Ct.  252. 

364 


PARTICULAR   LNSTANCES  §  328 

grant  by  ordinance  a  privilege  to  a  water  company  of 
constructing  and  operating  waterworks  within  the  city 
in  order  to  supply  the  public  and  the  city  with  water  for 
a  long  period  of  tiine.^'^  And  the  laws  of  Mississippi,  as 
construed  by  its  highest  court,  do  not  prevent  a  munic- 
ipality from  granting  an  exclusive  water  supply  franchise 
for  a  limited  period  during  which  it  cannot  erect  and 
operate  its  own  water  system;  and  under  the  constitu- 
tional limitation  that  the  legislative  power  to  alter, 
amend  and  repeal  charters  of  corporations  must  be 
exercised  so  that  no  injustice  shall  be  done  to  stock- 
holders, an  act  of  the  legislature  authorizing  the  munic- 
ipality to  erect  its  own  water  system  would  not  amount 
to  repealing  the  exclusive  features  of  an  existing  legal 
franchise.^ ^  But  it  is  also  decided  that  an  exclusive 
right  granted  by  a  city  to  a  water  company  which  would 
cut  off  future  competition  in  supplying  the  city  with  water 
for  a  long  period  of  time  tends  to  enhance  the  price  of 
an  article  of  necessity  and  constitutes  a  monopoly.^- 

It  is  also  held  that  a  municipal  corporation  could  bind 
itself  by  such  contracts  only  as  it  was  authorized  by  statute 
to  make.  It  has  no  power  to  grant  exclusive  privileges 
to  put  mains,  pipes  and  hydrants  in  its  streets,  nor  can 
it  lawfully,  by  contract,  deny  to  itself  the  right  to  exer- 
cise the  legislative  powers  vested  in  its  common  council. 
In  dealing  ^vith  municipal  corporations  parties  are  charge- 
able with  knowledge  of  their  powers.^^  So,  under  a  North 
Carolina  decision,  a  city  ordinance  or  contract  attempting 
to  grant  any  exclusive  privilege  for  the  construction  of 
waterworks  and  to  use  its  streets  for  any  purpose  is 
within  a  constitutional  prohibition  against  monopolies 
and  perpetuities  even  though  such  grant  be  made  as  an 

9«  Bartholomew  v.  City  of  Austin,  85  Fed.  359,  29  C.  C.  A.  568. 

"  Vicksburg  v.  Vicksburg  Waterworks  Co.,  202  U.  S.  453,  50  L.  ed.  1102, 
26  Sup.  Ct.  660. 

"2  Brenham,  City  of,  v.  Brenham  Water  Co.,  67  Tex.  542,  4  S.  W.  143. 
Period  was  twenty-five  years.  See  Altgelt  v.  City  of  San  Antonio,  81  Tex. 
436,  17  S.  W.  75. 

"  Syracuse  Water  Co.  v.  City  of  Syracuse,  116  N.  Y.  167,  22  N.  E.  381, 
26  N.  Y.  St.  R.  364. 

365 


§  329      MUNICIPAL   LEGISLATION    OR   CONTRACTS — 

incentive  or  inducement  to  the  establishment  and  main- 
tenance of  works  contributing  to  the  health,  comfort  or 
convenience  of  the  pubhc.^^  And  it  is  decided  in  Mon- 
tana that  a  city  council  cannot  grant  an  exclusive  right 
to  a  water  company  to  sell  to  the  city  all  the  water  it 
needs  for  certain  purposes  for  a  long  period  of  time  as 
such  a  grant  creates  a  monopoly.^^ 

§  329.  Waterworks  or  Water  Supply— Instances  of 
Valid  Contracts  by  Municipality— Exclusive  Privilege  or 
Monopoly. 

An  agreement  by  a  city  to  pay  the  taxes  assessed 
against  the  property  of  a  water-supply  company,  in  ex- 
cess of  a  certain  amount  as  part  of  the  consideration  of 
a  supply  of  water,  is  not  invalid  on  the  ground  that  it 
gives  the  particular  company  an  advantage  over  similar 
companies  that  might  wish  to  do  business  in  the  city, 
and,  therefore,  tends  to  create  a  monopoly.^^  "The 
proposition,  boldly  stated,  gets  down  to  this:  The  plain- 
tiff has  made  a  contract  with  the  city  on  terms  so  favor- 
able that  other  companies  cannot  compete  with  it.  If 
this  constitutes  a  monopoly,  the  courts  will  be  under 
the  duty  of  scrutinizing  contracts  with  municipalities 
with  great  care.  We  cannot  assent  to  the  views  of  coun- 
sel in  respect  to  this  claim;  no  exclusive  rights  were 
conferred  upon  the  plaintiff.  The  city  was  authorized 
to  contract  for  a  water  supply.  To  the  extent  that  the 
contract  of  the  city  to  take  its  supply  of  water  from  the 
plaintiff,  and  pay  for  it,  gave  the  plaintiff  an  advantage 
over  others  desiring  to  do  business  of  a  like  nature,  it 
is  a  necessary  and  legitimate  result  of  the  right  of  con- 
tract." ^^  A  contract,  however,  with  a  city  for  a  water 
supply  for  a  term  of  years  but  which  does  not  exclude 
the   city   from   contracting   with   others   for   additional 

9^  Ttirift  V.  Elizabeth  City,  122  N.  C.  31,  30  S.  E.  349,  44  L.  R.  A.  427. 
«  Davenport  v.  Kleinschmidt,  6  Mont.  502,  13  Pac.  249. 
=»«  Luddington  Water  Supply  Co.  v.  City  of  Luddington,  119  Mich.  480, 
6  Det.  L.  N.  891,  78  N.  W.  558. 
"  Id.,  489,  490,  per  Montgomery,  J. 

366 


PARTICULAR   INSTANCES  §  330 

water  supply  nor  affect  the  rights  of  other  persons  to 
supply  water  to  the  inhabitants  of  the  city  does  not 
create  a  monopoly.^*' 

In  a  suit  in  the  Federal  Supreme  Court  there  was 
involved  the  constitutionality  of  a  city  ordinance  fixing 
the  water  rates  to  be  charged  and  collected  by  a  water 
company;  prior  thereto  the  city  had  made  a  contract 
with  a  water  company  which  was  ratified  by  the  legis- 
lature and  it  was  urged  that  said  enactment  violated  the 
constitutional  provision  of  the  State  permitting  the  forma- 
tion of  corporations  under  general  laws  but  prohibiting 
their  creation  by  special  act  except  for  municipal  pur- 
poses. The  court  considered  this  point  at  some  length, 
and  determined  that,  at  the  time  of  making  the  contract 
and  of  the  subsequent  passage  of  the  ratifying  act,  it  was 
established  by  the  decisions  of  the  highest  court  of  the 
State  wherein  the  contract  was  made  that  the  State 
Constitution  permitted  a  grant  of  special  franchises  to 
persons  and  corporations,  and  permitted  the  latter  to 
receive  assignments  of  them  from  such  persons  or  grants 
of  them  directly  from  the  legislature;  that  this  law  en- 
tered into  the  contract  in  question  as  confirmed  by  the 
subsequently  enacted  statute  and  could  not  be  affected 
by  subsequent  decisions,  although  the  court  stated  that 
the  subsequent  decisions  had  not  been  uniform  it  declined 
to  reconcile  them.^^ 

§  330.  Waterworks  or  Water  Supply— Instances  of 
Void  Contracts — Exclusive  Privilege  or  Monopoly. 

The  right  to  furnish  water  for  public  and  domestic 
use  within  a  city  is  a  public  service  and  should  at  all 
times  remain  open  to  the  control  of  the  city  council  for 
the  benefit  of  the  public.  And  a  contract  which  would 
place  the  matter  beyond  the  control  of  the  city  council 

<»  Waco  Water  &  Light  Ck).  v.  City  of  Waco  (Tex.  Civ.  App.,  1894),  27 
S.  W.  675. 

»» Los  Angeles  v.  Los  Angeles  City  Water  Co.,  177  U.  S.  558,  571-576, 
44  L.  ed.  886,  20  Sup.  Ct.  736,  case  affirms  Los  Angeles  City  Water  Co.  v. 
City  of  Los  Angeles  (U.  S.  C.  C),  88  Fed.  720. 

367 


§  330      MUNICIPAL   LEGISLATION   OR   CONTRACTS — 

for  a  long  period  of  time,  is  in  the  nature  of  an  attempt 
to  create  a  monopoly,  a  power  which  the  city  council 
never  possesses  except  when  delegated  in  clear,  unmis- 
takable terms.  ^  So  a  grant  by  ordinance  of  an  exclusive 
right  to  furnish  all  the  water  required  for  municipal  pur- 
poses at  a  minimum  rate  fixed  in  the  contract  for  a  long 
period  of  time,  and  which  right  is  in  effect  such  that  it 
cannot  be  abridged  by  any  other  person  no  matter  at 
what  rate  or  on  what  terms,  within  said  period,  he  may 
wish  to  supply  the  city  with  water,  constitutes  a  monop- 
oly which  the  city  has  no  power  to  grant  notwithstanding 
the  grant  does  not  exclude  others  from  selling  water  to 
private  citizens.^  And  an  exclusive  privilege  granted  to 
a  water  company  by  a  city  by  a  contract  binding  itself 
not  to  grant  the  same  right  to  any  other  person  during 
a  certain  number  of  years,  said  contract  to  continue 
without  limit  after  the  expiration  of  said  period  unless 
terminated  by  the  election  of  the  city  to  purchase,  con- 
stitutes a  '^ perpetuity  or  monopoly."  ^  Again,  an  agree- 
ment of  a  county  made  with  a  certain  person  to  grant 
him  an  exclusive  right  of  way  to  lay  piping  for  supplying 
a  town  with  water  is  within  a  constitutional  prohibition 
against  creating  monopolies  even  though  such  agreement 
together  with  the  obligation  to  pay  a  specified  sum  of 

1  Illinois  Trust  &  Savings  Bank  v.  Arkansas  City  Water  Co.  (U.  S.  C.  C), 
67  Fed.  196,  citing  the  following  cases. 

United  Stales:  Wright  v.  Nagle,  101  U.  S.  791,  25  L.  ed.  921;  Minturn 
V.  Lame,  23  How.  (64  U.  S.)  435,  16  L.  ed.  574;  Omaha  Horse  R.  Co.  v. 
Cable  Tramway  Co.  (U.  S.  C.  C),  30  Fed.  324;  Saginaw  GasUght  Co.  v. 
City  of  Saginaw  (U.  S.  C.  C),  28  Fed.  529,  540;  Jackson  County  Horse 
R.  Co.  V.  Interstate  Rapid  Transit  Ry.  Co.  (U.  S.  C.  C),  24  Fed.  306. 

Illinois:  Chicago,  City  of,  v.  Kumpff,  45  111.  90. 

Iowa:  Logan  v.  Pyne,  43  Iowa,  524. 

Michigan:  Gale  v.  Village  of  Kalamazoo,  23  Mich.  344. 

Minnesota:  Long  v.  City  of  Duluth,  49  Minn.  280,  51  N.  W.  913. 

New  York:  Richmond  County  Gaslight  Co.  v.  Town  of  Middletown, 
59  N.  Y.  228. 

Ohio:  State  v.  Cincinnati  GasUght  &  Coke  Co.,  18  Ohio  St.  262. 

2  Davenport  v,  Kleinschmidt,  6  Mont.  502,  13  Pac.  249.  Period  of  du- 
ration of  grant  was  twenty  years. 

3  Hartford  Fire  Ins.  Co.  v.  City  of  Houston  (Tex.  Civ.  App.,  1908),  110 
S.  W.  973. 

368 


PARTICULAR   INSTANCES  §§  331-333 

money  constituted  the  consideration  of  a  contract  with 
the  county  whereby  works  were  to  be  erected  for  supply- 
ing water  for  county  purposes.  "* 

§  331.  Waterworks  or  Water  Supply— When  no  De- 
fense That  Contract  Creates  Monopoly. 

It  is  no  defense  by  a  city  that  its  contract  with  a  water 
company  created  a  monopoly  where  the  former  has  re- 
ceived, in  settlement  of  its  suit  against  the  water  com- 
pany for  loss  of  its  property  by  fire  occasioned  by  failure 
to  furnish  water  to  extinguish  it,  moneys  to  indemnify 
insurance  companies  for  moneys  paid  by  them  on  loss  of 
the  property,  as  such  payment  will  be  held  as  money 
received  for  the  benefit  of  such  insurance  companies,  and 
the  illegality  of  the  contract  cannot  be  availed  of  where 
the  case  stands  against  the  city  irrespective  of  the  claimed 
illegal  contract.^ 

§  332.  Injunction  Restraining  Municipality — Water 
System. 

It  is  a  valuable  feature  of  equity  jurisdiction  to  antic- 
ipate and  prevent  threatened  injury,  and  an  injunction 
may  properl}^  be  issued  to  restrain  a  municipality  from 
erecting  its  own  water  system  during  the  continuance  of 
an  exclusive  franchise  owned  by  a  water  company.^ 

§  333.  Contract  with  State  Water  Company— Consti- 
tutional Law — Due  Process. 

Where  the  charter  of  a  water  company  is  not  exclu- 
sive, and  is  subject  to  repeal,  alteration  or  amendment 
at  the  will  of  the  legislature,  no  deprivation  of  property 
without  due  process  of  law  or  impairment  of  the  obli- 
gation of  a  contract  can  arise  from  an  act  of  the  legis- 
lature empowering  the  city  to  erect  its  own  waterworks. 
Where  the  legislature  of  a  State  authorizes  a  city  to  erect 
its  own  waterworks,  but  on  condition  that  it  purchases 

«  Edwards  County  v.  Jennings,  89  Tex.  618,  35  S.  W.  1053. 

s  Hartford  Fire  Ins.  Co.  v.  City  of  Houston,  102  Tex.  317,  116  S.  W.  36, 
reversing  (Tex.  Civ.  App.,  1908),  110  S.  W.  973. 

«  Vicksburg  v.  Vicksburg  Waterworks  Co.,  202  U.  S.  453,  50  L.  ed.  110'2, 
26  Sup.  Ct.  660. 

24  369 


§§  334,  335  MUNICIPAL  legislation  or  contracts — 

the  plant  of  a  company  then  supplying  it,  at  a  valuation 
to  be  fixed  by  judicial  proceedings  as  provided  in  the  act, 
and  the  water  company  institutes  proceedings  under  the 
act,  it  cannot  thereafter  claim  that  because  certain  in- 
corporeal rights,  franchises  and  possible  future  profits 
were  not  allowed  for  in  fixing  the  valuation,  that  its 
property  was  taken  without  due  process  of  law,  and, 
changing  its  position,  cause  its  voluntary  acceptance  to 
become  an  involuntary  one  in  order  to  assail  the  con- 
stitutionaUty  of  the  legislation  in  question.'^ 

§  334.  Waterways— Exclusive  Right  to  Collect  Tolls — 
Monopoly. 

A  statute  which  relates  to  the  excavation  of  public 
waterways  and  creates  liens  upon  the  State  tide  lands 
filled  in  under  contract,  is  not  invalid  or  contrary  to  a 
constitutional  provision  prohibiting  monopolies  and  the 
granting  of  special  privileges  to  any  citizen,  by  reason  of 
that  part  of  the  act  granting  to  the  waterway  company 
the  exclusive  right  to  control  the  waterway  and  collect 
tolls,  where  such  provision  is  a  separable  part  of  the  act, 
and,  if  it  fails,  it  does  not  affect  such  portion  of  the  act 
as  relates  to  certificates  and  liens  for  the  improvements.^ 

§  335.  Consolidation  of  Corporations— Exclusive  Priv- 
ileges— Monopoly.^ 

As  we  have  stated  elsewhere  it  is  a  general  proposition 
that  all  contracts  and  agreements,  of  every  kind  and  char- 
acter, made  and  entered  into  by  those  engaged  in  an 
employment  or  business  impressed  with  a  public  char- 
acter, which  tend  to  prevent  competition  between  those 
engaged  in  like  employment,  are  opposed  to  the  public 
policy  of  the  State  and  are  therefore  unlawful,  all  agree- 
ments and  contracts  tending  to  create  monopolies  and 
prevent   proper   competition   are  by   the   common   law 

^  Newburyport  Water  Co.  v.  Newburyport,  193  U.  S.  561,  48  L.  ed.  795, 
24  Sup.  Ct.  553. 

« Seattle  &  Lake  Washington  Waterwaj^  Co.  v.  Seattle  Dock  Co.,  35 
Wash.  503,  77  Pac.  845;  Const.,  Art.  1,  §  12,  and  Art.  12,  §  22. 

9  Se*»  §§  390  et  seq.,  herein. 

370 


PARTICULAR   INSTANCES  §  335 

illegal  and  void,  and  a  State  Constitution  which  provides 
that  the  general  assembly  shall  pass  no  local  or  special 
law  for  ''granting  to  any  corporation,  association  or 
individual  any  special  or  exclusive  privilege  or  franchise 
whatever,"  ^°  is  a  clear  declaration  that  the  public  policy 
of  such  State  is  opposed  to  all  exclusive  and  monopolistic 
franchises  and  powers,  of  whatever  kind  or  character, 
and  this  applies  to  contracts  whereby  one  corporation 
attempts  to  acquire  control  of  another  corporation, 
coupled  with  a  pretended  purchase  of  the  stock  of  the 
latter,  and  such  contracts  are  mere  nullities  and  the 
title  to  such  stock  never  passed  from  the  sellers.  ^^  So 
the  privilege  conferred  by  an  act  authorizing  the  consoli- 
dation of  a  railroad  company  with  any  street  surface 
railroad  company  although  exceptional,  is  not  an  exclu- 
sive one  within  a  constitutional  prohibition  against  the 
grant  of  exclusive  privileges,  etc.,  to  any  corporation.^^ 
And  a  statute  authorizing  the  consolidation  of  gas  com- 
panies is  not  within  the  prohibition  of  the  Constitution  of 
Illinois. ^^  But  the  consolidation  of  street  railroads  has 
been  held  to  create  an  illegal  monopoly  when  made  in 
violation  of  the  New  York  stock  corporation  law.^^ 

'     10  Section  22,  Art.  4,  Const.  1870  of  111. 

"  Dunbar  v.  American  Teleph.  &  Teleg.  Co.,  238  lU.  456,  486,  487,  87 
N.  E.  521.    See  also  the  following  cases: 

Illinois:  Distilling  &  Cattle  Feeding  Co.  v.  People  ex  rel.  Maloney,  156 
111.  448,  41  N.  E.  188;  Ford  v.  Chicago  Milk  Shippers'  Assoc,  155  111.  166, 
39  N.  E.  651. 

Michigan:  Attorney  General  ex  rel.  Wolverine  Fish  Co.  v.  A.  Booth  & 
Co.,  143  Mich.  89,  106  N.  W.  868;  Richardson  v.  Buhl,  77  Mich.  632,  43 
N.  W.  1102. 

New  Jersey:  Compare  Trenton  Potteries  Co.  v.  Oliphant,  58  N.  J.  Eq. 
507,  43  Atl.  723. 

New  York:  People  v.  Milk  Exchange,  145  N.  Y.  267,  39  N.  E.  1062. 

Rhode  Island:  Compare  Oakdale  Manufacturing  Co.  v.  Jarst,  IS  R.  I. 
484,  28  Atl.  973. 

Texas:  San  Antonio  Gas  Co  .v.  State,  22  Tex.  Civ.  App.  118,  54  S.  W.  289. 

"  Bohmer  v.  Haffen,  161  N.  Y.  390,  55  N.  E.  1047,  afif'g  54  N.  Y.  Supp. 
1030,  35  App.  Div.  381;  Const.,  Art.  3,  §  18. 

"  People  V.  People's  Gaslight  &  Coke  Co.,  205  111.  482,  98  Am.  St. 
Rep.  244,  68  N.  E.  950;  Const.  Art.  4,  §  22. 

^*  Continental  Securities  Co.  v.  Interborough  Rapid  Transit  Co.  (U.  S. 
C.  C),  165  Fed.  946. 

371 


§336 


POWER  OF  STATE- 


CHAPTER    XXII 


POWER   OF   STATE — POLICE    POWER   GENERALLY 


336.  Police  Power  of  State — Re- 

straining   Right    of    Con- 
tract Generally.  §  34L 

337.  Police  Power  of  State — As  to 

Contracts   and   Combina- 
tions in  Restraint  of  Trade         342. 
Generally. 

338.  Police  Power  of  State — Pre- 

vention of  Discrimination. 

339.  Police  Power  of  State — Pro- 

hibiting   Giving     of    Re-         343. 
bates. 

340.  Police  Power  of  State — Cor- 

porations— Limitations  in 


Federal    Constitution — 
Fourteenth  Amendment. 

Police  Power  of  State — 
Foreign  Corporations  — 
Fourteenth  Amendment. 

Power  of  State  to  Provide 
Mode  and  Means  of  Pro- 
cedure to  Enforce  Statutes 
— Power  of  Supreme  Court 
of  United  States. 

Power  of  Legislature  as  Af- 
fected by  Constitutional 
Provision  Requiring  Pas- 
sage of  Laws. 


§  336.  Police  Power  of  State — Restraining  Right  of 
Contract  Generally. 

In  the  reasonable  exercise  of  the  pohce  power  for  the 
protection  of  the  pubHc  health,  safety,  morals  and  wel- 
fare States  may  restrain  the  general  right  of  contract.^ 

The  police  power  extends  to  many  subjects  which 
affect  the  general  welfare  and  public  interest.  In  the 
absence  of  such  power,  the  citizen  would  have  the  abso- 
lute authority  to  contract  and  the  power  to  hold  property 
as  he  might  deem  proper,  but  under  that  power  the  State 
may  enact  valid  laws  requiring  each  citizen  to  so  conduct 
himself  and  so  use  his  property  as  not  to  unnecessarily 
injure  others.  Of  such  a  character  are  laws  forbidding 
pools,  combinations,  trusts  and  other  statutes,  of  a  sim- 
ilar nature  and  which  are  founded  upon  those  police 
powers  which  are  the  inherent  rights  of  sovereignty.  ^ 

»  Knight  &  Jillson  Co.  v.  MiUer,  172  Ind.  27,  87  N.  E.  823,  citing  Stand- 
ard Oil  Co.  v.  State,  117  Penn.  618,  100  S.  W.  705,  10  L.  R.  A.  (N.  S.)  1015; 
American  Express  Co.  v.  Southern  Indiana  Express  Co.,  167  Ind.  292,  78 
N.  E.  1021;  Adams  Express  Co.  v.  State,  161  Ind.  328,  67  N.  E.  1033. 

estate  ex  rel.  Iladloy  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W,  902. 

372 


POLICE    POWER   GENERALLY  §  337 

"Undoubtedly  there  is  a  certain  freedom  of  contract 
which  cannot  be  destroyed  by  legislative  enactment. 
In  pursuance  of  that  freedom  parties  may  seek  to  further 
their  business  interests,  and  it  may  not  be  always  easy 
to  draw  the  Hne  between  those  contracts  which  are  be- 
yond the  reach  of  the  police  power  and  those  which  are 
subject  to  prohibition  or  restraint.  But  a  secret  arrange- 
ment, by  which,  under  penalties,  an  apparently  existing 
competition  among  all  the  dealers  in  a  community  in  one 
of  the  necessaries  of  life  is  substantially  destroyed,  with- 
out any  merging  of  interests  through  partnership  or 
incorporation,  is  one  to  which  the  police  power  extends."  ^ 

§  337.  Police  Power  of  State— As  to  Contracts  and 
Combinations  in  Restraint  of  Trade  Generally. 

Contracts  which  have  a  tendency  to  suppress  com- 
petition are  contrary  to  public  policy  and  are  subject 
to  public  control  under  the  police  power."* 

"That  State  legislatures  have  the  right  to  deal  with 
the  subject-matter  and  to  prevent  unlawful  combinations 
to  prevent  competition,  and  in  restraint  of  trade,  and  to 
prohibit  and  furnish  monopolies  is  not  open  to  question."  * 
So  it  is  said  in  a  case  in  Kansas  that  combinations  having 
for  their  object  the  restraint  of  trade  by  the  prevention 
of  competition  are  inimical  to  public  policy,  their  contracts 
in  furtherance  of  their  object  nonenforceable,  and  their 
agreements  of  confederacy,  followed  by  acts  in  prosecu- 
tion of  their  purpose,  rightful  subjects  of  restrictive  and 
Federal  legislation.^  So  it  is  within  the  police  power  of 
the  State  to  adopt  such  regulations  as  will  protect  the 
public  against  the  evils  resulting  from  combinations  of 

>  Smiley  v.  Kansas,  196  U.  S.  447,  457,  49  L.  ed.  546,  25  Sup.  Ct.  276, 
quoted  in  Grenada  Lumber  Co,  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct. 
695,  54  L.  ed.  826. 

*  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 

'  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  107,  29  Sup.  Ct.  220,  53 
L.  ed.  417,  per  Mr.  Justice  Day,  citing  National  Cotton  Oil  Co.  v.  Texas, 
197  U.  S.  115,  25  Sup.  Ct.  379,  49  L.  ed.  689;  Smiley  v.  Kansas,  196  U.  S. 
447,  25  Sup.  Ct.  289,  49  L.  ed.  546. 

»  State  V.  Smiley,  65  Kan.  240,  09  Pac.  199,  aflQrmcd  196  U.  S.  447,  25 
Sup.  Ct.  289,  49  L.  ed.  546. 

373 


§  337  POWER   OF   STATE — 

those  engaged  in  the  business  of  fire  insurance  and  to 
substitute  competition  for  monopoly,  and  regulations 
which  have  a  real,  substantial  relation  to  that  end  and 
are  not  essentially  arbitrary  do  not  deprive  the  insurance 
companies  of  their  property  without  due  process  of 
lawJ  The  court  said  in  this  case:  ''We  concur  entirely 
in  the  opinion  expressed  by  the  State  court  that  the 
statute  does  not  infringe  the  Federal  Constitution,  nor 
deprive  the  insurance  company  of  any  right  granted 
or  secured  by  that  instrument.  The  business  of  fire 
insurance  is,  as  every  one  knows,  of  an  extensive  and 
peculiar  character,  and  its  management  concerns  a 
very  large  number  of  people,  particularly  those  who 
own  property  and  desire  to  protect  themselves  by  in- 
surance. We  can  well  understand  that  fire  insurance 
companies,  acting  together,  may  have  owners  of  property 
practically  at  their  mercy  in  the  matter  of  rates,  and 
may  have  it  in  their  power  to  deprive  the  public  gen- 
erally of  the  advantages  flowing  from  competition  be- 
tween rival  organizations  engaged  in  fire  insurance.  In 
order  to  meet  the  evils  of  such  combinations  or  associa- 
tions, the  State  is  competent  to  adopt  appropriate  regu- 
lations that  will  tend  to  substitute  competition  in  the 
place  of  combination  or  monopoly."  ^  And  while  an 
individual  may  not  be  interfered  with  in  regard  to  a  fixed 
trade  rule  not  to  purchase  from  competitors  a  State 
may  prohibit  more  than  one  from  entering  into  an  agree- 
ment not  to  purchase  from  certain  described  persons  even 
though  such  persons  be  competitors  and  the  agreement 
be  made  to  enable  the  parties  thereto  to  continue  their 
business  as  independents.^ 

In  Illinois  it  has  been  decided  that  such  legislation  as 
is  in  force  in  that  State  has  not  abrogated  the  common- 
law  rule  with  respect  to  combinations  and  conspiracies 

7  German  Alliance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  31  Sup.  Ct.  246,  55 
L.  ed.  . 

*  Per  Mr.  Justice  Harlan,  citing  Carroll  v.  Greenwich  Ins.  Co.,  199  U.  S. 
401,  411,  2r,  Sup.  Ct.  66,  50  L.  ed.  246. 

8  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  535, 
54  L.  ed.  826. 

374 


POLICE    POWER   GENERALLY  §§  338-340 

in  restraint  of  trade  and  that  it  is  not  necessary  to  look 
to  this  legislation  alone  to  find  the  public  policy  of  the 
State  with  respect  thereto.^" 

§  338.  Police  Power  of  State— Prevention  of  Discrim- 
ination. 

The  prevention  of  discrimination  in  particular  localities, 
in  prices  of  commodities  in  general  use  "for  the  purpose 
of  destroying  the  business  of  a  competitor"  by  selling 
such  commodities  at  a  lower  rate  in  such  locality  than  is 
charged  for  the  same  elsewhere,  is  within  the  police 
power  of  the  State.  As  to  such  an  act  it  is  said:  "If  the 
State  has  not  the  power  to  protect  its  people  from  the 
acts  of  those  who  have  for  their  'purpose'  the  destruction 
of  the  business  of  a  competitor,  in  order  that  the  wrong- 
doer may  have  a  monopoly,  its  powers  are  much  more 
limited  than  we  supposed.  *  *  *  When  we  take  into  con- 
sideration that  it  is  not  the  act  itself,  but  the  act  coupled 
with  the  purpose  of  destroying  the  business  and  property 
of  others,  which  is  declared  to  be  criminal,  w^e  can  find 
but  little  trouble  in  arriving  at  the  conclusion  that  the 
statute  is  within  the  power  of  the  legislature  and  is  there- 
fore valid."  '' 

§  339.  Police  Power  of  State— Prohibiting  Giving  of 
Rebates. 

At  common  law  traders,  manufacturers  and  common 
carriers  have  the  right  to  give  rebates  to  their  patrons 
and  customers  in  order  to  secure  and  retain  their  busi- 
ness. But  where  the  purpose  of  rebates  is  the  stifling 
of  competition  or  with  the  object  of  controlling,  fixing 
and  maintaining  prices  it  is  within  the  power  of  the 
legislature  to  enact  laws  preventing  the  same.^- 

§  340.  Police  Power  of  State— Corporations— Limita- 
tions in  Federal  Constitution— Fourteenth  Amendment. 
Commerce  purely  intrastate  is  a  subject  as  entirely 

>°  People  V.  Aachen  &  Norwich  Fire  In3.  Co.,  126  111.  App.  636. 
"  State  V.  Drayton,  82  Neb.  254,  117  N.  W.  7GS,  per  Reese,  J. 
"  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

375 


§  340  POWER   OF   STATE — 

under  the  control  of  the  State  as  is  the  delegated  control 
over  interstate  commerce  exercised  by  the  United  States. 
The  power  exercised  in  such  case  is  the  police  power 
reserved  to  the  States.  The  limitation  upon  its  exercise 
contained  in  the  Federal  Constitution  is  found  in  the 
Fourteenth  Amendment,  whereby  no  State  may  make 
any  law  by  which  a  citizen  is  deprived  of  life,  liberty  or 
property  without  due  process  of  law.  A  like  limitation 
upon  the  legislative  power  will  be  found  in  the  Constitu- 
tion of  each  State. ^^  There  is,  however,  said  to  be  noth- 
ing in  the  Federal  Constitution  which  prevents  the  enact- 
ment of  a  statute  prohibiting  the  making  of  all  contracts 
in  restraint  of  trade  whether  reasonable  or  unreasonable.^'' 
So  it  is  said  that  the  Fourteenth  Amendment  does  not 
interfere  with  the  police  power  of  the  State  and  its  exer- 
cise for  the  purpose  of  defining,  limiting,  governing  or  de- 
stroying trusts,  monopolies  and  combinations  in  restraint 
of  trade.  ^^  And  all  corporations,  associations  and  indi- 
viduals, within  the  jurisdiction  of  a  State,  are  subject  to 
such  regulations,  in  respect  of  their  relative  rights  and 
duties,  as  the  State  may,  in  the  exercise  of  its  police  power 
and  in  harmony  with  its  own  and  the  Federal  Constitu- 
tion prescribe  for  the  public  convenience  and  the  general 
good.^^  So  in  a  case  in  Mississippi  the  court  says:  "We 
uphold  and  maintain  in  its  full  integrity  the  doctrine 
which  recognizes  the  right  of  the  State,  in  the  exercise 
of  its  reserved  police  power,  to  restrict  the  power  of  cor- 

"  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  695, 

54  L.  ed.  826,  holding  in  action  by  the  State  in  equity  that  the  anti-trust 
statute  of  Mississippi  (Miss.  Code,  §  5002)  is  not  unconstitutional  as 
abridging  the  liberty  of  contract  as  against  retail  lumber  dealers  uniting 
in  an  agreement,  wliich  the  State  court  decided  was  within  the  prohibition 
of  the  statute,  not  to  purchase  any  materials  from  wholesale  dealers  selling 
direct  to  consumers  in  certain  localities. 

>*  State  ex  rel.  Hadlcy  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 
"  State  V.  Virginia-Carolina  Chemical  Co.,  71  S.  C.  544,  51  S.  E.  455. 
"  German  AlUance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  317,  31  Sup.  Ct.  246, 

55  L.  ed. ,  per  Mr.  Justice  Harlan,  citing  Jacobson  v.  Massachusetts, 

197  U.  S.  11,  27,  31,  25  Sup.  Ct.  .358,  49  L.  ed.  643;  Lake  Shore  &  M.  S.  Ry. 
Co.  V.  Ohio,  173  U.  S.  285,  297,  19  Sup.  Ct.  465,  43  L.  ed.  702;  House  v. 
Mayes,  219  U.  S.  270,  31  Sup.  Ct.  337,  55  L.  ed. . 

376 


POLICE    POWER   GENERALLY  i  341 

porations  to  contract  without  certain  prescribed  limits, 
and  which  forbids  that  such  power  should  ever  be  so 
abridged  or  so  construed  as  to  permit  corporations  to 
conduct  their  business  in  such  manner  as  to  infringe 
upon  the  rights  of  individuals  or  the  general  well-being 
of  the  State  J7 

§  341.  Police  Power  of  State — Foreign  Corporations — 
Fourteenth  Amendment. 

The  right  of  a  State  to  impose  conditions  upon  the 
privilege  of  doing  business  by  foreign  corporations  is  not 
affected  by  the  Fourteenth  Amendment  of  the  Federal 
Constitution,  and  that  amendment  presents  no  obstacle 
to  the  enforcement  of  a  statute  providing  for  the  exclu- 
sion of  foreign  corporations  violating  it  from  doing  any 
business  within  the  State.  ^^  And  the  provision  of  the 
United  States  Constitution  that  no  State  shall  pass  any 
law  which  will  impair  the  obligations  of  a  contract,  ^^  is 
not  violated  by  a  statute  which  provides  for  the  forfeiture 
of  a  franchise  of  a  foreign  corporation  for  violation  of 
the  anti-trust  laws  of  the  State,  such  provision  of  the 
Constitution  having  no  application  to  a  license  issued  by 
a  State  to  a  foreign  corporation  to  do  business  therein 
for  the  reason  that  when  it  accepts  the  license  it  impliedly, 
at  least,  agrees  to  transact  such  business  under  and  in 
obedience  to  the  laws  of  the  State  in  the  same  manner 
as  a  domestic  corporation  should  transact  similar  business 
and  that  if  it  violates  the  laws  of  the  State,  then  it  will 
thereby  forfeit  its  rights  to  such  license,  in  the  same 
manner  that  the  domestic  corporations  would  forfeit 
their  rights  by  offending  against  the  laws.-'' 

The  fact  that  licenses  granted  to  a  foreign  corporation 
were  issued  prior  to  the  enactment  of  an  anti-trust  act 
does  not  affect  the  liability  of  the  corporation  for  a  vio- 

"  Yazoo  &  Mississippi  Valley  R.  R.  Co.  v.  Searles,  85  Miss.  520,  37  So. 
939,  68  L.  R.  A.  715. 

'*  Attompy  General  ex  rel.  Wolverine  Fish  Co.  v.  \.  Booth  &  Co.,  143 
-Mich.  89,  106  N.  W.  808. 

»»  Art.  1,  §  10. 

^  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  110  S.  W.  902. 

377 


§§  342,  343  POWER  of  state — 

lation  of  such  act,  because  the  enactment  of  such  statutes 
is  but  the  exercise  of  the  pohce  power  of  the  State  which 
cannot  be  contracted  away  or  surrendered  by  legislation.^^ 

§  342.  Power  of  State  to  Provide  Mode  and  Means 
of  Procedure  to  Enforce  Statutes — Power  of  Supreme 
Court  of  United  States. 

Since  States  have  the  power  to  prevent  monopolies 
and  unlawful  combinations  in  restraint  of  trade  they  may 
also  provide  the  procedure  and  determine  the  methods 
and  means  by  which  such  laws  may  be  made  effectual 
subject  only  to  the  limitations,  both  in  civil  and  criminal 
cases,  that  such  procedure  must  not  work  a  denial  of 
fundamental  rights  or  conflict  with  constitutional  pro- 
visions. ^^ 

Though  a  State  has  no  power  to  prevent  the  carrying  on 
of  interstate  trade,  it  may  nevertheless  authorize  courts 
to  forfeit  the  charters  of  either  a  domestic  or  foreign  cor- 
poration for  a  misuser  of  the  powers  granted,  as  where 
a  corporation  violates  the  anti-trust  laws  of  the  State. 
Statutes  of  such  a  character  are  not  violative  of  the 
United  States  Constitution.  ^^  And  in  construing  State 
anti-trust  acts  the  rule  controls  that' the  fixing  of  punish- 
ment for  crime  and  penalties  for  unlawful  acts  is  within 
the  police  power  of  the  State  and  that  the  Supreme  Court 
of  the  United  States  cannot  interfere  with  State  legis- 
lation in  fixing  fines,  or  judicial  action  in  imposing  them, 
unless  so  grossly  excessive  as  to  amount  to  deprivation  of 
property  without  due  process  of  law.^^ 

§  343.  Power  of  Legislature  as  Affected  by  Constitu- 
tional Provision  Requiring  Passage  of  Laws. 

In  Mississippi  it  is  declared  that  the  constitutional 

"  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

"  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L.  ed. 
417,  aff'g  (Tex.  Civ.  App.)  106  S.  W.  918. 

"  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

"  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L. 
ed.  417,  aff'g  (Tex.  Civ.  App.)  106  S.  W.  918;  and  citing  Coffey  v.  Harlan 
County,  204  U.  S.  659,  27  Sup.  Ct.  305,  51  L.  ed.  G6G. 

378 


POLICE   POWER  GENERALLY  §  343 

provision  requiring  the  legislature  to  pass  laws  to  pro- 
hibit "trusts,  combinations,  contracts  and  agreements 
inimical  to  the  public  welfare"  neither  confers  nor  limits 
its  power  which  exists  by  virtue  of  the  general  grant  of 
legislative  powers  and  that  the  expression  might  be 
stricken  from  the  Constitution  and  laws  without  affect- 
ing the  validity  of  such  an  act." 

"State  V.  Jackson  Cotton  Oil  Co.,  95  Miss.  6,  48  So.  300. 


379 


§344 


STATE    STATUTES- 


CHAPTER    XXIll 


STATE  STATUTES — CONSTITUTIONALITY  AND  CONSTRUCTION 

GENERALLY 


S  344.  State    Statutes  —  Constitu- 
tionality of  Generally. 
■i.  Constitutionality  —  Liberty 
of  Contract — Due  Process 
of  Law. 

346.  Constitutionality    —    Class 

Legislation  —  Liberty  of 
Contract. 

347.  Constitutionality     —     Dis- 

crimination. 

348.  Constitutional  Provision  Re- 

quiring Legislature  to 
Enact  Law.s — Not  a  Re- 
peal of  a  Prior  Law. 

349.  Contract  Prior  to  Passage  of 

Act  Does  Not  Render  It 
Unconstitutional. 

350.  Construction  —  General 

Rules. 

351.  Construction — As  to  Intent 

of  Legislature. 

352.  Construction — Where     Part 

of  Act  Unconstitutional. 

353.  Construction — Rule     as     to 

Title  and  Body  of  Act. 

354.  Construction — Rule    as     to 

Statutes  in  Pari  Materia. 

355.  Construction — Rule     as     to 

Statutes  in  Pari  Materia — 
Special  and  General  Stat- 
ute— Excepted  Class. 


356.  Construction — Rule     as     to 

Additional  and  Descrip- 
tive Words. 

357.  Word  "Arrangement"  Con- 

strued. 

358.  Word  "Combination"  Con- 

strued. 

359.  Words    "Commodity"    and 

' '  Convenience ' '  Construed 
— Personal  Services  Not — 
Telephone  Service  Is. 

360.  Word  "Court"  Construed. 
36 L  Words     "In     Restraint     of 

Trade"  Construed. 

362.  Word     "Monopoly"     Con- 

strued. 

363.  Word   "Person"   Construed 

— Whether  Corporations 
Included. 

364.  Words  "Real  Value"  Con- 

strued. 

365.  Word  "Trade"  Construed. 

366.  Application  of  Statute  Gen- 

erally. 

367.  Penalty  Provisions  of  Act — 

Review  by  United  States 
Supreme  Court. 

368.  Territorial      Legislation   — 

Power  of  Congress — Dele- 
gation of  Power  to  Sub- 
ordinate Bodies. 


§  344.  State  Statutes— Constitutionality  of  Generally. 

As  we  stated  in  the  preceding  chapter  a  State  may 
in  the  exercise  of  the  poHce  power  vested  in  it  and  subject 
to  constitutional  restrictions  both  Federal  and  State  pass 
statutes  affecting  the  general  welfare  and  public  interest. 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  345 

A  State  legislature  may  legislate  in  regard  to  contracts 
which  suppress  or  tend  to  suppress  competition  and  to 
adopt  such  regulations  and  restrictions  as  will  protect 
the  public  against  the  evils  resulting  from  contracts, 
combinations  or  other  arrangements  which  have  such  a 
result  and  are  in  restraint  of  trade.  This  power  of  the 
State  is  recognized  by  the  courts  and  as  a  general  rule 
statutes  passed  in  the  exercise  of  such  power  have  been 
held  constitutional.^  A  State  statute  may  be  constitu- 
tional even  though  it  prohibits  the  making  of  all  con- 
tracts in  restraint  of  trade  including  those  that  are  reason- 
able as  well  as  those  that  are  unjust  and  unreasonable.^ 

§345.  Constitutionality — Liberty  of  Contract — Due 
Process  of  Law. 

Anti-trust  laws  are  not  unconstitutional  as  depriving 
anyone  of  due  process  of  law  because  so  vague  and  in- 
definite as  not  to  advise  a  citizen  prosecuted  under  them 

1  Illinois:  Harding  v.  American  Glucose  Co.,  182  111.  551,  55  N.  E.  577, 
74  Am.  St.  Rep.  189,  64  L.  R.  A.  738,  construing  III.  Act,  June  11,  1891; 
Ford  V.  Chicago  Milk  Shippers'  Assoc,  155  111.  166,  39  N.  E.  651. 

Kansas:  State  v.  Smiley,  65  Kan.  240,  69  Pac.  199,  aff'd,  196  U.  S.  447, 
25  Sup.  Ct.  289,  49  L.  ed.  546. 

Michigan:  Bingham  v.  Brands,  119  Mich.  255,  77  N.  W.  940,  construing 
3  How.  Stat.,  §9354]. 

Missouri:  Finck  v.  Schneider  Granite  Co.,  187  Mo.  244,  86  S.  W.  713, 
106  Am.  St.  Rep.  452. 

Ohio:  State  v.  Gage,  72  Ohio  St.  210,  73  N.  E.  1078;  State  ex  rel.  Monnett 
V.  Buckeye  Pipe  Line  Co.,  61  Ohio  St.  520,  56  N.  E.  464,  construing  93 
O.  L.,  p.  143. 

South  Carolina:  State  v.  Virginia-Carolina  Chemical  Co.,  71  S.  C.  544, 
51  S.  E.  455. 

Tennessee:  State  v.  Witherspoon,  115  Tcnn.  138,  construing  Acts,  1903, 
chap.  140;  State  ex  rel.  Astor  v.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59 
S.  W.  1033,  78  Am.  St.  Rep.  941. 

Texas:  State  v.  Laredo  Ice  Co.,  96  Tex.  461,  73  S.  W.  951,  construing 
Anti-Trust  Act  of  1899  (Acts,  26th  Leg.,  chap.  146);  Texas  Brewing  Co. 
V.  Templcman,  90  Tex.  277,  38  S.  W.  27;  Honck  v.  Anheuser-Busch  Brew- 
ing Assoc,  88  Tex.  184,  30  S.  W.  869;  San  Antonio  Gas  Co.  v.  State,  22 
Tex.  Civ.  App.  118,  54  S.  W.  289,  construing  Tex.  Rev.  Stat.,  Art.  5313; 
Waters-Pierce  Oil  Co.  v.  State,  19  Tex.  Civ.  App.  1,  44  S.  W.  936. 

See  also  cases  cited  in  the  preceding  chapter,  this  chapter,  and  the  sub- 
sequent chapter. 

2  State  ex  rel.  Hadley,  Att'y  Gen'l.,  v.  Standard  Oil  Co.,  218  Mo.  1,  116 
S.  W.  902. 

381 


§  346  STATE   STATUTES — 

of  the  nature  of  the  acts  constituting  a  violation  of  the 
law,  where  the  objection  is  based  on  the  mere  fact  that 
they  denounce  and  prohibit  acts  which  are  "reasonably 
calculated"  or  which  ''tend"  to  accomplish  the  prohibited 
results.^ 

As  to  statutes  forbidding  pools,  combinations  and  trusts 
operating  as  a  denial  of  due  process  of  law  it  is  said  in  a 
case  in  Missouri  that  while  the  Fourteenth  Amendment 
prevents  illegal  infringements  upon  the  liberty  of  the 
citizen  to  contract  or  the  depriving  him  of  his  property 
or  the  imposing  of  restraints  and  burdens  upon  him 
without  due  process  of  law  yet  that  amendment  has  never 
been  held  to  prevent  the  legislature  from  the  exercise  of 
the  general  police  power  of  the  State;  that  such  statutes 
are  enacted  for  the  purpose  of  restraining  the  unbridled 
liberty  of  the  citizen  in  his  conduct  and  use  of  his  property; 
and  that  no  such  reasonable  restraint  imposed  by  statute 
has  ever  been  held  unconstitutional  because  it  deprived  the 
citizen  of  his  life,  liberty  or  property  without  due  process 
of  law  but  that  upon  the  other  hand  the  courts  have 
uniformly  held  all  such  laws  to  be  a  wise,  just  and  valid 
exercise  of  the  police  powers  of  the  State/ 

§  346.  Constitutionality — Class  Legislation— Liberty  of 
Contract. 

Class  legislation  is  said  to  be  of  two  kinds,  namely,  that 
in  which  the  classification  is  natural  and  reasonable  and 
that  in  which  the  classification  is  arbitrary  and  capricious ; 
the  former  is  generally  recognized  as  constitutional  and 
valid  while  the  latter  is  generally  condemned  as  uncon- 
stitutional and  invalid.^ 

»  Waters-Kerce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L.  ed. 
417,  aff'g  (Tex.  Civ.  App.)  106  S.  W.  918. 

*  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

*  State  ex  rel.  Astor  v.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59  S.  W. 
1033,  78  Am.  St.  Rep.  941. 

Nebraska  Laws,  1897,  chap.  79,  held  unconstitutional  both  as  violating 
clause  of  Federal  Constitution  as  to  liberty  of  contract  and  as  denying 
equal  protection  of  the  laws  in  that  it  excepted  labor  organizations  from 
its  operation.    Niagara  Fire  Ins.  Co.  v.  Cowell  (U.  S.  C.  C),  110  Fed.  816. 

382 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  346 

In  Nebraska  an  act  entitled  "An  act  to  prohibit  unfair 
commercial  discrimination  between  different  sections, 
communities  or  localities,  or  unfair  competition,  and  pro- 
viding penalties  therefor"  is  not  in  violation  of  the  Con- 
stitution being  neither  class  legislation  nor  an  interference 
with  freedom  of  contract,  the  act  not  preventing  persons 
and  corporations  dealing  in  commodities  in  general  use 
from  selling  them  at  such  price  as  such  person  or  cor- 
poration may  see  fit  to  demand.^ 

In  South  Dakota  an  act  prohibiting  unfair  competition 
and  discrimination  has  been  held  to  be  constitutional  and 
not  subject  to  the  objection  that  by  reason  of  an  arbitrary 
classification  it  denies  the  defendant  equality  under  the 
law  in  violation  of  the  Federal  and  State  Constitutions  ^ 
or  that  it  denies  any  person,  natural  or  artificial,  his  con- 
stitutional right  to  freely  contract.^ 

«  State  V.  Drayton,  82  Neb.  264, 117  N.  W.  768,  construing  Act  of  April  3, 
1907,  chap.  157,  Laws,  1907,  §  1  of  which  provided  as  follows:  "Any  per- 
son, firm,  company,  association  or  corporation,  foreign  or  domestic,  doing 
business  in  the  State  of  Nebraska  and  engaged  in  the  production,  manu- 
facture or  distribution  of  any  commodity  in  general  use,  that  shall  inten- 
tionally, for  the  purpose  of  destroying  the  business  of  a  competitor  in  any 
locahty,  discriminate  between  different  sections,  communities  or  cities  of 
this  State,  by  selling  such  commodity  at  a  lower  rate  in  one  section,  com- 
munity or  city,  than  is  charged  for  said  commodity  by  said  party  in  another 
section,  community  or  city,  after  making  due  allowance  for  the  difference, 
if  any,  in  the  grade  or  quality  and  in  the  actual  cost  of  transportation  from 
the  point  of  manufacture,  if  a  manufactured  product,  shall  be  deemed 
guilty  of  unfair  discrimination,  which  is  hereby  prohibited  and  declared 
unlawful." 

'Section  1,  Art.  14,  of  the  Federal  Constitution;  §§2,  18,  Art.  6,  of  S. 
Dak.  Const. 

8  State  V.  Central  Lumber  Co.,  24  S.  Dak.  136,  123  N.  W.  504,  constru- 
ing Sess.  Laws  S.  D.,  1907,  chap.  131,  p.  196,  §  1  of  which  provided  as 
follows:  "Any  person,  firm,  or  corporation,  foreign  or  domestic,  doing 
business  in  the  State  of  South  Dakota,  and  engaged  in  the  production, 
manufacture  or  distribution  of  any  commodity  in  general  use,  that  in- 
tentionally for  the  purpose  of  destroying  the  competition  of  any  regular, 
established  dealer  in  such  commodity,  or  to  prevent  the  competition  of 
any  person  who  in  good  faith  intends  and  attempts  to  become  such  dealer, 
shall  discriminate  between  different  sections,  communities  or  cities  of  this 
State,  by  selling  such  commodity  at  a  lower  rate  in  one  section,  community 
or  city,  or  any  portion  thereof  than  such  person,  finn  or  corporation,  foreign 
or  domestic,  charges  for  such  commodity  in  another  section,  community  or 
citv,  after  equalizing  the  distance  from  the  point  of  production,  manu- 

383 


§  346  STATE   STATUTES — 

Where  a  statute  in  Tennessee  ^  prohibited  all  trusts, 
combinations  and  agreements  made  with  a  view  to  lessen 
or  which  tended  to  lessen  full  and  free  competition  or 
which  tended  to  advance,  reduce  or  control  the  price  of 
any  product  or  article  except  such  as  might  be  entered 
into  by  the  owners  in  reference  to  ''agricultural  products 
or  hve-stock  while  in  the  possession  of  the  producer  or 
raiser"  it  was  held  that  such  classification  was  not  ar- 
bitrary and  capricious  but  natural  and  reasonable.  The 
court  declared  that  differently  expressed  the  act  left 
farmers  and  stock  raisers  free  to  make  such  transactions 
as  they  might  choose  and  was  even  otherwise  allowable 
in  relation  to  their  farm  products  and  live  stock  while 
yet  in  their  possession  but  visited  the  prescribed  punish- 
ment on  them  and  on  all  other  persons  for  all  other 
transactions  that  were  calculated  to  impair  free  com- 
petition in  trade  and  to  influence  the  price  of  domestic 
or  imported  articles.  And  it  was  further  said  that  it 
was  wholly  impracticable,  not  to  say  impossible  for  them, 
as  individuals,  and  while  each  one  retained  the  posses- 
sion of  his  farm  products  or  live  stock,  to  conduct  deal- 
ings in  relation  thereto  that  would  or  could  seriously  im- 
pair competition  and  injuriously  affect  prices,  and  that 
if  they,  the  better  to  accomplish  that  end,  by  mutual 
consent  placed  their  conamodities  under  the  control  of  a 
comimon  agency,  and  subjected  them  to  agreed  rules  and 
schedules,  they  thereby  surrendered  the  possession  con- 
templated by  the  act  and  were  no  longer  of  the  excepted 
class,  but  of  the  other  one,  and  subject  to  all  the  penalties 
laid  upon  it.^° 

In  Indiana  it  has  been  decided  that  an  anti-trust  act 
of  that  State  ^^  prohibiting  contracts  and  combinations  in 
restraint  of  trade  and  to  prevent  free  competition  neither 
authorizes    the  confiscation  of  property,  nor  denies  the 

facture  or  distribution  and  freight  rates  therefrom  shall  be  deemed  guilty 
of  unfair  discrimination." 

9  Tenn.  Acts,  1897,  chap.  94. 

">  State  ex  rel.  Astor  v.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59  S.  W. 
1033,  78  Am.  St.  Rep.  941. 

11  Acts,  1899,  p.  257,  §§  3884-3888;  Burus,  1908. 

384 


CONSTITUTIONALITY   AND   CONSTRUCTION      §§  347,  348 

equal  protection  of  the  laws,  nor  constitutes  class  legis- 
lation. ^^ 

§  347.  Constitutionality— Discrimination. 

An  anti-trust  law  is  not  subject  to  the  objection  that 
it  is  unconstitutional  in  that  it  unjustly  discriminates 
against  property  by  embracing  commodities  only  and  does 
not  include  labor  which  may  also  become  the  subject 
of  a  pool  or  combination.^^ 

§  348.  Constitutional  Provision  Requiring  Legislature 
to  Enact  Laws — Not  a  Repeal  of  a  Prior  Law. 

A  constitutional  provision  requiring  the  legislature  to 
enact  laws  to  prevent  pools,  trusts  and  combinations 
created  to  depreciate  below  its  real  value  any  article  or 
to  enhance  the  cost  of  any  article  above  its  real  value 
confers  upon  the  legislature  the  power  and  discretion  to 
determine  the  need  of  future  legislation  upon  the  subject. 
Such  a  provision  only  forbids  trusts,  pools  and  combina- 
tions to  depreciate  an  article  below  its  real  value  or  to 
enhance  its  cost  above  its  real  value.  ^^ 

So  in  Kentucky  a  constitutional  provision  that  "it 
shall  be  the  duty  of  the  general  assembly,  from  time  to 
time,  as  necessity  may  require,  to  enact  such  laws  as  may 

"  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 

"  State  ex  rel.  Iladley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 
The  court  said:  "While  it  is  true  those  statutes  are  limited  in  their  scope 
and  operation  to  persons  and  corporations  dealing  in  commodities,  and  do 
not  include  combinations  of  persons  engaged  in  labor  pursuits,  yet  it  must 
be  borne  in  mind  that  the  differentiation  between  labor  and  property  is  so 
great  that  they  do  not  belong  to  the  same  general  or  natural  classification 
of  rights,  or  things,  and  have  never  been  so  recognized  by  the  common  law, 
or  by  legislative  enactments.  They  stand  upon  entirely  different  footings 
and  the  laws  pertaining  to  the  one  are  entirely  different  from  those  per- 
taining to  the  other.  *  *  *  This  classification  of  the  laws  regarding  labor 
and  property  has  always  been  recognized  by  all  nations  in  all  ages;  and 
those  laws  which  apply  to  the  one  have  never  been  considered  or  looked 
upon  as  being  special  and  class  legislation  because  they  do  not  embrace 
both."    Per  Woodson,  J. 

'*  Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115 
S.  W.  703,  131  Ky.  768,  115  S.  W.  755,  construing  Const.,  §  198  and  Act  of 
May  20,  1S90  (Ky.  Stats.,  1903,  §  3915;  Commonwealth  v.  Grinstead  & 
Tinslcy,  108  Ky.  59,  55  S.  W.  720,  57  S.  W.  471,  21  Ky.  Law.  Rep.  1444. 

25  385 


§§  349,  350  STATE   STATUTES — 

be  necessary  to  prevent  all  trusts,  pools,  combinations  or 
other  organizations,  from  combining  to  depreciate  below 
its  real  value  any  article,  or  to  enhance  the  cost  of  any 
article  above  its  real  value"  was  construed  as  not  repealing 
a  statute  providing  that  any  corporation  or  individual 
who  shall  become  a  member  of,  or  a  party  to,  or  in  any 
way  interested  in,  any  pool,  trust,  combination,  or  agree- 
ment for  the  purpose  of  regulating  the  price  or  limiting 
the  production  of  any  article  of  property,  shall  be  deemed 
guilty  of  the  crime  of  conspiracy,  and  punished  therefor, 
it  being  declared  that  such  requirement  of  the  Constitu- 
tion is  not  a  grant  of  power  and  does  not  impliedly  pro- 
hibit the  legislature  from  going  beyond  the  duty  en- 
joined.^'' 

§  349.  Contract  Prior  to  Passage  of  Act  Does  Not 
Render  It  Unconstitutional. 

The  fact  that  a  contract  has  been  made  prior  to  the 
passage  of  an  anti-trust  statute  by  the  terms  of  which 
it  is  illegal  does  not  render  the  statute  unconstitutional 
where  such  contract  is  a  continuing  one.  The  continua- 
tion of  the  acts  under  the  contract  after  it  has  been  de- 
clared illegal  becomes  a  violation  of  the  act.  No  one  can 
have  any  vested  right  which  he  can  claim  to  be  exempt 
from  the  lawful  exercise  by  the  State  of  its  police  powers. 
Every  one  holds  his  property  rights  subject  to  such  law- 
ful exercise.  ^^ 

§  350.  Construction — General  Rules. 

In  construing  anti-trust  statutes  the  following  general 
rules  as  to  the  interpretation  to  be  put  upon  legislative 
acts  control.  Of  these  the  most  important  is  said  to  be 
that  resort  must  be  had  to  the  language  of  the  act  itself; 
and  that  language  alone,  to  gather  the  legislative  purpose 

"  Ck)mmon wealth  v.  Grinstead  &  Tinsley,  108  Ky.  59,  22  Ky.  Law  Rep. 
377,  .55  S.  W.  720,  construing  §  198  of  the  Constitution  and  provisions  of 
Act  of  May  20,  1890,  Ky.  Stats?.,  §§  3915,  3917. 

See  also  Commonwealth  v.  Bavarian  Brewing  Co.,  112  Ky.  925,  23 
Ky.  Law  Rep.  2334,  66  S.  W.  1016. 

«  Finck  V.  Schneider  Granite  Co.,  187  Mo.  244,  86  S.  W.  213,  106  Am. 
St.  Rep.  452. 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  350 

if  that  language  is  unambiguous  and  that  in  such  a  case 
resort  is  not  allowable  to  any  other  source  of  information 
to  learn  what  the  lawTiiaking  department  intended,  or  as 
to  what  evils  they  proposed  remedying.  If,  however,  the 
legislature  has  enacted  two  or  more  statutes  which  from 
their  wording  appear  to  be  inconsistent,  or  if  the  statute 
under  consideration  ap'pears  to  be  in  conflict  with  a  pro- 
vision of  the  Constitution,  State  or  Federal,  there  is  an 
ambiguity,  for  it  is  always  to  be  presumed  that  the  legis- 
lature intended  its  enactments  to  become  valid  and  en- 
forceable laws.  Repeals  by  implication  also  are  not 
favored,  it  being  presumed  that  if  the  legislature  had  by 
an  act  intended  to  repeal  a  prior  statute  it  would  so  have 
expressed  it  as  to  leave  no  doubt  of  its  purpose.  There- 
fore when  two  statutes  bearing  on  the  same  subject 
appear  on  their  face  to  be  so  inconsistent  with  each  other, 
the  court  in  construing  them  should  first  seek  to  har- 
monize them  if  possible  so  as  to  allow  both  to  stand. 
If,  however,  this  cannot  be  done  without  violence  to  some 
part  of  the  language  employed  in  one  or  both  statutes 
then  they  should  be  so  construed  that  both  will  stand 
so  far  as  possible  and  where  any  part  of  either  is  irrecon- 
cilable with  any  part  of  the  other  the  latest  stands,  while 
the  inconsistent  part  of  the  power  is  deemed  to  have 
been  repealed.  In  case  of  an  ambiguity  because  of  the 
uncertainty  of  the  words  employed,  or  because  of  an 
apparent  conflict  in  statutes,  or  between  a  statute  and 
the  Constitution,  the  courts  are  then  permitted  to  look 
beyond  the  words  of  the  particular  statute  as  to  the 
legislative  purpose.  Such  methods  of  construction  are 
always  for  the  sole  purpose  of  arriving  at  the  legislative 
intention.  ^^ 

A  statute  forbidding  combinations  in  restraint  of  trade 
is  held  to  be  in  aid  of  the  common. law  and  therefore  to  be 
strictly  construed.  ^^    But  it  has  been  decided  that  penal 

"Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115  S. 
W.  703. 

'*  Home  Telephone  Co.  v.  Granby  &  Neosho  Telephone  Co.,  147  Mo. 
App.  216,  126  S.  W.  773. 

387 


§  351  STATE   STATUTES — 

statutes  and  statutes  which  impose  burdens  and  HabiUties 
unknown  at  common  law  must  be  strictly  construed  in 
favor  of  those  upon  whom  the  burden  is  sought  to  be 
imposed  and  nothing  will  be  taken  as  intended  that  is 
not  clearly  expressed. ^^ 

In  Nebraska  in  construing  a  statute  prohibiting  con- 
tracts in  restraint  of  trade  which  statute  was  said  to  be 
almost  a  literal  copy  of  the  Sherman  Act,  changing  only 
its  field  of  operations,  the  court  referred  to  two  decisions 
of  the  United  States  Supreme  Court  ^^  saying  that  by 
such  decisions  the  Sherman  Act  was  held  to  embrace  and 
declare  to  be  illegal  every  contract,  combination  or  con- 
spiracy of  whatever  form,  or  whatever  nature,  and  who- 
ever may  be  parties  to  it  which  directly  or  necessarily 
operated  in  restraint  of  trade  without  regard  to  whether 
such  contract  was  a  reasonable  or  unreasonable  restraint 
of  trade  and  declared  that  this  was  the  proper  construc- 
tion to  put  upon  the  Nebraska  statute. '^^ 

§  351.  Construction— As  to  Intent  of  Legislature. 

All  the  language  of  a  statute  must  be  considered  in 
its  construction  and  such  an  interpretation  placed  upon 
any  word  thereof  as  was  within  the  evident  intent  of  the 
legislature.  22  So  in  construing  an  anti- trust  statute  the 
Supreme  Court  of  Tennessee  says:  ''It  is  also  a  familiar 
canon  of  construction  of  statutes  that  they  must  be  so 
construed,  if  it  can  be  done  without  violence  to  the  evi- 
dent intent  of  the  legislature,  so  as  to  avoid  any  conflict 

'9  State  V.  International  Harvester  Co.,  79  Ark.  517,  96  S.  W.  119,  wherein 
it  is  said  that  this  principle  has  been  so  often  declared  that  it  is  elemental 
and  citing  Hughes  v.  State,  6  Ark.  131;  Grace  v.  State,  40  Ark.  97;  Stout 
V.  State,  43  Ark.  414;  Casey  v.  State,  53  Ark.  334,  14  S.  W.  90;  Watkins 
V.  Griffith,  59  Ark.  344,  27  S.  W.  234;  Little  Rock  &  Ft.  S.  Railway  Co.  v. 
Offenheiraer,  64  Ark.  271,  43  S.  W.  150;  State  v.  Lancashire  Fire  Ins.  Co.,  66 
Ark.  466,  51  S.  W.  633;  State  v.  Arkadelphia  Lumber  Co.,  70  Ark.  329, 
67  S.  W.  1011;  Brown  v.  Haselman,  79  Ark.  213,  95  S.  W.  136;  Sutherland 
on  Statutory  Inter.,  §  208. 

2»  United  States  v.  Trans-Missouri  Freight  Ass'n,  166  U.  S.  290,  17  Sup. 
Ct.  540,  41  L.  ed.  1007;  Northern  Securities  Co.  v.  United  States,  193  U. 
S.  197,  331,  24  Sup.  Ct.  436,  48  L.  ed.  679. 

"  State  V.  Adams  Lumber  Co.,  81  Neb.  392,  116  N.  W.  302. 

«  Rohlf  V.  Kasemeier,  140  Iowa,  182,  118  N.  W.  276. 

388 


CONSTITUTIONALITY   AND    CONSTRUCTION      §§  352,  353 

with  the  Constitution  of  the  State  or  of  the  United  States; 
and  that  every  intendment,  when  the  statute  has  been 
formally  enacted,  must  be  made  in  favor  of  its  validity, 
and  that,  where  it  is  subject  to  two  constructions,  that 
must  be  given  which  will  sustain  it  rather  than  that 
which  will  defeat  it."  ^^  And  it  is  not  necessary  that  the 
body  of  an  anti-trust  act  shall  declare  that  a  thing  shall 
be  done  with  a  specific  intent,  when  the  doing  of  that 
thing  by  the  force  of  its  character  and  effects  discloses 
a  situation  upon  which  the  law  engrafts  an  intent  and 
purpose,  and  which  could  have  no  other  purpose.  Con- 
tracts or  combinations  which  could  have  no  other  effect 
than  to  restrain  free  competition,  or  which  have  such 
tendency,  will  be  deemed  to  have  been  so  intended,  and 
that  purpose  need  not  be  declared  in  the  act.-' 

§  352.  Construction— Where  Part  of  Act  Unconstitu- 
tional. 

An  entire  act  is  not  rendered  unconstitutional  by  the 
presence  therein  of  provisions  which  are  unconstitutional 
where  the  latter  can  be  eliminated  without  affecting  the 
rest  of  the  act.  So  where  some  of  the  provisions  of  an 
anti-trust  act  were  construed  as  an  attempt  by  the  State 
to  exercise  a  prerogative  of  Congress  to  regulate  interstate 
commerce  the  court  held  that  as  such  provisions  could 
be  eliminated,  a  cause  of  action  existing  independent 
thereof  could  be  maintained.-^ 

§  353.  Construction— As  to  Title  and  Body  of  Act. 

Although  the  title  to  an  anti-trust  act  declares  the 
subject-matter  of  the  statute  to  be  the  prohibition  of 
contracts  or  combinations  "intended  to  prevent  free  com- 
petition in  business,"  the  body  of  the  act,  in  defining 
the  contracts  and  combinations  prohibited,  need  not 
designate  them  as  "intended  to  prevent  free  competition 
in  business,"  the  necessary  effect  thereof  being  to  prevent 

"  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015,  construing  Acts,  1903,  chap.  140. 

"  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 

"  State  V.  Virginia-Carolina  Chemical  Co.,  71  S.  C.  544,  51  S.  E.  455. 

3S9 


§  354  STATE    STATUTES 

such  competition.  These  words  in  the  title  are  nothing 
more  than  a  legal  definition  of  an  unlawful  combination 
at  common  law,  a  declaration  of  the  effect  of  the  prohibited 
combinations,  as  a  matter  of  law,  to  which  the  law  sup- 
plies the  intent.  If  it  appears  upon  the  face  of  the  body 
of  the  act  that  the  doing  of  the  things  prohibited  have  a 
direct  tendency,  if  done,  to  restrain  free  competition, 
the  law  supplies  the  intent  of  the  title. ^^  And  an  anti- 
trust act  is  not  invalid  because  of  an  omission  to  men- 
tion penalties  in  the  title. ^^ 

§  354.  Construction— Rule  as  to  Statutes  in  Pari 
Materia. 

Two  or  more  anti-trust  statutes  enacted  at  different 
sessions  of  the  legislature,  on  the  same  subject,  are  to 
be  treated  in  pari  materia,  and  the  court  must  presume 
that  the  legislature  intended  all  the  enactments  to  con- 
stitute a  consistent  treatment  of  the  subject  within  con- 
stitutional limitations.  In  such  a  case  the  statutes  should 
be  read  in  conjunction  with  the  State  and  Federal  Con- 
stitutions, and  the  several  enactments  will  be  treated  as 
a  harmonious  consistent  system,  in  preference  to  sup- 
posing that,  nterally  construed,  one  is  repugnant  to  the 
others  and  some  enactments  in  consequence  wholly  fail.^* 

Statutes  in  pari  materia  are  to  be  construed  together 
and  repeals  by  implication  are  not  favored.  If  a  later 
statute  does  not  cover  the  entire  field  of  the  first  and 
fails  to  embrace  within  its  terms  a  material  portion  of 
the  first,  it  will  not  repeal  so  much  of  the  first  as  is  not 
included  within  its  scope  but  the  two  will  be  construed 
together  so  far  as  the  first  still  stands.  Where,  however, 
the  legislature  has  passed  two  statutes  upon  the  same 
subject,  the  latter  covering  the  entire  matter  in  the  first 
and  also  additional  provisions,  the  last  act  supersedes 
the  former  act  and  repeals  it  by  implication.-^ 

2«  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 
"  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 
>»  Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115  S. 
W.  703,  131  Ky.  768,  115  S.  W.  755. 

M  State  V.  Omaha  Elevator  Co.,  75  Neb.  637,  110  N.  W.  874. 

390 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  355 

In  the  application  of  this  general  rule  it  was  decided 
in  a  case  in  Nebraska  that  the  anti-trust  act  of  1897, 
known  as  the  "Gondring  Act"  was  repealed  by  impli- 
cation by  the  anti-trust  act  of  1906,  known  as  the  "Jun- 
kin  Act,"  except  as  to  the  first  section  thereof  defining 
trusts.^"  And  the  anti-trust  act  of  1891  in  Illinois  did  not 
repeal  section  forty-six  of  the  criminal  code.  By  the  latter 
section  it  was  made  a  criminal  offense  to  conspire  to  do 
an  illegal  act  injurious  to  public  trade  whether  any  act 
was  done  to  effect  the  object  of  the  conspiracy  or  not 
while  by  the  anti-trust  act  of  1891  it  was  made  a  criminal 
offense  to  enter  into  an  agreement  to  regulate  or  fix  the 
price  of  any  article  of  merchandise  or  commodity  manu- 
factured, mined,  produced  or  sold  within  the  State. 
Between  these  enactments  there  was  held  to  be  no  re- 
pugnancy since  there  is  a  distinction  between  a  conspiracy 
to  an  illegal  act  and  the  actual  performance  of  that  act, 
it  being  declared  that  the  conspiracy  to  do  the  act  is  one 
crime  and  the  doing  of  the  act  another.  ^^  So  in  Kansas 
the  act  of  1897  ^-  did  not  repeal  the  act  of  1889,^3  it  being 
said  that  the  two  statutes  have  much  in  common  but 
that  inasmuch  as  several  subjects  mentioned  in  the 
earlier  act  are  omitted  in  the  second  one  the  legislature 
must  be  deemed  to  have  intended  them  to  stand  together.  ^^ 

§  355.  Construction— Rule  as  to  Statutes  in  Pari  Ma- 
teria—Special  and  General  Statute— Excepted  Class. 

In  a  case  in  Nebraska  the  proposition  was  maintained 
by  defendants  that  where  there  is  found  a  special  statute 
dealing  with  a  particular  subject  and  also  a  general  statute 
broad  enough  in  its  terms  to  include  the  matters  covered 
by  the  special  statute,  as  well  as  other  matters,  the  gen- 
eral statute  will  be  held  to  apply  to  all  matters  not  spe- 
cifically covered  by  the  special  statute,  and,  as  to  such 

»  State  V.  Omaha  Elevator  Co.,  75  Neb.  637,  110  N.  W.  S74. 
"Chicago,  Wilmington  &  Vermillion  Coal  Co.  v.  People,  214  III.  421, 
73  N.  E.  770,  aff'g  114  111.  App.  75. 
«  Kan.  Gt-n.  Stat.,  1909,  §§  5142  et  seq. 
»  Kan.  Gen.  Stat.,  1909,  §§  51S5  et  seq. 
"State  V.  GK'un  Lumber  Co.,  S3  Kan.  .390,  111  P.ac.  484. 

391 


§  356  STATE   STATUTES — 

matters,  the  special  statute  alone  will  apply.  The  court, 
however,  held  the  correct  rule  to  be  that  unless  it  appears 
from  its  terms  that  an  act  applying  to  a  certain  class  of 
persons  is  meant  to  cover  all  inhibitions  and  regulations 
affecting  them,  a  later  general  act  applying  to  all  persons, 
and  prohibiting  in  general  terms  the  acts  specified  in  the 
former  act,  as  well  as  a  number  of  other  acts  and  pur- 
poses, defining  new  crimes  and  prescribing  new  penalties, 
and  giving  new  civil  remedies,  will  not  be  held  to  except 
the  persons  embraced  in  the  former  act  from  the  opera- 
tion of  the  latter.  ^^  And  in  applying  this  doctrine  the 
court  held  that  the  acts  of  1887  and  1897  prohibiting 
combinations  by  grain  dealers  and  others  to  fix  the  price 
of  grain  did  not  except  such  dealers  from  the  operation 
of  the  later  general  anti-trust  acts  of  1897  and  1905,  ap- 
plying to  all  illegal  combinations  to  fix  prices.  ^^ 

§  356.  Construction— Riile  as  to  Additional  and  De- 
scriptive Words. 

It  is  a  general  rule  of  statutory  construction  that  the 
meaning  of  additional  and  general  descriptive  words  is 
confined  to  the  class  to  which  the  preceding  specific 
words  belong.  This  rule  has  been  applied  in  a  case  in 
Arkansas  under  an  anti-trust  statute  which  prohibited 
combinations  from  regulating  or  fixing  "the  price  of  any 
article  of  manufacture,  mechanism,  merchandise,  com- 
modity, convenience,  repair,  any  product  of  mining,  or 
any  article  or  thing  whatsoever."  The  court  held  in  this 
case  that  the  regulation  of  railroads  and  the  fixing  of 
rates  for  the  transportation  of  freight  and  passengers 
had  been  provided  by  numerous  other  acts;  that  questions 
affecting  transportation  had  always  been  the  subject  of 
separate  and  independent  legislation  in  the  State  that 
the  anti-trust  act  did  not  purport  to  deal  with  the  sub- 
ject of  such  transportation  and  the  fixing  of  rates  therefor 

"  State  V.  Omaha  Elevator  Co.,  75  Neb.  637,  110  N.  W.  874,  citing  1 
Lewis'  Sutherland  Statutory  Construction,  p.  528;  1  Kent,  Commentaries, 
462. 

36  State  V.  Omaha  Elevator  Co.,  75  Neb.  637,  110  N.  W.  874. 

392 


CONSTITUTIONALITY   AND    CONSTRUCTION      §§  357,  358 

and  that  the  case  was  a  plain  one  for  the  application  of 
the  rule  cjusdem  generis.  And  the  court  said  in  this  case: 
"It  would  be  a  violent  presumption,  indeed,  to  say  that 
the  legislature  in  this  vague  and  indefinite  manner  at- 
tempted to  deal  with  a  subject  which  so  vitally  affects 
the  welfare  of  the  people  and  a  proper  solution  of  which 
has  ever  been  one  of  the  gravest  concern  and  perplex- 
ity. It  seems  evident  to  us  that  the  framers  of  the  act 
intended  that  the  act  'or  any  article  or  thing  whatsoever ' 
should  take  their  meaning  from  the  things  specifically 
mentioned  before,  and  that  when  so  construed  the  allega- 
tions of  the  complaint  do  not  constitute  a  violation  of 
the  terms  of  the  act."  " 

§  357.  Word  "  Arrangement  "  Construed. 

Where  a  State  statute  declares  ''every  contract,  agree- 
ment, arrangement  or  combination"  whereby  a  "monop- 
oly *  *  *  is  created,"  etc.,  "to  be  against  public  policy, 
illegal  and  void,"  the  word  "arrangement"  is  held  to 
mean  something  different  from  a  "contract"  or  "agree- 
ment" or  a  "combination."  It  may  include  each  and 
all  of  these  things  and  more.  "The  usual  and  ordinary 
meaning  of  the  word  'arrangement'  is  'a  setting  in  order'; 
but  the  better  and  fuller  meaning  of  the  word  as  used 
in  the  statute  is  that  given  in  the  '  New  English  Diction- 
ary' edited  by  James  A.  H.  Murray.  It  is  there  defined 
as:  'The  disposition  of  measures  for  the  accomphshment 
of  a  purpose;  preparation  for  successful  performance.' 
It  is  further  defined  in  the  same  dictionary  as:  'A  struc- 
ture or  combination  of  things  in  a  particular  way  for  any 
purpose.'  "  ^* 

§  358.  Word  "  Combination  "  Construed. 
Under    a    statute    prohibiting    any    "combination    of 
capital,  skill  or  acts  by  two  or  more"  the  word  "com- 

"  State  ex  rel.  Means  v.  Chicago,  R.  I.  &  P.  Ry.  Co.  (Ark.,  1910),  128 
S.  W.  555,  per  Hart,  J.,  construing  .•^-k.  Acts,  1905,  p.  1. 

'«  People  V.  American  lee  Co.,  120  N.  Y.  Supp.  443;  Consol.  Laws  N.  Y., 
chap.  20,  §§  340-34G  (Gen'l  Business  Laws);  s.  c.  (upon  points  us  to  plead- 
ing, etc.),  120  X.  Y.  Supp.  41.  135  App.  Div.  ISO. 

393 


§  359  STATE    STATUTES — 

bination"  is  construed  as  meaning  union  or  association, 
and  if  there  be  no  union  or  association  by  two  or  more 
of  their  "capital,  skill  or  acts"  there  can  be  no  combi- 
nation.^^ The  court  said  in  this  case:  "When  we  consider 
the  purposes  for  which  the  'combination'  must  be  formed 
to  come  within  the  statute,  the  essential  meaning  of  the 
word  'combination,'  and  the  fact  that  a  punishment  is 
presented  for  each  day  that  the  trust  continues  in  exist- 
ence, we  are  led  to  the  conclusion  that  the  union  or 
association  of  'capital,  skill  or  acts'  denounced  is  where 
the  parties  in  the  particular  case  designed  the  united 
co-operation  of  such  agencies,  which  might  have  been 
otherwise  independent  and  competing,  for  the  accom- 
plishment of  one  or  more  of  such  purposes."  ^^ 

§  359.  Words  "  Commodity  "  and  "  Convenience  " 
Construed— Personal  Services  Not —Telephone  Service 

Is. 

The  term  "commodity"  as  used  in  a  statute  relating 
to  an  unlawful  combination,  pool  or  trust  to  control  the 
price  or  limit  the  quantity  of  any  article  of  merchandise, 
or  commodity  manufactured,  mined,  produced  or  sold 
within  the  State  does  not  include  personal  services,  either 
skilled  or  unskilled. ^^ 

In  Missouri  it  has  been  provided  by  statute  that 
"If  any  two  or  more  *  *  *  corporations  who  are  en- 
gaged in  buying  or  selling  any  *  *  *  commodity,  con- 
venience *  *  *  or  any  article  or  thing  whatsoever,  shall 
enter  into  any  *  *  *  agreement  *  *  *  or  understand- 
ing *  *  *  to  limit  competition  in  such  trade,  by  refusing 
to  buy  from  or  sell  to  any  other  person  or  corporation 
any  such  article  or  thing  aforesaid,  for  the  reason  that 
such  other  person  or  corporation  is  not  a  member  of  or 
party  to  such  *  *  *  combination,  confederation,  associa- 
tion or  understanding  *  *  *  it  shall  be  in  violation  of 
this  article."  "^    This  statute  is  held  to  be  in  aid  of  the 

^  Gates  V.  Hooper,  90  Tex.  563,  39  S.  W.  1079,  rev'g  39  S.  W.  186. 

*"  Per  Denman,  J. 

«  Rohlf  V.  Kasemeier,  140  Iowa,  182,  118  N.  W.  276. 

«  Section  8978,  R.  S.  1899,  Ann.  St.  1906,  §  8978. 

394 


CONSTITUTIONALITY   AND    CONSTRUCTION  §  360 

common  law  and  therefore  not  to  be  .strictly  construed 
and  in  this  view  it  is  declared  that  it  is  proper  to  treat 
telephone  service  as  a  convenience  or  commodity  being 
bought  and  sold.  In  this  case  the  court  was  called  upon 
to  determine  the  validity  of  a  contract  stipulating  that 
each  of  two  telephone  companies  should  have  the  exclu- 
sive right  to  transmit  over  its  lines  all  messages  coming 
from  the  lines  of  the  other  which  were  destined  to  points 
on  lines  of  the  connecting  company  and  not  reached  by 
the  lines  of  the  initial  carrier,  and  it  was  decided  that  such 
contract  was  in  violation  of  the  above  statute  in  that 
in  respect  to  such  messages  neither  company  was  per- 
mitted to  buy  the  commodity  or  convenience  of  telephone 
service  from  any  company  other  than  the  party  to  the 
contract/^ 

§  360.  Word  "  Court  "  Construed. 

Under  a  statute  authorizing  the  "court"  to  assess  a 
fine,  the  word,  ''Court"  is  construed  as  not  intended  as  a 

*^  Home  Telephone  Co.  v.  Granby  &  Neosho  Telephone  Co.,  147  Mo. 
App.  216,  126  S.  W,  773.  The  court  said:  "It  is  very  true  that  under  the 
contract  either  one  of  the  parties  thereto  are  free  to  sell  their  service  to 
whomsoever  they  will.  The  right  to  sell  the  convenience  or  commodity 
of  telephone  service  is  not  sought  to  be  restrained  by  the  contract.  How- 
ever this  may  be  it  is  otherwise  as  to  the  right  of  either  company  to  buy 
the  convenience  or  commodity  of  telephone  service  for  the  purpose  of 
transmitting  messages  which  originate  on  or  pass  from  the  lines  of  one 
company  and  are  destined  to  points  on  the  Unes  of  the  other  not  reached 
by  the  initial  carrier.  *  *  *  It  is  entirely  clear  that  such  an  arrangement 
as  that  portrayed  above  operates  to  Hmit  competition  in  respect  to  such 
commodity  or  convenience  as  telephone  service  as  is  proffered  or  available 
for  the  transmission  of  messages  in  the  territory  occupied  by  these  com- 
panies and  attempts  to  confer  a  complete  monopoly  on  each  of  the  con- 
tracting parties  with  respect  thereto.  As  the  contract  assures  to  each 
company  the  exclusive  right  to  transmit  all  messages,  or,  in  other  words, 
furnish  the  service  for  all  messages  originating  on  or  ptissing  from  the  lines 
of  the  other  destined  to  points  on  its  own  lines  and  not  reached  by  lines  of 
the  initial  carrier,  this  of  course  requires  that  the  initial  carrier  shall  not 
buy  such  sers'ice  to  the  same  end  from  any  other  company  not  a  party  to 
the  contract.  The  arrangement  therefore  falls  within  the  very  words  of 
the  statute  and  is  subject  to  its  inhibition.  The  exclusive  privilege  referred 
to,  if  valid,  will  confer  a  complete  monopoly  on  the  two  contracting  com- 
panies with  respect  to  the  business  mentioned  and  prohibit  either  from 
buying  Hke  service  of  all  other  compani(>s  for  the  reason  that  they  are  not 
parties  to  the  contract  and  tho  contract  is  therefore  void."    Per  Nortoni,  J. 

395 


§§  361,  362  STATE   STATUTES — 

designation  of  the  presiding  judge  in  his  distinctive  func- 
tions but  rather  as  a  collective  word  indicating  the  tri- 
bunal before  which  the  conviction  might  be  had  and 
including  both  judge  and  jury.  This  conclusion  is  reached 
in  a  case  involving  the  construction  of  a  statute  author- 
izing the  assessment  by  the  "Court"  of  a  fine  of  one 
hundred  dollars  and  which  was  claimed  to  be  in  violation 
of  a  constitutional  provision  that  no  fine  in  excess  of  fifty 
dollars  should  be  laid  on  any  citizen  unless  "assessed  by 
a  jury  of  his  peers  who  shall  assess  the  fine  at  the  time 
they  find  the  fact.""^ 

§  361.  Words  "  In  Restraint  of  Trade  "  Construed. 

Upon  the  question  of  the  construction  of  the  clause 
"in  restraint  of  trade"  it  is  said  in  a  late  case  in  Mis- 
sissippi: "What  does  this  statute  mean  when  it  prohibits 
'contracts  in  restraint  of  trade'?  Does  it  mean  that 
any  contract  which  in  any  way  restrains  trade  shall  be 
illegal?  If  so  broad  a  meaning  should  be  given  to  the 
statute  as  this,  it  would  involve  a  destruction  and  dis- 
aster to  the  commercial  world  never  dreamed  of  by  its 
authors  and  not  comprehended  within  the  evil  intended 
to  be  rectified.  *  *  *  A  contract  in  reasonable  restraint 
of  trade  was  valid  before  the  enactment  of  the  statute, 
where  its  design  and  purpose  is  not  to  create  a  monopoly 
and  such  contract  is  valid  now  '  where  it  is  such  only  as 
to  afford  a  fair  protection  to  the  interest  of  the  party 
in  favor  of  whom  it  is  given  and  not  so  large  as  to  inter- 
fere with  the  interest  of  the  public.'"  ^^ 

§  362.  Word  "  Monopoly  "  Construed. 

Where  in  a  statute  "combinations"  for  the  "creation 
of  a  monopoly  or  the  unlawful  restraint  of  trade  or  for 
the  prevention  of  competition  in  any  necessary  of  life" 

"State  ex  rel.  Astor  v.  Schlitz  Brewing  Co.,  104  Tenn.  715,  59  S.  W. 
1033,  78  Am.  St.  Rep.  941. 

"  Cumberland  Telephone  &  Telegraph  Co.  v.  State  ex  rel.  Attorney 
General  (Miss.,  1911),  54  So.  670,  per  Mayes,  C.  J.,  construing  Misa.  Code, 
§  5002,  as  amended  by  Laws,  1908,  p.  124. 

396 


CONSTITUTIONALITY   AND   CONSTRUCTION      §§  363,  364 

are  abolished,"^  the  word  "monopoly"  as  above  used 
does  not  include  all  present  existing  means  of  carrying 
on  a  business  or  doing  a  particular  thing  generally,  or 
in  a  particular  place  or  locality,  and  the  right  to  possess, 
or  own,  or  control  all  means  for  doing  that  thing  in  that 
place  in  the  future.  That  strict  meaning  does  not  apply, 
but  covers  an  exclusive  privilege  to  carry  on  a  traffic 
or  complete  control  of  a  business  in  a  certain  locality.''^ 

§  363.  Word  "  Person  "  Construed —Whether  Cor- 
porations Included. 

Although  the  word  ''person"  as  used  in  a  statute  may 
and  frequently  does  include  corporations  yet  this  is  not 
true  in  all  cases  even  though  by  statute  or  code  it  is  de- 
clared that  the  word  "person"  includes  a  corporation. 
In  the  construction  of  a  statute  involving  the  question 
whether  it  does  or  not,  it  must  always  be  determined  by 
ascertaining  the  legislative  intention  to  be  found  by  the 
aid  of  the  context  and  purpose  of  the  act.^^ 

So  where  an  anti-trust  act  mentioned  in  the  first  sec- 
tion both  persons  and  corporations,  in  the  second,  corpora- 
tions only,  in  the  third,  persons  only  and  again  in  the 
fourth,  both  persons  and  corporations  it  was  declared 
that  the  word  "persons"  in  the  third  section  was  not 
intended  to  include  corporations.^^ 

§  364.  Words  "  Real  Value  "  Construed. 

The  words  "real  value"  as  used  in  a  constitutional  or 
statutory  provision  in  regard  to  the  increasing  or  dimin- 
ishing of  the  prices  of  articles  are  construed  as  meaning 
the  same  as  market  value,  at  a  sale  under  normal  condi- 
tions, unaffected  by  any  combination  of  producers  or  deal- 

«  Section  7,  N.  Y.  Stock  Corp.  Law,  Laws,  1890,  p.  1069,  chap.  564, 
amended  by  Laws,  1892,  p.  1828,  chap.  688. 

"  Continental  Securities  Co.  v.  Interborough  Rapid  Transit  Co.  (U.  S. 
C.  C),  165  Fed.  945. 

«  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015,  construing  Acts,  1903,  chap.  140. 

«  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015,  construing  Acts,  1903,  chap.  140. 

397 


§  365  STATE   STATUTES — 

ers  whose  object  is  to  create  an  abnormal  condition  in  the 
market.^" 

§  365.  Word  "  Trade  "  Construed. 

In  construing  an  act  entitled  "An  act  to  declare  un- 
lawful trusts  and  combinations  in  restraint  of  trade  and 
products"  it  has  been  decided  that  the  word  ''trade" 
should  not  be  construed  as  used  in  the  narrower  and  per- 
haps usual  sense  as  referring  to  the  business  of  selling 
or  exchanging  some  tangible  substance  or  commodity 
for  money  or  the  business  of  dealing  by  way  of  sale  or 
exchange  in  commodities  but  rather  in  the  broader  sense 
as  meaning  any  occupation  or  business  carried  on  for 
subsistence  or  profit.  And  it  was  decided  that  since  by 
giving  it  the  latter  construction  it  would  fairly  embrace 
and  cover  a  provision  of  the  act  with  reference  to  the 
business  of  insurance  and  render  such  provision  valid 
while  by  giving  it  the  narrower  meaning  it  would  render 
the  provision  invalid,  the  broader  meaning  should  be 
adopted." 

The  court  said  upon  this  question:  "The  title  prefixed  to 
an  act  may  be  broad  and  general,  or  it  may  be  narrow  and 
restricted,  but  in  either  event  it  must  be  a  fair  index  of  the 
provisions  of  the  act;  that  is,  the  subject  of  the  act  must  be 
clearly  expressed  by  the  title.  Here  a  term  is  employed  in 
the  title  which,  if  given  the  broader  meaning,  would  render 
the  provision  in  question  valid,  while  by  giving  it  the 
narrower  and  perhaps  more  common  meaning,  it  would 
render  the  provision  invalid.  Which  of  these  should  be 
adopted?  The  mere  generality  of  the  title  to  an  act 
does  not  render  it  objectionable,  so  long  as  the  act  has 
but  one  general  object,  and  the  title  is  such  that  neither 
the  members  of  the  legislature  nor  the  people  to  be 
affected  can  be  misled.  Titles  of  a  very  general  nature 
have  been  adopted  in  the  legislation  of  this  State,  and 

^Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115  S. 
W.  703,  construing  §  198,  Ky.  Const.,  requiring  the  general  assembly  to 
enact  laws  to  prevent  combinations  to  depreciate  below  its  real  value  any 
article  or  to  enhance  the  cost  of  any  article  above  its  real  value. 

"  In  Re  Pinkney,  47  Kan.  89,  27  Pac.  179. 

398 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  366 

their  use  has  been  encouraged  and  sustained.  *  *  *  That 
the  broader  meaning  of  the  word  'trade'  was  the  one 
intended  by  the  legislature  is  manifest  from  the  incor- 
poration of  the  insurance  provision  in  the  body  of  the  act. 
The  meaning  given  by  the  legislature  to  the  terms  for 
expressing  the  subject  of  the  act  should  be  considered  by 
the  court  in  determining  the  sufficiency  of  the  title.  AVhile 
the  legislature  cannot  extend  the  scope  of  the  title  by 
giving  to  a  word  therein  a  definition  'which  is  unnatural 
and  unwarranted  by  usage,  still,  if  the  word  admits  of 
the  construction  given  to  it  by  the  legislature,  and  can  be 
properly  used  in  a  sense  broad  enough  to  include  the  pro- 
visions of  the  act,  the  intention  of  the  legislature  is  en- 
titled to  great  weight  in  determin-ing  the  sufficiency  of 
the  title.  *  *  *  How  can  it  be  said  that  the  business  of 
insurance  is  foreign  to  the  title  of  this  act,  when  the  sub- 
ject, expressed  .in  the  title,  taken  in  its  broadest  sense, 
and  the  one  intended  by  the  legislature  would  embrace 
such  business?  How  can  anyone  be  misled  as  to  this 
provision  by  the  use  of  the  word  'trade'  when  the  leading 
lexicographers  and  writers  employ  the  word  in  a  sense 
which  is  comprehensive  enough  to  include  the  provision? 
The  fact  that  the  narrower  meaning  of  the  word  is  the 
one  most  frequently  used  will  not  justify  the  court  in 
restricting  the  meaning  which  the  legislature  intended 
it  should  have."  ^^ 

§  366.  Application  of  Statute  Generally. 

A  State  statute  which  prohibits  any  corporation  from 
creating  or  entering  into  any  pool,  trust,  agreement, 
combination,  confederation  or  understanding  with  any 
other  corporation,  partnership,  individual  or  any  other 
person  or  association  of  persons,  to  regulate  or  fix  prices 
or  to  maintain  such  prices,  when  so  regulated  and  fixed, 
or  to  fix  or  limit  the  amount  or  quantity  of  any  article  of 
manufacture  is  applicable  to  individuals  and  partner- 
ships as  well  as  to  corporations;  it  contemplates  the 
existence  of  at  least  two  or  more  corporations,  individuals 

^"^  Per  Johnston,  J. 

399 


§§  367, 368  STATE   STATUTE — 

or  partnerships,  so  as  to  agree  or  combine  with  each  other 
to  do  the  prohibited  acts  set  forth  in  the  statute;  it  is 
intended  to  preclude  secret  agreements  to  accompUsh 
the  things  condemned  by  the  enactment,  or  to  deceive 
and  mislead  the  public  by  an  apparent  competition 
when  as  a  fact  there  is  none.  Such  a  statute,  however, 
is  not  broad  enough  to  prohibit  one  corporation,  in  good 
faith,  in  the  legitimate  pursuit  of  its  business,  from  pur- 
chasing the  assets  of  another  corporation  in  a  similar 
business,  and  if  such  a  statute  is  to  be  construed  as  pro- 
hibiting corporations  from  purchasing  in  good  faith  the 
assets  of  another  corporation,  it  would  apply  with  equal 
force  to  the  rights  and  powers  of  individuals.^^ 

§  367.  Penalty  Provisions  of  Act— Review  by  United 
States  Supreme  Court. 

Where  the  penalty  provisions  of  a  statute  are  clearly 
separable  and  are  not  invoked,  the  United  States  Supreme 
Court  is  not  called  to  determine  whether  the  penalties  are 
so  excessive  as  to  amount  to  a  deprivation  of  property 
without  due  process  of  law  and  thus  render  the  statute 
unconstitutional  in  that  State. ^^ 

§  368.  Territorial  Legislation— Power  of  Congress — 
Delegation  of  Power  to  Subordinate  Bodies. 

Territories  are  portions  of  the  United  States  not  yet 
created  into  States  and  Congress  has  the  power  to  dis- 
pose of  and  make  all  needful  rules  and  regulations  therein, 
having  complete  legislative  authority  over  the  people 
inhabiting  the  territories  and  all  the  departments  of  the 
territorial  government.  Subordinate  bodies  may  be  dele- 
gated the  right  to  legislate  for  a  territory  or  Congress 
may  restrict  all  such  legislation  to  itself.  Where  power 
is  conferred  upon  a  territory  to  legislate  it  has  only  such 
authority  as  has  been  granted  but  in  so  far  as  legislation 
is  exercised  by  the  body  to  which  it  is  delegated,  such 

"  State  (Crow,  Att'y  Gen'l)  v.  Ck^ntinental  Tobacco  Co.,  177  Mo.  1,  32, 
75  S.  W.  737,  Laws  Mo.,  1897,  p.  208;  see  Act,  1899. 

"  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  535, 
54  L.  ed.  826. 

400 


CONSTITUTIONALITY   AND   CONSTRUCTION  §  3G8 

body  acts  by  virtue  of  Federal  authority  and  its  legis- 
lation is  Federal  legislation.  These  principles  are  stated 
in  a  case  in  Oklahoma  in  which  it  was  claimed  that  an 
act  of  the  territorial  legislature  to  prevent  combinations, 
pools  or  trusts  to  fix  or  regulate  prices  or  to  prevent  or 
restrict  competition  which  was  passed  several  months 
after  the  Sherman  Anti-trust  Act  '"'"  was  not  a  valid  and 
enforceable  act  inasmuch  as  Congress  had  legislated  upon 
that  subject  and  that  its  legislation  was  exclusive  so  far 
as  the  territorial  legislature  was  concerned,  in  that  it 
could  pass  no  act  covering  the  same  field  which  could 
stand  concurrently  with  the  Federal  legislation  upon 
the  subject.  It  was,  however,  decided  that  under  the 
authority  conferred  upon  the  Territory  of  Oklahoma  by 
the  Organic  Act  ^^  providing  "That  the  legislative  power 
of  the  Territory  shall  extend  to  all  rightful  subjects  of 
legislation  not  inconsistent  with  the  Constitution  and 
laws  of  the  United  States,"  and  placing  the  legislative 
power  in  the  governor  and  legislative  assembly,  the  legis- 
lative power  for  self-government,  was  subject  to  a  few 
specified  limitations,  quite  as  extensive  as  that  of  a  State, 
and  that  the  territorial  act  was  not  repugnant  to  nor  in 
conflict  with  the  Federal  act  or  any  other  constitutional 
or  congressional  limitation  and  was  a  valid  and  existing 
statute  of  the  territory." 

"  Act  Cong.,  July  2,  1890,  chap.  637,  26  Stat.  209  (U.  S.  Comp.  Stat., 
1901,  p.  3200). 

w  Act  of  May  2,  1890,  chap.  182,  26  Stat.  84. 

"  Territory  v.  Long  Bell  Lumber  Co.,  22  Okla.  890,  99  Pac.  911.  The 
court  quoted  from  opinion  in  Clinton  v.  Englebrecht,  13  Wall.  (U.S.)  434,20 
L.  ed.  659,  as  follows:  "The  theory  upon  which  the  various  governments  for 
portions  of  the  territory  of  the  United  States  have  been  organized  has  ever 
been  that  of  leaving  to  the  inhabitants  all  the  powers  of  self-government 
consistent  with  the  supremacy  and  supervision  of  national  authority, 
and  with  certain  fundamental  principles  estabhshed  by  Congress"  and 
said:  "This  in  our  judgment  is  a  correct  statement  of  the  rule  involved,  and 
the  determination  of  the  extent  to  which  Congress  has  granted  to  the  ter- 
ritory of  Oklahoma  to  legislate  must  be  ascertained  from  a  construction 
of  the  powers  specifically  granted  in  section  6  of  the  Organic  Act.  •  *  * 
There  is  nothing  in  the  Federal  Act  prescribing  or  prohibiting  to  the  legis- 
lative authority  of  the  territory'  the  right  to  legislate  upon  this  identical 
subject,  nor  is  the  same  contained  in  any  act  of  Congress  to  which  our  at- 
tention has  been  called.     Per  Dunn,  J. 

26  401 


§  369  STATE   STATUTES 


CHAPTER  XXIV 

STATE    STATUTES — PARTICULAR   CONSTITUTIONAL   AND 
STATUTORY   PROVISIONS 

§  369.  Constitutional  Provision  — Statute  Relieving  from 

Prohibiting  Consolidation  Liability, 

of  Parallel  and  Competing  §  374.  Provisions  as  to  Punishment 

Lines  of  Railroad.  — Fine  or  Imprisonment — • 

370.  Combination  to  Fix  or  Limit  Forfeiture    of     Charter — 

the  Price  or  Premium  for  Revocation  of  Permit. 

Insuring     Property     Pro-  375.  Statute   Permitting   Pooling 

hibited.  by  Farmers  of  Farm  Prod- 

371.  Statute    Prohibiting    Condi-  ucts. 

tion  of  Sale  Not  to  Sell  376.  Exception   in   Statute — Sale 

Goods  of  Any  Other  Per-  of  Good  Will  of  Business — 

eon.  Agricultural    Products   or 

372.  Statute  Forbidding  Discrim-  Live  Stock. 

ination  in   Prices  for  Pe-         377.  Donnelly  Anti-Trust  Act — 
troleum.  New  York. 

373.  Purchaser  from  Combination 

§  369.  Constitutional  Provision  Prohibiting  Consolida- 
tion of  Parallel  and  Competing  Lines  of  Railroad. 

In  a  constitutional  provision  prohibiting  the  consoUda- 
tion  of  ''parallel  or  competing"  lines  of  railroad  the 
conjunction  ''or"  is  used  to  co-ordinate  the  two  words 
which  it  connects  as  equivalent,  the  one  of  the  other. 
Such  a  provision  is  construed  as  having  in  view  the  com- 
mercial relations  the  lines  bear  to  each  other  and  the 
preservation  of  competition,  and  the  word  parallel  is  not 
to  be  construed  in  its  strict  sense.  ^ 

So  a  constitutional  provision  prohibiting  any  railroad 
company  from  consolidating  with  any  other  railroad  com- 
pany owning  or  having  under  its  control  a  parallel  or  com- 
peting line  is  sufficient  to  forbid  a  consolidation  of  railroad 
companies  whose  lines  are  in  fact  parallel  or  competing, 

^  State  ex  inf.  Attorney-General  v.  Terminal  Railroad  Association,  182 
Mo.  284,  81  S.  W.  395. 

402 


CONSTITUTIONAL   AND    STATUTORY    PROVISIONS      §  369 

tracking  the  State  through  its  length  or  breadth.  The 
formation,  however,  of  a  corporation  for  the  purpose  of 
providing,  by  means  of  a  common  track  and  terminus 
ample  and  convenient  connections  and  accommodations 
within  a  city  for  all  railroads  which  enter  or  may  enter  it 
and  for  all  individuals  and  companies  doing  business  with 
such  railroads  docs  not  violate  such  act.'-  The  court  said : 
"If  the  Merchants'  Terminal  Company  can  deliver  the 
cars  which  are  loaded  on  the  switch  at  the  manufacturer's 
establishment  to  one  railroad  only  that  railroad  has  a 
practical  monopoly  of  the  business  of  that  manufacturer. 
But  if  the  whole  terminal  system  is  open  to  the  shipper 
he  may  invite  bids  on  his  freight  and  employ  the  railroad 
that  will  take  it  at  the  lowest  rate.  That  is  the  system 
that  this  respondent  has  established  and  it  is  bound  to 
serve  all  railroad  companies  approaching  St.  Louis  on 
the  same  terms.  *  *  *  We  gather  from  the  information 
that  all  along  the  lines  of  the  terminal  tracks,  intersecting 
the  city  from  north  to  south,  from  east  to  west,  and 
belting  it  on  the  west,  there  are  manufacturing  and  other 
business  concerns  with  switch  tracks  or  spurs  into  their 
premises,  which  enable  the  shipper  to  load  the  cars  on 
the  switch  tracks  on  his  premises  and  have  them  deliv- 
ered to  any  railroad  that  reaches  the  city.  A  more 
effectual  means  of  keeping  competition  up  to  the  highest 
point  between  parallel  or  competing  lines  could  not  be 
devised.  The  destruction  of  the  system  would  result 
in  compelling  the  shipper  to  employ  the  railroad  with 
which  he  has  switch  connection,  "or  else  cart  his  product 
to  a  distant  part  of  the  city,  at  a  cost  possibly  as  great 
as  the  railroad  tariff."  ^ 

But  a  constitutional  provision  prohibiting  the  consoli- 
dation of  parallel  and  competing  lines  of  railroads  and 
not  referring  to  street  railways  will  be  construed  as  re- 
ferring to  railroads  in  the  sense  in  which  that  word  is 

"State  ex  inf.  Attorney-General  v.  Terminal  Railroad  Association  of 
St.  Louis,  182  Mo.  284,  81  S.  W.  395,  construing  §  17,  Art.  12,  of  the  Mo. 
Constitution. 

'  Per  Valliant,  J. 

403 


§  370  STATE   STATUTES 

ordinarily  understood  and  not  as  including  street  railways, 
and  this  construction  is  strengthened  where  another 
provision  of  the  same  article  of  the  Constitution  specifi- 
cally refers  to  street  railways.  It  was  said  in  this  case 
that  ordinarily  when  we  speak  of  a  railroad  we  mean  a 
railroad  over  which  freight  and  passengers  are  trans- 
ported from  one  town  or  city  to  another  and  that  when 
we  speak  of  those  roads  on  which  passengers  are  trans- 
ported over  the  streets  of  a  town  or  city  we  call  them 
street  railways.^ 

§  370.  Combination  to  Fix  or  Limit  the  Price  or 
Premium  for  Insuring  Property  Prohibited. 

In  the  application  of  the  doctrine  as  to  the  power  of 
the  State  to  pass  regulations  in  the  exercise  of  the  police 
power  and  to  prescribe,  within  constitutional  limits,  the 
particular  means  of  enforcing  such  regulations  it  has  been 
determined  that  provisions  imposing  on  all  insurance  com- 
panies who  are  in  connection  with  a  tariff  association,  in 
violation  of  the  statute,  a  liability  to  be  recovered  by  the 
insured  of  twenty-five  per  cent  in  excess  of  the  amount 
of  the  policy  '^  are  not  unconstitutional  under  the  Four- 
teenth Amendment  as  depriving  such  companies  of  their 
property  without  due  process  of  law  or  denying  them  the 
equal  protection  of  the  laws.^  The  court  said:  "Much 
stress  is  placed  by  the  insurance  company  on  that  clause 
of  the  statute  allowing  the  insured  to  recover,  in  addition 
to  the  actual  loss  or  damage  suffered,  twenty-five  per 
cent  of  the  amount  of  such  loss  or  damage,  if  the  com- 
pany before  or  at  the  time  of  the  trial  belonged  to  or 
was  connected  with  a  tariff  association  that  fixed  rates; 
we  do  not  think  that  this  provision  is  in  excess  of  the 
])ower  of  the  State.     As  a  means  to  effect  the  object  of 

*  Scott  V.  Farmers'  &  Merchants'  National  Bank,  97  Tex.  31,  75  S.  W. 
7,  104  Am.  St.  Rep.  385,  reversing  (Tex.  Civ.  App.)  66  S.  W.  485,  67  S.  W. 
343. 

«  §§  2619,  2620  of  the  Code  of  Alabama  as  amended  by  §§  4954,  4955  of 
the  Code  of  1907. 

» German  Alliance  Ins.  Co.  v.  Hale,  219  U.  S.  307,  31  Sup.  Ct.  246,  55 
L.  ed. 

404 


I 


CONSTITUTIONAL   AND   STATUTORY    PROVISIONS      §  37U 

the  statute — the  discouragement  of  monopoly  or  com- 
bination and  the  encouragement  of  competition  in  the 
matter  of  insurance  rates — the  State  adopted  the  regu- 
lation here  in  ciuestion.  It  was  for  the  State,  keeping 
within  the  limits  of  its  constitutional  powers,  to  say  what 
particular  means  it  would  prescribe  for  the  protection  of 
the  public  in  such  matters.  The  court  certainly  cannot 
say  that  the  means  here  adopted  are  not,  in  any  real  or 
substantial  sense,  germane  to  the  end  sought  to  be  at- 
tained by  the  statute.  Those  means  may  not  have  been 
the  best  that  could  have  been  devised,  but  the  court 
cannot,  for  any  such  reason,  declare  them  illegal  or  be- 
yond the  power  of  the  State  to  establish.  So  far  as  the 
Federal  Constitution  is  concerned,  the  State  could  for- 
bid, under  penalty,  combinations  to  be  formed  within  its 
limits,  by  persons,  associations  or  corporations  engaged 
in  the  business  of  insurance,  for  the  purpose  of  fixing 
rates.  But  it  is  not  bound  to  go  to  that  extent  in  its 
legislation.  It  may,  in  its  discretion,  go  only  so  far  as  to 
impose  upon  associations  or  corporations  acting  together 
in  fixing  rates,  a  liabihty  to  pay  to  the  insured,  as  part 
of  the  recovery,  a  certain  per  cent  beyond  the  actual 
loss  or  damage  suffered,  if,  before  or  at  the  time  of  the 
suit  on  the  contract  of  insurance,  it  is  made  to  appear 
that  the  company  or  corporation  sued  is  part  of  or  con- 
nected with  a  tariff  rate  association.  Such  a  provision 
manifestly  tends  to  discourage  monopoly  or  combination 
and  to  encourage  competition  in  a  business  in  the  con- 
duct of  which  the  general  pubUc  is  largely  interested."  ^ 

'  Per  Mr.  Justice  Harlan. 

As  to  violation  of  statute  as  to  insurance  combinations  in  Missouri  by  a 
club,  see  State  v.  Firemen's  Fund  Ins.  Co.,  152  Mo.  1,  52  S.  W.  595,  45 
L.  R.  A.  363. 

Statutes  as  to  insurance  combinations.  Section  1  of  the  Missouri  Act  of 
1S97  (Laws,  1897,  p.  208),  prohibiting  among  other  things  combinations  to 
regulate  or  fix  the  price  or  premium  to  be  paid  for  insuring  property  against 
loss  or  damage  by  fire,  lightning  or  storm  or  to  maintain  said  price  when  so 
fixed  or  regulated  was  held  not  to  be  unconstitutional  as  depriving  insur- 
ance companies  of  their  property,  life  or  liberty  without  due  process  of 
law.  State  v.  Firemen's  Fund  Ins.  Co.,  152  Mo.  1,  52  S.  W.  595.  45  L.  R. 
A.   363. 

405 


§  370  STATE   STATUTES — 

So  it  was  determined  that  the  provision  of  the  Iowa 
Code  of  1897,^  prohibiting  combinations  of  insurance 
companies  as  to  rates,  commissions  and  manner  of  trans- 
acting business  was  not  unconstitutional  as  depriving 
the  companies  of  their  property  or  of  their  Uberty  of 
contract  within  the  meaning  of  the  Fourteenth  Amend- 
ment and  that  the  auditor  of  the  State  would  not  be 
enjoined  from  enforcing  the  provisions  of  the  statute.^ 
The  court  also  said:  "Equally  without  basis  on  which 
to  rest  is  the  contention  that  the  statute  violates  the 
clause  of  the  Fourteenth  Amendment,  forbidding  a  State 
to  'deny  to  any  person  within  its  jurisdiction  the  equal 
protection  of  the  la\\js.'  We  will  assume  for  the  pur- 
poses of  this  case,  that  this  company  is  within  the  juris- 
diction of  the  Federal  court  so  as  to  entitle  it  to  claim 
the  benefit  of  that  provision  of  the  Fourteenth  Amend- 
ment.^" We  are  yet  clearly  of  the  opinion  that  the  statute 
does  not,  within  the  meaning  of  the  Constitution,  deny 
the  insurance  company  the  equal  protection  of  the  laws. 
The  statute  applies  only  to  associations  or  corporations 
that  unite  in  fixing  the  rates  of  insurance  to  be  charged 
by  each  constituent  member  of  the  combination.  Looking 
at  the  evil  to  be  remedied  that  was  such  a  classification 
as  the  State  could  legally  make.  It  is  neither  unreason- 
able nor  arbitrary  within  the  rule  that  a  classification 
must  rest  upon  some  difference  indicating  *a  reasonable 
and  just  relation  to  the  act  in  respect  of  which  the 
classification  is  proposed.'  The  legislature  naturally 
directed  its  enactment  against  insurance  companies  or 
corporations  which  before  or  at  the  time  of  trial  were 
found  to  be  members  of  the  insurance  tariff  association 
that  fixed  rates.  No  principle  of  classification  required 
it  to  include  insurance  associations  that  were  free  to  act, 
in  the  matter  of  rates,  upon  the  merits  of  each  application 
for  insurance,  unaffected  by  any  agreement  or  arrange- 

8  Section  1754. 

» Carroll  v.  Greenwich  Ins.  Co.,  199  U.  S.  401,  26  Sup.  Ct.  66,  50  L.  ed. 
246. 

i"  Blake  v.  McClung,  172  U.  S.  239,  260,  19  Sup.  Ct.  165,  38  L.  ed.  432. 

406 


CONSTITUTIONAL   AND    STATUTORY   PROVISIONS      §371 

ment  with  other  companies.  All  insurance  companies, 
persons,  or  corporations  engaged  in  the  business  of  insur- 
ance as  agent  or  otherwise  with  associations,  persons  or 
corporations  which  acted  together  in  fixing  rates  are 
placed  by  the  statute  upon  an  equality  in  every  respect 
and,  therefore,  it  cannot  rightfully  be  contended  that  the 
plaintiff  in  error  is  denied  the  equal  protection  of  the 
laws.  Whatever  'liberty  of  contract'  they  had  must 
have  been  exercised  in  subordination  to  any  valid  regu- 
lations the  State  prescribed  for  the  conduct  of  their 
business.  Statutes  that  apply  equally  to  all  of  the  same 
class  and  under  like  conditions  cannot  be  held  to  deny 
the  equal  protection  of  the  laws;  for,  as  this  court  has 
adjudged  'the  equal  protection  of  the  laws  is  a  pledge  of 
the  protection  of  equal  laws'  to  all  under  like  circum- 
stances." ^' 

And  in  a  case  in  Arkansas  it  is  decided  that  an  anti- 
trust act  providing  that ' '  any  corporation  organized  under 
the  laws  of  this  or  any  other  State,  or  country,  and 
transacting  or  conducting  any  kind  of  business  in  this 
State,  or  any  partnership  or  individual  *  *  *  who  shall 
create,  enter  into,  become  a  member  of  or  a  party  to  any 
pool,  trust,  agreement,  combination,  confederation  or 
understanding  *  *  *  to  fix  or  limit  *  *  *  the  price  or 
premium  to  be  paid  for  insuring  property  against  loss  or 
damage  by  fire  *  *  *  shall  be  deemed  and  adjudged 
guilty  of  a  conspiracy  to  defraud"  does  not  apply  to 
pools  or  combinations  formed  outside  of  the  State  and  not 
intended  to  affect,  and  which  do  not  affect,  persons,  or 
property,  or  prices  of  insurance  within  the  State.  ^- 

§371.  Statute  Prohibiting  Condition  of  Sale  Not  to 
Sell  Goods  of  Any  Other  Person. 

It  is  a  valid  exercise  of  the  police  power  of  a  State  to 
provide  that  a  person,  firm  or  corporation  shall  not  make 

"Per  Mr.  Justice  Harlan,  citing  Yick  Wo  v.  Hopkins,  US  U.  S.  356, 
367,  6  Sup.  Ct.  1064,  29  L.  ed.  220;  Barbier  v.  Connolly,  113  U.  S.  27,  5 
Sup.  Ct.  357,  28  L.  ed.  923;  Leon  Hing  v.  Crowley,  113  U.  S.  703,  5  Sup. 
Ct.  730,  28  L.  ed.  1145. 

'=  State  V.  Lancashire  Fire  Ins.  Co.,  66  Ark.  466,  51  S.  W.  633. 

407 


§  371  STATE    STATUTES — 

it  a  condition  of  the  sale  of  goods  that  the  purchaser 
shall  not  sell  or  deal  in  the  goods  of  any  other  person, 
firm  or  corporation.  Such  an  act  is  held  not  to  be  in 
violation  of  the  United  States  Constitution  or  of  the 
Declaration  of  Rights  in  the  Constitution  of  Massachu^ 
setts. '^ 

So  in  Massachusetts  it  has  been  provided  by  statute 
as  follows:  "A  person,  firm,  corporation,  or  association 
of  persons  doing  business  in  this  Commonwealth,  shall 
not  make  it  a  condition  of  the  sale  of  goods,  wares  or 
merchandise  that  the  purchaser  shall  not  sell  or  deal  in 
the  goods,  wares  or  merchandise  of  any  other  person, 
firm,  corporation  or  association  of  persons;  but  the  pro- 
visions of  this  section  shall  not  prohibit  the  appointment 
of  agents  or  sale  agents  for  the  sale  of,  nor  the  making 
of  contracts  for  the  exclusive  sale  of,  goods,  wares  or 
merchandise."  In  construing  this  statute  the  words 
"exclusive  sale"  were  held  to  mean  a  selling  within  a 
prescribed  territory,  to  the  exclusion  of  all  other  persons, 
so  that  in  the  designated  place  the  purchaser  who  makes 
such  a  contract  with  the  original  seller  will  have  the 
control  of  the  market  for  resale.  And  it  was  decided 
that  a  contract  that  the  purchaser  shall  sell  the  goods 
of  the  seller,  and  shall  not  sell  the  goods  of  any  other 
person  is  not  permitted  by  the  terms  of  the  statute.  ^^ 

But  in  giving  this  statute  such  a  construction  it  has 
been  held  that  it  does  not  prohibit  a  sale  at  a  reduced 
rate  in  consideration  of  an  agreement  to  sell  the  vendor's 
goods  alone. ^^     So  it  has  been  held  lawful  under  this 

"  Commonwealth  v.  Strauss,  191  Mass.  545,  78  N.  E.  136,  11  L.  R.  A. 
(N.  S.)  968. 

But  it  has  been  decided  that  a  statute  making  it  a  criminal  offense  to 
make  it  a  condition  of  the  sale  of  goods  "that  the  purchaser  shall  not  sell 
or  deal  in  the  goods  *  *  *  of  any  other  person,  firm,  corporation  or  asso- 
ciation of  persons"  is  one  which  is  highly  penal  and  to  be  strictly  construed. 
Commonwealth  v.  Strauss,  188  Mass.  229,  74  N.  E.  308,  followed  in 
Butterick  Publishing  Co.  v.  Fisher,  203  Mass.  122,  89  N.  E.  189,  construing 
Mass.  R.  L.,  chap.  56,  §  1. 

i<  Commonwealth  v.  Strau.ss,  191  Mass.  545,  78  N.  E.  136,  11  L.  R.  A. 
(N.  S.)  968. 

1^  Butterick  Publishing  Co.  v.  Fisher,  203  Mass.  122,  89  N.  E.  189. 

408 


CONSTITUTIONAL    AND   STATUTORY    PROVISIONS     §  372 

statute  to  make  an  inducement  by  way  of  giving  a  dis- 
count from  the  regular  price  if  the  purchaser  will  handle 
the  seller's  goods  exclusively.'^  The  language  of  the 
statute  is  held  not  to  include  such  cases  but  to  refer  to 
a  sale,  a  condition  of  which  is  that  there  shall  be  no  sale 
of  the  goods  of  others  and  to  dealing  which  makes  it 
impossible  for  one  to  buy  certain  goods  to  sell  again  unless 
he  agrees  at  the  same  time  to  sell  these  exclusively.  Such 
an  absolute  agreement  on  the  part  of  the  purchaser  is  a 
condition  precedent  to  the  consummation  of  a  prohibited 
sale.'^ 

§  372.  Statute  Forbidding  Discrimination  in  Prices 
for  Petroleum. 

In  the  exercise  of  the  police  power  which  is  vested  in 
the  legislature  it  has  been  decided  that  a  law  is  con- 
stitutional which  forbids  discrimination  in  the  prices 
charged  for  petroleum  or  any  of  its  products  and  that 
the  inclusion  in  the  statute  of  articles  not  subject  to  classi- 
fication with  articles  which  are  so  subject  does  not  ren- 
der the  enactment  invalid  as  to  the  articles  properly 
subject  to  classification.  In  this  case  which  was  a  prose- 
cution under  the  statute  for  discrimination  in  the  price 
of  kerosene  it  was  held  that  kerosene  was  one  of  the  com- 
modities subject  to  special  classification  and  that,  being 
the  only  one  in  which  the  complaint  charged  discrimina- 
tion, the  right  of  the  defendant  to  plead  any  improper 
inclusion  in  the  statute  of  other  articles  was  denied.  '^ 

16  Commonwealth  v.  Strauss,  188  Mass.  229,  74  N.  E.  308. 

"  Per  Knowlton,  C.  J. 

"  State  ex  rel.  Young  v.  Standard  Oil  Co.,  HI  Minn.  85,  126  N.  W.  527. 
Upon  the  question  of  the  vahdity  of  the  statute  the  court  said:  "In  de- 
termining the  vaUdity  of  the  statute,  we  have  to  consider  whether  petro- 
leum and  its  products  possess,  in  themselves,  or  in  the  manner  in  which 
they  may  be  placed  upon  the  market  as  articles  of  commerce,  any  peculiar 
characteristics  which  furnish  a  legitimate  reason  for  singling  them  out  for 
the  purpose  of  regulation,  to  the  exclusion  of  other  articles  used  for  similar 
purposes.  In  determining  this  question  we  judicially  note  all  facts  of  com- 
mon knowledge  presumably  considered  by  the  legislature  when  the  law 
was  enacted,  and  inquire  whether  there  existed,  at  the  time  of  and  before 
the  act  was  passed,  practices  in  this  class  which  were  inimical  to  the  public 
welfare  and  properly  the  subject   of  remedial   legislation.     We  have  no 

409 


§§  373,  374  STATE    STATUTES — 

§  373.  Purchaser  from  Combination— Statute  Reliev- 
ing from  Liability. 

An  anti-trust  act  making  the  sale  of  any  article  by  any 
individual  company  or  corporation  transacting  business 
within  the  State  contrary  to  its  provisions  unlawful  and 
reUeving  the  purchaser  of  liability  for  the  unpaid  part 
of  the  purchase  money  and  authorizing  him  to  recover 
money  paid  does  not  affect  sales  made  in  another  State 
between  citizens  thereof  and  of  citizens  of  the  State  where 
such  statute  is  in  force  though  the  sale  was  completed  by 
delivery  in  the  latter  State  as  such  a  transaction  con- 
stitutes a  part  of  interstate  commerce.  ^^ 

§  374.  Provisions  as  to  Punishment— Fine  or  Impris- 
onment—Forfeiture of  Charter— Revocation  of  Permit. 

A  statute  providing  for  the  punishment  by  fine  of 
''any  corporation,  company,  firm  or  association  of  per- 
sons," found  guilty  of  violating  that  statute  and  for  the 
punishment  by  fine  or  imprisonment,  or  by  both  fine  and 
imprisonment,  of  any  "president,  manager,  dnector  or 

difficulty  upon  this  question.  Petroleum  is  taken  from  the  earth  in  a 
manner  peculiar  to  itself.  The  refined  oil  is  handled  as  no  other  product. 
Its  production  and  distribution  have  caused  more  legislative  investiga- 
tions, and  have  been  the  subject  of  greater  legal  combats,  in  recent  years, 
than  any  other  article  of  commerce.  We  think  it  is  more  unique,  and 
justifies  special  regulation  much  more,  than  many  of  the  other  articles  as 
to  which  legislation  was  sustained  in  the  cases  above  cited.  The  public 
policy,  not  only  of  Minnesota,  but  of  all  the  States  and  the  Federal  govern- 
ment, is  to  restrain  monopolies  and  to  encourage  competition.  Everywhere 
are  found  laws  prohibiting  pools  and  combinations  in  restraint  of  trade. 
Here  we  have  one  of  the  principal  products  of  petroleum,  kerosene,  which 
it  is  claimed  in  the  complaint,  can  be  so  handled  by  a  powerful  corporation 
that  competition  can  be  stifled  without  resort  to  either  pool  or  combina- 
tion. The  complaint  charges  defendant  discriminates  in  its  prices  for  the 
purpose  of  destroying  the  business  of  its  competitors,  and  has  and  does 
prevent  legitimate  competition.  We  are  advised  of  no  other  article  or 
product  of  commerce,  except  other  petroleum  oils,  as  to  which  such  a 
practice  prevails.  The  demurrer  admits  these  allegations.  All  these  con- 
ditions were  before  the  legislature  and  furnished  the  motive  for  the  legis- 
lation. The  classification  was  neither  fanciful  nor  arbitrary,  but  proper 
and  necessary  to  meet  the  peculiar  conditions  surrounding  the  distribution 
of  these  primary  products  of  petroleum."    Per  O'Brien,  J. 

"  Frank  A.  Menne  Factory  v.  Harback,  8.5  Ark.  278,  107  S.  W.  991, 
construing  Anti-Trust  Act,  Jan.  23,  190.5. 
410 


CONSTITUTIONAL   AND    STATUTORY    PROVISIONS      §  'A7\ 

other  officer  or  agent,  or  receiver  of  any  corporation, 
company,  firm,  partnership,  or  any  corporation,  com- 
pany, firm  or  association,  or  member  of  any  corporation, 
firm  or  association,  or  any  member  of  any  company, 
firm  or  other  association,  or  any  individual,"  is  con- 
strued as  manifestly  intended  to  provide  for  the  punish- 
ment of  artificial  persons  or  combinations  by  a  fine, 
and  for  the  punishment  of  natural  persons  by  fine  or 
imprisonment,  or  by  both  fine  and  imprisonment.  And 
to  effectuate  that  intention  it  is  decided  that  the  word 
"person"  as  used  in  the  first  part  of  the  section,  will  be 
rejected  as  a  mere  inaccuracy,  while  the  words  "any 
corporation,"  and  the  words  following  them,  where  first 
repeated  in  the  second  part  of  the  section,  will  be  treated 
as  governed  by  the  word  "of"  just  as  they  are  where 
they  first  occur. -° 

In  Missouri  it  has  been  decided  that  an  anti-trust 
statute  which  provides,  in  case  of  a  violation  of  its  terms 
for  a  fine  and  forfeiture  of  the  charter  of  the  corporation 
violating  and  for  fine  and  imprisonment  in  the  case  of  a 
person  is  not  violative  of  the  Fourteenth  Amendment  to 
the  Constitution  of  the  United  States,  in  that  while  the 
game  acts  are  denounced  the  punishment  unposed  upon 
corporations  is  greater  and  different  from  that  imposed 
upon  individuals.-^ 

20  Commonwealth  v.  Grinstead  &  Tinsley,  108  Ky.  59,  22  Ky.  Law  Rep. 
377,  55  S.  W.  720,  construing  Ky.  Stats.,  §  3917. 

"  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 
The  court  said:  "If  the  contention  of  counsel  for  respondents  is  sound, 
then  any  individual  could  form  an  unlawful  combination  in  restraint  of 
trade  with  any  corporation,  and  when  proceeded  against  for  such  unlawful 
conduct  either  one  or  both  of  them  could  interpose  the  unconstitutionality 
of  the  statute,  because  the  punishment  prescribed  against  each  is  not  the 
same  but  different.  And  we  might  add  that,  if  their  position  is  tenable, 
then  the  legislature  would  be  powerless  to  provide  for  the  imprisonment 
of  the  one  because  it  could  not  imprison  the  other;  nor  could  it  provide 
for  the  forfeiture  of  the  charter  of  the  corporation,  because  the  individual 
would  have  none  to  forfeit,  ergo,  there  is  no  punishment  the  legislature 
could  pro\ide  except  a  fine  against  each.  Such  a  contention  regarding 
the  proposition  here  involved  if  followed  to  its  logical  conclusion  would 
lead  to  an  absurdity,  and,  at  the  same  time,  shows  the  unsoundness  of 
respondent's  contention."    Per  Woodson,  J. 

411 


§  375  STATE    STATUTES — 

A  statute  prohibiting  unfair  competition  and  discrimi- 
nation and  which  provides  that  any  person,  firm  or  cor- 
poration violating  the  act  shall  be  subject  to  a  fine  and 
also  providing  in  addition  that  in  case  a  corporation  is 
guilty  of  violating  the  act  the  court  may  annul  the  charter 
or  revoke  the  perniit  of  such  corporation  and  may  per- 
manently enjoin  it  from  transacting  business  within  the 
State  is  not  unconstitutional  on  the  ground  that  the 
provision  regarding  forfeiture  is  an  additional  punish- 
ment to  that  imposed  upon  individuals  and  amounts  to 
a  denial  of  the  equal  protection  of  the  law.-- 

In  Ohio  the  act  of  April  19,  1898,  depriving  trusts  and 
prohibiting  them  under  penalties  by  a  valid  exercise  of 
the  poUce  power,  authorized  the  punishment  by  fine  and 
imprisonment  of  a  person  who  is  an  active  member  of, 
and  assists  in  carrying  out  the  purposes  of,  an  association 
formed  to  prevent  competition  in  the  sale  of  an  article 
of  merchandise.^^ 

The  fact  that  by  statute  or  code  a  crime  or  pubhc 
offense  is  defined  as  "an  act  or  omission  forbidden  by 
law  and  to  which  is  annexed,  upon  conviction,  either  of 
the  following  punishments  *  *  *  (3)  Fine"  does  not 
require  that  a  statute  in  order  to  state  an  offense  must 
use  the  word  ''forbid"  or  other  express  word  of  pro- 
hibition. So  where  a  statute  defines  unlawful  discrimina- 
tion and  competition  and  provides  that  "any  person, 
firm  or  corporation  violating  the  provisions"  of  the  act 
"shall  upon  conviction  thereof  be  fined"  states  an  offense 
though  the  statute  nowhere  "forbids"  the  act  in  express 
terms,  the  presenting  of  a  punishment  for  the  commis- 
sion of  the  acts  specified  being  held  to  be  a  sufficient 
prohibition  or  forbidding.  ^^ 

§  375.  Statute    Permitting    Pooling    by    Fanners    of 
Farm  Products. 
A  statute  which  authorizes  the  pooling  of  farm  products 

«  State  V.  Central  Lumber  Co.  (S.  D.,  1909),  123  N.  W.  504. 

"  State  V.  Gage,  72  Ohio  St.  210,  73  N.  E.  1078. 

"  State  V.  Central  Lumber  Co.  (S.  D.,  1909),  123  N.  W.  504. 

412 


CONSTITUTIONAL   AND    STATUTORY    PROVISIONS      §  375 

for  the  purpose  of  grading,  classifying  and  selling  in  order 
or  for  the  purpose  of  obtaining  a  greater  or  higher  price 
therefor  than  they  might  or  could  obtain  or  receive  by 
selling  said  crops  separately  or  individually  has  been 
construed  as  not  in  conflict  with  a  constitutional  pro- 
vision requiring  the  legislature  to  prevent  all  pools,  trusts 
and  combinations  created  to  depreciate  below  its  real 
value  any  article  or  to  enhance  the  cost  of  any  article 
above  its  real  value.  Such  an  enactment  is  construed  as 
having  for  its  purpose  the  enabling  of  farmers  to  com- 
bine their  resources  and  place  their  property  in  the  hands 
of  an  agent  selected  by  them,  to  the  end  that  better 
prices  might  be  obtained  and  not  for  the  purpose  of 
enhancing  the  price  of  an  article  above  its  real  value.-' 

So  in  Kentucky  by  act  of  March  21,  1906,-''  and  of 
March  13,  1908,-^  a  pooling  by  farmers  of  farm  products 
raised  by  them  was  authorized.  This  act  has  been  held 
to  be  constitutional  and  not  to  violate  the  Federal  anti- 
trust act  of  July  2,  1890,"^  known  as  the  Sherman  Law, 
such  acts  having  no  relation  to  interstate  commerce  but 
being  confined  in  their  operation  to  products  grown  and 
pooled  in  the  State  and  to  sales  therein.-^ 

And  the  provision  of  this  act  making  it  unlawful  for 
the  owner  of  pooled  products  to  violate  his  pooling  con- 
tract by  selling  his  part  of  such  products  without  the 
consent  of  the  agent  of  the  pooling  parties  is  within  the 
power  of  the  legislature,  there  being  no  limitation  in  the 
Constitution.  ^°  Nor  does  this  provision  deprive  the  seller 
of  the  equal  protection  of  the  law  in  contravention  of  the 
Fourteenth  Amendment  to  the  United  States  Constitu- 
tion.^^ 

"Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115  S. 
W.  703,  131  Ky.  768,  115  S.  W.  755;  Owen  County  Burley  Tobacco  Society 
V.  Brumback,  32  Ky.  Law  Rep.  916,  107  S.  W.  710. 

-*Ky.  Laws,  1906,  chap.  117. 

"^  Ky.  Laws,  1908,  chap.  8. 

^  Act  of  July  2,  1890,  chap.  647;  26  Stat.  209  U.  S.;  p.  Com  Stat.,  1901, 
p.  3200. 

-9  Commonwealth  v.  Hodges,  137  Ky.  233,  125  S.  W.  689. 

«>  C-ommonwcalth  v.  Hodges,  137  Ky.  233,  125  S.  W.  689. 

"  Commonwealth  v.  Hodges,  137  Ky.  233,  125  S.  W.  689. 

U3 


§  376  STATE    STATUTES — 

And  it  has  been  decided  that  such  an  act  is  not  vio- 
lative of  the  Fourteenth  Amendment  to  the  Federal 
Constitution  on  the  ground  that  it  is  class  legislation  it 
being  declared  that  that  amendment  does  not  prohibit 
the  State  from  enacting  any  measure  it  chooses  favorable 
to  any  class  of  persons  within  its  jurisdiction  and  that 
its  effect  is  to  act  automatically  upon  the  laws  of  the 
State  raising  other  classes  to  the  same  level  as  that 
enjoyed  by  the  favored  class,  securing  to  all  the  same 
benefits. ^^ 

By  this  statute  it  was  also  made  an  offense  for  persons 
to  buy  products  from  a  party  to  such  a  contract  knowing 
that  he  was  violating  his  contract,  and  this  provision  was 
construed  as  not  interfering  with  such  person's  rights 
under  the  Constitution  to  acquire  property  or  as  de- 
priving him  of  the  equal  protection  of  the  law  in  viola- 
tion of  the  Fourteenth  Amendment. ^^ 

§  376.  Exception  in  Statute— Sale  of  Good  Will  of 
Business— Agricultural  Products  or  Live  Stock. 

A  statute  prohibiting  contracts  by  which  one  is  re- 
strained from  exercising  a  lawful  profession,  trade  or 
business  but  containing  an  exception  that  ''one  who 
sells  the  good  will  of  a  business  may  agree  with  the  buyer 
to  refrain  from  carrying  on  a  similar  business  within  a 
specified  county,  city  or  a  part  thereof  so  long  as  the 
buyer  or  any  person  deriving  title  to  the  good  will  from 
him  carries  on  a  like  business  therein"  is  to  be  construed 
as  meaning  that  the  agreement  to  refrain  from  carrying 
on  the  business  must  be  auxiliary  and  collateral  to  a  sale 
of  the  good  will  of  the  business  and  that  the  transaction 
must  involve  more  than  a  bare  agreement  to  refrain.^* 

But  in  a  case  in  the  United  States  Supreme  Court  the 
question  of  the  constitutionality  of  an  act  which  contains 
an  exception  therein  is  considered.     In  this  case  the 

^*  Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115 
S.  W.  703,  131  Ky.  768,  115  S.  W.  755. 

"  Commonwealth  v.  Hodges,  137  Ky.  233,  125  S.  W.  689. 

"  Mapes  V.  Metcalf,  10  N.  D.  601,  88  N.  W.  713,  construing  §  3927  of 
Rev.  Codes,  1899. 

414 


CONSTITUTIONAL    AND    STATUTORY    PROVISIONS      §  376 

Illinois  Trust  Act  of  1893  which  by  one  of  its  sections 
provided  that:  "The  provisions  of  this  act  shall  not 
apply  to  agricultural  products  or  live  stock  while  in  the 
hands  of  the  producer  or  raiser"  was  before  the  court 
for  construction  and  it  was  declared  that  the  act  was 
repugnant  to  the  Constitution  of  the  United  States, 
unless  this  section  could  be  eliminated,  leaving  the  rest 
of  the  act  in  operation,  and  the  court  after  considering 
the  other  provisions  in  connection  therewith  determined 
that  the  statute  must  be  regarded  as  an  entirety  and 
must  be  adjudged  to  be  unconstitutional  as  denying  the 
equal  protection  of  the  laws  to  those  within  its  jurisdic- 
tion who  were  not  embraced  by  such  section. ^^  In  re- 
gard to  this  exception  the  court  said:  Under  what  rule 
of  permissible  classification  can  such  legislation  be  sus- 
tained as  consistent  with  the  equal  protection  of  the 
laws?  It  cannot  be  said  that  the  exemption  made  by 
the  ninth  section  was  of  slight  consequence,  as  affecting 
the  general  public  interested  in  domestic  trade  and  en- 
titled to  be  protected  against  combinations  formed  to 
control  prices  for  their  own  benefit;  for  it  cannot  be 
disputed  that  agricultural  products  and  live  stock  in 
Illinois  constitute  a  very  large  part  of  the  wealth  and 
property  of  that  State.  We  conclude  this  part  of  the 
discussion  by  saying  that  to  declare  that  some  of  the 
class  engaged  in  domestic  trade  or  commerce  shall  be 
deemed  criminals  if  they  violate  the  regulations  pre- 
scribed by  the  State  for  the  purpose  of  protecting  the 
public  against  illegal  combinations  formed  to  destroy 
competition  and  to  control  prices,  and  that  others  of  the 
same  class  shall  not  be  bound  to  regard  those  regulations, 
but  may  combine  their  capital,  skill  or  acts  to  destroy 
competition  and  to  control  prices  for  their  special  bene- 
fit, is  so  manifestly  a  denial  of  the  equal  protection  of 
the  laws  that  further  or  extended  argument  to  establish 
that  position  would  seem  to  be  unnecessary.  ^^    And  in 

»» ConnoUy  v.  Union  Sewer  Pipe  Ck).,  184  U.  S.  540,  46  L.  ed.  679,  22 
Sup.  Ct.  431. 

•*  Per  Mr.  Justice  Harlan. 

415 


§  377  STATE   STATUTES 

Texas  in  construing  a  similar  statute  ^^  the  Supreme 
Court  of  that  State  followed  this  decision,  saying  that  it 
recognized  the  superior  authority  of  the  Supreme  Court 
of  the  United  States  upon  this  question  and  in  obedience 
to  its  decision  would  hold  that  in  so  far  as  the  law  of 
1895  came  within  the  terms  of  the  above  case  it  was 
invalid.  ^^ 

§  377.  Donnelly  Anti-Trust  Act— New  York. 

In  New  York  it  is  declared  that  the  general  purpose  of 
the  Donnelly  Anti-Trust  Act  ^^  is  to  destroy  monopolies 
in  the  manufacture,  production  and  sale  within  the  State 
of  commodities  in  common  use  and  that  in  this  respect 
it  is  little  more  than  a  codification  of  the  common  law 
upon  the  subject  and  is  to  be  construed  with  reference 
thereto.''*^ 

"  Anti-Trust  Law,  1895,  Rev.  Stat.,  Articles  5313-5315. 

38  State  V.  Shippers'  Compress  Warehouse  Co.,  95  Tex.  603,  69  S.  W. 
58,  aff'g  (Tex.  Civ.  App.)  67  S.  W.  1049. 

35  Laws,  1899,  chap.  690. 

«  Matter  of  Jackson,  57  Misc.  R.  (N.  Y.)  1,  107  N.  Y.  Supp.  799,  citing 
Matter  of  Davies,  168  N.  Y.  89,  101,  61  N.  E.  118;  Matter  of  the  Applica- 
tion of  the  Attorney-General  v.  Consolidated  Gas  Co.,  56  Misc.  R.  (N.  Y.) 
49,  106  N.  Y.  Supp.  407. 


416 


GENERAL   PRINCIPLES 


§378 


CHAPTER  XXV 


STATE   STATUTES — VIOLATIONS — GENERAL   PRINCIPLES 


(  378.  Contracts  and  Combinations 
— Legality  and  Illegality 
— General  Principles. 

379.  Intention  as  Affecting — Pre- 

sumption as  to. 

380.  All    Provisions   of   Contract 

Should  Be  Considered  — 
Presumption  as  to  Legal- 
ity. 

381.  Mere  Form  of  Association  or 

Combination  Not  Con- 
trolling Test  of  Legality. 

382.  Combination  to  Carry  Out 

Restrictions  Prohibited — 
Where  Combination  May 
80  Operate — Result  Is  Im- 
material— Each  Case  Con- 
trolled by  Own  Facts. 


§  383.  Where  Contract  Legal  But 
One  of  Several  Links  in 
Combination. 

384.  Where  By-Laws  of  Associa- 

tion Show  Illegality. 

385.  Where  Contract  or  Combi- 

nation Involves  Interstate 
Commerce — Not  Subject 
to  State  Anti-Trust  Law. 

386.  Where    Contract    Made    or 

Combination  Formed  Out- 
side of  State. 

387.  Combination  Formed  Before 

Passage  of  Statute. 

388.  Foreign    Corporations    Sub- 

ject to  State  Anti-Trust 
Law. 

389.  What  Constitutes  a  Trust- 

Texas  Statute. 


§  378.  Contracts  and  Combinations— Legality  and  Il- 
legality— General  Principles. 

In  a  case  in  Illinois  it  is  declared  that  the  object  of 
both  the  Federal  statutes  and  those  of  that  State,  as  to 
contracts  in  restraint  of  trade,  is  to  prohibit  the  formation 
of  all  trusts  and  combinations  and  to  remove  all  obstruc- 
tions in  restraint  of  trade  and  free  competition  and  that 
it  is  not  the  purpose  of  such  laws  to  hinder  or  prohibit 
contracts  on  the  part  of  corporations  or  individuals  made 
to  foster  or  increase  trade  or  business.^  "Combinations 
are  not  per  se  illegal,  any  more  than  are  contracts,  agree- 
ments, and  understandings  generally;  but  when  the 
purpose  of  either  is  to  destroy  competition  in  trade  or 
commerce,   the  particular   transaction   falls   within   the 

'  Southern  Fire  Brick  &  Clay  Co.  v.  Garden  City  Sand  Co.,  223  111.  616, 
79  N.  E.  313,  afif'g  124  111.  App.  599. 

27  417 


§  378  STATE  STATtJTES — VIOLATIONS — 

prohibition  of  the  anti-trust  statute.  *  *  *  The  effect 
upon  competition  furnishes  a  reasonably  accurate  test  for 
cases  which  arise  under  the  general  language  of  the 
statute."  ^ 

As  to  the  construction  of  such  statutes  it  has  been 
declared  by  the  California  Supreme  Court  that  the 
tendency  of  its  modern  decisions  has  been  to  view  with 
greater  liberality  contracts  claimed  to  be  in  restraint  of 
trade  and  that  it  is  not  every  limitation  on  absolute  free- 
dom of  dealing  that  is  prohibited.  And  it  was  said  that 
the  provisions  of  the  code  making  void  every  contract 
by  which  one  is  restrained  from  exercising  a  lawful  pro- 
fession, trade  or  business  were  to  be  construed  in  the 
light  of  these  principles.^  A  combination  or  conspiracy 
the  main  purposes  and  effects  of  which  are  to  foster  the 
trade  and  increase  the  business  of  those  who  make  and 
operate  it,  and  which  only  indirectly  and  remotely  re- 
stricts competition  in  trade  or  business,  is  not  a  "com- 
bination and  conspiracy  in  restraint  of  trade"  within  the 
meaning  and  intent  of  the  Minnesota  statute.*  But  an 
agreement  the  purpose  and  effect  of  which  are  directly 
to  restrain  trade  and  hinder  competition  in  the  sale  or 
purchase  of  a  commodity  is  against  public  policy  and  void 
and  punishable,  and  this  applies  in  the  case  of  a  statute 
prohibiting  a  "trust"  or  "combination"  of  such  a  char- 
acter so  that  the  latter  is  not  unconstitutional.^  And 
though  a  contract  may  not  be  illegal  on  its  face  as  being 
in  violation  of  an  anti-trust  act  yet  if  all  the  evidence  is 
consistent  only  with  an  unlawful  purpose  on  the  part 
of  all  the  parties  it  is  decided  that  its  illegality  should  not 
be  submitted  to  the  jury.^ 

In  order  to  violate  a  State  statute  prohibiting  monop- 

2  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  543,  121  N.  W.  325; 
Laws,  1899,  p.  487,  chap.  359;  R.  L.  1905,  §  5168. 

'  Grogan  v.  Chaffee,  156  Cal.  611,  105  Pac.  745,  construing  §§  1673-1675, 
Cal.  Civ.  Code. 

<  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  121  N.  W.  395;  Lawa, 
1899,  chap.  359,  p.  487;  R.  L.,  1905,  §  5168. 

5  State  V.  Jackson  Cotton  Oil  Co.,  95  Miss.  6,  48  So.  300. 

•  Detroit  Salt  Co.  v.  National  Salt  Co.,  134  Mich,  103,  96  N.  W.  1. 

418 


GENERAL   PRINCIPLES  §§  379,  380 

olies  it  is  not  necessary  that  a  complete  monopoly  be 
effected.  It  is  sufficient  it  the  acts  tend  to  that  end  and 
to  deprive  the  public  of  the  advantages  which  flow  from 
free  competition.' 

§  379.  Intention  as  Affecting— Presumption  as  to. 

Courts  will  conclusively  presume  that  it  was  the  in- 
tention of  parties  to  a  combination  to  prevent  compe- 
tition where  the  contracts  executed  must  necessarily 
have  that  effect,  it  being  a  well-established  principle  that 
they  will  be  presumed  to  have  acted  with  intent  to  pro- 
duce the  result  which  the  nature  of  the  act  necessarily 
or  reasonably  does  produce,  or  tends  to  produce.^  And 
the  fact  that  the  intent  of  the  members  of  a  combination 
or  the  parties  to  an  agreement  may  not  have  been  to 
violate  an  anti-trust  statute  is  immaterial  where  their 
practices  in  connection  therewith  have  been  in  violation 
of  the  provisions  of  the  act  so  as  to  in  fact  constitute 
the  parties  to  such  combination  or  agreement  a  trust 
within  the  meaning  thereof.^  So  a  combination,  contract, 
or  understanding,  the  direct  and  necessary  effect  of  which 
is  to  stifle  or  restrict  competition  in  trade  or  business 
violates  the  Minnesota  anti-trust  statute  whatever  may 
have  been  the  intention  of  the  parties.^" 

§380.  All  Provisions  of  Contract  Should  Be  Con- 
sidered—Presumption as  to  Legality. 

M  the  provisions  of  a  contract  should  be  considered 
and  construed  with  reference  to  controlling  provisions 
and  principles  of  law.  Until  the  contrary  appears  it  is 
assumed  that  a  contract  is  made  for  and  will  accomplish 
only  a  lawful  purpose;  and  no  strained  or  unusual  con- 
struction should  be  given  to  a  contract  so  as  to  render  it 
unlawful.    But  when  it  appears  from  a  contract  and  the 

'  Bigelow  V.  Calumet  &  Heck  Mining  Co.  (U.  S.  C.  C),  155  Fed.  869. 

8  Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823. 

»  State  V.  Firemen's  Fund  Ins.  Co.,  152  Mo.  1,  52  S.  W.  595,  45  L.  R.  A. 
363. 

>«  State  V.  Dulutb  Board  of  Trade,  107  Minn.  506,  121  N.  W.  395,  Laws, 
1899,  chap.  359,  p.  487:  R.  L.,  1905,  §  5168. 

419 


§§  381,  382   STATE   STATUTES— VIOLATIONS— 

circumstances  under  which  it  was  made,  and  from  its 
purposes,  operation  and  results,  that  in  its  terms  or  in 
its  full  operation  it  is  unlawful,  or  its  operation  accom- 
plishes, or  in  reahty  tends  to  accomplish  an  unlawful 
purpose,  whether  so  intended  by  the  parties  thereto  or 
not,  the  contract  will  not  be  enforced  by  the  courts." 

§  381.  Mere  Form  of  Association  or  Combination  Not 
Controlling  Test  of  Legality. 

The  mere  form  of  an  association  or  combination,  or 
the  terms  of  the  contract  or  rules  adopted  by  it  will  not 
be  the  absolute  test  whether  it  is  in  violation  of  an  anti- 
trust act,  but  in  cases  where  the  illegality  may  not  be 
apparent  on  the  surface  the  courts  will  look  beneath  the 
surface,  and,  from  the  methods  employed  in  the  con- 
duct of  the  business  and  the  various  acts  done  in  pur- 
suance of  the  arrangement  determine,  no  matter  what 
its  particular  form  may  be  or  the  constituent  elements, 
whether  the  combination  is  a  violation  of  the  statute. ^^ 

§  382.  Combination  to  Carry  Out  Restrictions  Pro- 
hibited—Where Combinations  May  So  Operate— Re- 
sult Is  Immaterial— Each  Case  Controlled  by  Own 
Facts. 

Where  the  statute  denounces  combinations  to  carry 
out  restrictions  in  trade  or  commerce  if  a  combination  is 
made  which  may  so  operate  the  statute  has  been  violated 
no  matter  what  the  result  may  be  and  it  is  immaterial 
that  the  immediate  result  of  the  combination  may  have 
been  a  reduction  in  prices.  The  law  does  not  look  to 
results  in  such  cases.  The  object  of  statutes  of  this  char- 
acter is  to  guard  the  commerce  and  trade  of  the  State 
so  that  it  may  flow  in  its  regular  channels  subject  to  the 
law  of  supply  and  demand  and  untrammeled  by  combi- 
nations of  men  or  corporations  which  can  at  will  control 
their  course.    The  fact  that  by  a  combination  a  rate  has 

"  Stewart  &  Brother  v.  Steams  &  Culver  Lumber  Co.,  56  Fla.  570,  48 
So.  19. 

>2  Yazoo  &  Mississippi  Valley  R.  R.  Co.  v.  Searles,  85  Miss.  620,  37  So. 
939,  68  L.  R.  A.  715. 

420 


GENERAL   PRINCIPLES  §  382 

been  fixed  lower  than  one  that  has  prevailed  carries  with 
it  the  power  and  ability  to  establish  higher  rates,  and  the 
existence  of  a  combination  possessing  such  power  is  a 
violation  of  the  statute.'^  In  determining  whether  a 
contract  is  in  violation  of  a  statute  prohibiting  contracts, 
combinations  or  trusts  tending  to  lessen  competition  in, 
or  to  control  the  price  of,  commodities,  each  case  alleged 
to  fall  within  the  statute  must  be  controlled  by  its  own 
peculiar  facts  and  circumstances.  The  court  must  neces- 
sarily consider  the  tendency  or  power  of  the  contract 
to  injure  the  public,  either  considered  in  itself  or  as  part 
of  a  scheme  to  destroy  or  impede  competition  and  control 
supply  and  prices.  A  contract  may  be  unlawful  as  a 
part  of  a  scheme  to  create  such  a  result,  though  standing 
by  itself  and  independent  of  any  such  scheme  it  might 
be  lawful.  And  it  is  said  that  though  the  immediate 
effect  of  a  trust  or  combination  may  be  really  beneficial 
to  the  public  in  improving  the  quality  of  the  goods  or 
service  and  reducing  the  price,  yet  if  it  has  inherent 
capability  or  natural  tendency  to  injure  the  public,  then 
competition  is  stifled  and  control  and  supply  of  prices 
secured,  and  it  is  obnoxious  to  the  statute.  The  main 
general  test  should  be  whether  the  contract,  trust  or  com- 
bination is  monopolistic  in  purpose  or  natural  tendency. 
If  so  it  unreasonably  affects  competition  and  prices 
to  the  detriment  of  the  public  and  is  obnoxious  to  the 
statute.  ^-^  So  where  the  gist  of  the  offense  denounced  by 
statute  against  pooling  is  that  the  purpose  of  the  pool 
is  to  enhance  the  value  of  the  article  pooled  above  its 
real  value  and  the  design  of  the  poolers  is  to  so  enhance 
the  value  of  their  product,  or  where,  whatever  their  de- 
sign, such  is  the  natural  effect  of  their  action,  and  such 
as  was  necessarily  foreseen  because  of  its  obviousness, 
the  offense  is  complete.  ^^ 

"  San  Antonio  Gas  Co.  v.  Texas,  22  Tex.  Civ.  App.  118,  54  S.  W.  2S9. 

•*  Wood  Mowing  &  Reaping  Co.  v.  Greenwood  Hardware  Co.,  75  S.  C. 
378,  55  S.  E.  973,  per  Mr.  Justice  Jones. 

"International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  332. 

421 


§§  383,  384  STATE  STATUTES — VIOLATIONS — 

§  383.  Where  Contract  Legal  But  One  of  Several 
Links  in  Illegal  Combination. 

Though  a  contract  standing  alone  might  be  legal  yet 
where  it  is  one  of  several  contracts  all  of  which  are  links 
and  necessary  links  in  an  illegal  combination  which  is 
intended  to  work  and  does  work  serious  pubhc  injury 
and  unduly  raises  prices  so  long  as  it  holds  together  such 
contract  will  be  regarded  as  illegal.  ^^ 

§  384.  Where  By-Laws  of  Association  Show  Illegality. 

The  fact  that  several  of  the  agreements  contained  in 
the  rules  of  a  club  considered  by  themselves  are  not 
illegal  is  immaterial  where  they  are  merely  steps  to  effect 
the  accomplishment  of  an  illegal  object.^" 

So  where  the  by-laws  of  an  association  are  intended 
and  are  well  calculated  to  prevent  full  and  free  com- 
petition in  the  purchase  and  sale  of  articles  of  legitimate 
traffic,  to  influence  the  prices  thereof  and  thereby  to 
injuriously  affect  trade  and  commerce  they  will  be  re- 
garded as  within  the  operation  of  a  statute  prohibiting 
and  declaring  unlawful  ''all  trusts,  pools,  contracts,  ar- 
rangements or  combinations"  since  whether  they  are 
regarded  as  a  contract,  an  arrangement,  a  combination 
or  a  trust,  one  or  all,  it  is  said  that  they  partake  of  the 
nature  of  all  of  them.^^  And  where  the  by-laws  of  a  mas- 
ter plumbers'  association,  chartered  as  a  non-profit  asso- 
ciation, in  effect  punished  competition  between  its  mem- 
bers by  imposing  a  penalty  upon  a  successful  competitor 
and  the  purchase  of  supplies  by  the  members  was  limited 
to  purchases  from  those  who  complied  with  the  rules  of 
the  association  and  the  purchase  of  materials  from  mem- 
bers only,  it  was  decided  that  an  anti-trust  statute 
forbidding  combinations  preventing  or  intending  to  pre- 
vent ''full  and  free  competition  in  the  production,  manu- 

"  Finck  V.  Schneider  Granite  Co.,  187  IVIo.  244,  86  S.  W.  213,  106  Am. 
St.  Rep.  452. 

"  Hunt  V.  Riverside  Co-operative  Club,  140  Mich.  538,  104  N.  W.  40, 
112  Am.  St.  Rep.  420. 

's  BaUey  v.  Master  Plumbers,  103  Tenn.  99,  52  S.  W.  853,  46  L.  R.  A.  561. 

422 


GENERAL   PRINCIPLES  §  385 

facture,  or  sale  of  any  article  of  legitimate  traffic"  was 
violated.  ^^  And  a  statute  making  unlawful  any  contract 
in  restraint  of  trade  or  which  tends  to  limit  or  control 
the  supply  or  market  price  of  any  article  or  which  limits 
or  interferes  with  open  and  free  competition  in  the  pro- 
duction, purchase  or  sale  of  any  commodity,^"  is  violated 
by  an  organization,  the  constitution  and  by-laws  of  which 
regulate  the  credit  to  be  allowed  its  members,  discrimi- 
nates in  the  price  to  be  paid  for  produce  against  persons 
not  members,  controls  the  delivery  of  goods  and  provides 
a  penalty  by  fine  and  suspension  for  ofTending  and  de- 
faulting members.-' 

§  385.  Where  Contract  or  Combination  Involves  In- 
terstate Commerce— Not  Subject  to  State  Anti-Trust 
Law. 

Where  a  contract  'affects  and  involves  interstate  com- 
merce it  has  been  decided  that  it  is  not  subject  to  the 
anti-trust  law  of  a  State.  This  doctrine  is  asserted  in  a 
case  in  Texas  where  a  contract  made  in  that  State  for 
the  shipment  of  goods  from  another  State  to  the  buyer  a 
resident  in  Texas  was  assailed  on  the  ground  of  its  being 
violation  of  both  State  and  Federal  anti-trust  acts.  The 
courts  upon  the  question  of  the  contract  being  violative 
of  the  State  act  said  that  even  if  the  transaction  in  ques- 
tion were  granted  to  be  in  violation  of  the  anti-trust 
statutes  of  the  State,  it  could  not  be  held  to  be  illegal 
and  void  because  the  act  did  not  apply  to  interstate 
transactions."  And  in  an  earlier  case  in  the  same  State 
a  similar  conclusion  is  reached,-^  the  court  saying:  "It 
is  to  be  presumed  that  the  legislature  of  Texas  intended 
to  exercise  its  authority  to  make  laws  within  the  scope 

»  BaUey  v.  Master  Plumbers,  103  Tenn.  99,  52  S.  W.  853,  4G  L.  R.  A.  oGl. 

»  Minn.  Laws,  1899,  chap.  359. 

"  Ertz  V.  Produce  Exchange  Co.,  82  Minn.  173,  84  N.  W.  743,  51  L.  R. 
A.  825,  83  Am.  St.  Rep.  419. 

"  Moroney  Hardware  Co.  v.  Goodwin  Pottery  Co.  (Tex.  Civ.  App.,  1909), 
120  S.  W.  1088. 

»  Alhortvpe  Co.  v.  Gust-Fiest  Co.,  102  Tex.  219.  114  S.  W.  791. 

423 


§§  386,  387     STATE   STATUTES— VIOLATIONS — 

of  its  power  under  the  Constitution  of  tliis  State  and  of 
the  United  States,  and  that  it  was  not  the  purpose  of 
that  body  to  embrace  contracts  of  this  class  in  the  terms 
of  the  anti-trust  laws.  We  are  of  opinion  that  there 
is  evidence  of  that  purpose  in  this  language  found  in  the 
title  of  the  act,  'An  act  to  define,  prohibit  and  declare 
illegal  trusts,  monopolies  and  conspiracies  in  restraint  of 
trade,  and  to  prescribe  penalties  for  forming  or  being 
connected  with  such  trusts,  monopolies  and  conspiracies 
and  to  provide  for  the  suppression  of  the  same  and  to 
promote  free  competition  in  the  State  of  Texas.'  The 
declared  purpose  of  the  law  does  not  reach  subjects 
beyond  the  power  of  the  State  to  regulate."  ^^ 

In  a  case  in  Tennessee,  however,  it  is  decided  that  a 
combination  is  none  the  less  a  violation  of  an  anti-trust 
law  of  a  State  though  it  may  incidentally  affect  inter- 
state commerce.  ^^ 

§  386.  Where  Contract  Made  or  Combination  Formed 
Outside  of  State. 

Although  an  agreement  to  violate  the  anti-trust  law 
of  a  State  may  be  made  outside  the  State,  if  the  parties 
thereto  or  their  agents  execute  it,  or  attempt  to  do  so, 
within  the  State,  they  are  under  the  jurisdiction  of  the 
State  and  their  conviction  for  such  acts  is  not  without 
due  process  of  law.^^ 

§  387.  Combination  Formed  Before  Passage  of  Stat- 
ute. 

The  fact  that  a  combination  may  have  been  formed  be- 
fore the  passage  of  an  anti-trust  act  is  immaterial  if  it  is 
in  active  existence  thereafter.  The  statute  is  not  to  be 
considered  as  having  a  retroactive  effect  or  an  ex  post 
facto  operation,  but  as  only  applicable  to  offenses  occur- 

**  Per  Mr.  Justice  Brown. 

"  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(X.  S.)  1015. 

=6  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L. 
ed.,  aff'g  (Tex.  Civ.  App.)  100  S.  W.  918. 

424 


GENERAL   PRINCIPLES  §  388 

ring  after  its  enactment.  The  offense  does  not  consist 
in  the  formation  and  existence  of  the  combination  before 
the  law  went  into  effect  but  in  the  persistence  of  the 
parties  in  it  after  it  has  become  unlawful."  The  court 
said  in  this  connection:  "That  such  is  the  correct  inter- 
pretation of  such  statutes  is  held  by  the  Supreme  Court 
of  the  United  States  in  United  States  v.  Trans-Missouri 
Freight  Association.-'*  But  it  is  said  that  this  interpre- 
tation of  the  statute  would  render  it  unconstitutional  as 
impairing  the  obligation  of  a  valid  contract.  The  answer 
is  that  the  State  may,  in  the  exercise  of  its  police  power, 
prohibit  the  continuance  in  the  future  of  those  things 
already  in  existence  which  are  so  injurious  to  the  rights 
and  interests  of  its  citizens  generally  as  to  justify  such 
an  exercise  of  the  power  whether  the  continuance  of  the 
things  is  provided  for  by  contract  or  not.  The  same 
power  which  may  upon  sufficient  occasion,  destroy  other 
property  of  the  citizen  to  secure  the  general  welfare, 
may,  to  the  same  end,  destroy  the  binding  obligation  of 
contracts.  The  constitutional  inhibition  against  the 
impairment  of  the  obligation  of  contracts  is  not  a  limi- 
tation upon  the  police  power  when  exercised  within  its 
legitimate  sphere,  and  therefore  the  mere  objection  that 
the  exercise  of  that  power  impairs  the  obligation  of  a 
contract  does  not  reach  the  true  question,  which  is  whether 
or  not  the  attempted  exercise  is  within  the  scope  of  the 
power  exercised."  ^^ 

§  388.  Foreign  Corporations  Subject  to  State  Anti- 
Trust  Laws. 

It  may  be  stated  generally  that  foreign  corporations 
do  not  come  into  a  State  as  a  matter  of  legal  right,  but 
only  by  comity,  and  that  said  corporations  are  sub- 
ject to  the  same  restrictions  and  duties  as  corporations 

"  State  V.  Missouri,  Kansas  &  Texas  Ry.  Co.,  99  Tex.  516,  91  S.  W.  214, 
5  L.  R.  A.  (N.  S.)  783. 

28 166  U.  S.  342,  41  L.  ed.  1007,  17  Sup.  Ct.  540. 
"  Per  Williams,  J. 

425 


§  389  STATE   STATUTES — VIOLATIONS — 

formed  in   this   State,    and   have  no  other  or  greater 
powers.^" 

§  389.  What  Constitutes  a  Trust— Texas  Statute. 

In  order  to  constitute  a  trust  within  the  meaning  of 
the  Revised  Statutes  of  Texas  ^^  there  must  be  a  "com- 
bination of  capital,  skill  or  acts  by  two  or  more."  The 
word  "combination"  as  there  used  "means  union  or 
association.  If  there  be  no  union  or  association  by  two 
or  more  of  their  ^capital,  skill  or  acts '  there  can  be  no 
'combination'  and  hence  no  'trust.'  When  we  consider 
the  purposes  for  which  the  'combination  must  be  formed 
to  come  within  the  statute,  the  essential  meaning  of  the 
word  'combination'  and  the  fact  that  a  punishment  is 
prescribed  for  each  day  that  the  trust  continues  in  exist- 
ence, we  are  led  to  the  conclusion  that  the  union  or  asso- 
ciation of  'capital,  skill  or  acts '  denounced  is  where  the 
parties  in  the  particular  case  designed  the  united  co- 
operation of  such  agencies,  which  might  have  been  other- 
wise independent  and  competing,  for  the  accompHshment 
of  one  or  more  of  such  purposes.  In  the  case  stated  in 
the  petition  there  is  no  'combination.'  The  plaintiff 
bought  defendant's  goods  together  with  the  good  will  of 
his  business,  both  of  which  were  subjects  of  purchase 
and  sale,  and  in  order  to  render  the  sale  of  the  good  will 
effectual  the  seller  agreed  that  he  would  not  for  one  year 
thereafter  do  a  like  business  in  that  town.  This  was 
but  a  kind  of  covenant  or  warranty  that  the  purchaser 
should  have  the  use  and  benefit  of  such  good  will  during 
that  year,  for  it  is  clear  that  if  the  seller  had  immediately 
engaged  in  a  like  business  at  the  same  place  the  purchaser 
would  have  had  no  benefit  therefrom.  By  this  trans- 
action neither  the  capital,  skill  nor  acts  of  the  parties 
were  brought  into  any  kind  of  union,  association,  or  co- 
operative action.  The  purchaser  became  the  owner  of 
the  things  sold  and  the  seller  was,  by  the  terms  of  the 

^  Harding  v.  American  Glucose  Co.,  182  111.  551,  55  N.  E.  577,  74  Am. 
St.  Rep.  189,  64  L.  R.  A.  738,  per  Mr.  Justice  Magruder. 

5'  Rev.  Stat.,  Art.  5313;  Rev.  Civ.  Stat.  Tex.,  1895,  Title  CVIII. 

426 


GENERAL    PRINCIPLES  §  389 

contract,  restrained  from  doing  a  thing  which  if  done 
would  have  defeated  in  part  the  effectiveness  of  the 
sale."  32 

"  Gates  V.  Iloopor,  90  Tex.  563,  565,  39  S.  W.  1079,  per  Denman,  Assoc. 
J.  (construing  and  applying  Rev.  Stat.,  Art.  5313;  Rev.  Civ.  Stat.  Tex., 
1895,  Title  CVIII,  which  was  repealed  by  the  Anti-Trust  Law,  Laws  Tex., 
1903,  p.  119,  Chap.  XCIV,  which  was  amended  an  to  venue,  penalties  and 
fees  by  Laws  of  Tex.  1909,  p.  281.  The  repealing  law  of  1903,  however, 
defines  a  trust  as  a  "combination  of  capital,  skill  or  acts  by  two  or  more," 
etc.).  The  above  text  is  quoted  nearly  in  full  in  State  (Crow,  Att'y  Gen'l) 
v.  Continental  Tobacco  Co.,  177  Mo.  1,  34,  75  S.  W.  737,  per  Fox,  J.  That 
word  combination  in  above  statute  means  union  or  association.  See  Texaa 
&  Pacific  Coal  Co.  v.  Lawson,  89  Tex.  394,  34  S.  W.  919. 


427 


STATE   STATUTES — VIOLATIONS — 


CHAPTER  XXVI 

STATE   STATUTES — VIOLATIONS — PARTICULAR  CONTRACTS 
AND    COMBINATIONS 


390.  Consolidation      of      Several 

Corporations — Transfer  of 
Property  to  One. 

391.  Contract     Between      Rival      §  403. 

Corporations     Each     Ob- 
taining Interest  in  Other. 

392.  Where   Statute   or   Charter 

Permits   Consolidation  of         404, 
Corporations. 

393.  Purchase  of  Assets  of  Cor- 

porations. 

394.  Mining  Corporation  —  Pur-         405. 

chase  by,  of  Stock  in  An- 
other Mining  Corporation. 

395.  Contracts  Between  Common         406. 

Carriers — ConsoUdation  of 
Railroad         Companies — 
Parallel    and    Competing         407. 
Lines. 

396.  Contract  Between  Railroad 

Company  and  Palace  Car         408. 
Company. 

397.  Merger  of  Street  Railways.  409. 

398.  Contracts  Between  RaUroad 

Companies  and  Express  or 
Transfer  Companies — Ex-         410. 
elusive  Right. 

399.  Car      Service      Association 

Merely  Agent  of  Several 
Railroads.  411. 

400.  Agreements  Between  Steam- 

boat Companies. 

401.  Contracts    Between    Manu- 

facturer    and     Purchaser         412. 
Not  to  Resell  Below  Cer- 
tain      Price — Proprietary         413. 
Medicines — Uniform  Job- 
bing Price. 

402.  Exclusive  Rights — Contracts         414. 

428 


Between  Vendor  and  Pur- 
chaser— When  a  Viola- 
tion. 

Exclusive  Rights — Contracts 
Between  Vendor  and  Pur- 
chaser— When  Not  a  Vio- 
lation. 

Exclusive  Contract — Sale  of 
By-Product  —  Distin- 
guished From  Sale  of 
Entire  Output. 

Contract  Giving  Exclusive 
Right  to  Sell  Goods  on 
Certain  Premises. 

Agreement  Restraining  Pur- 
chaser Using  Premises  for 
Certain  Purpose. 

Agreement  Between  Agent 
of  Seller  and  Purchasers — 
Coal  Oil. 

Contracts  Between  Principal 
and  Agent. 

Sale  of  Business  and  Grood 
Will — Contracts  Not  to 
Engage  in  Competition. 

Sale  of  Business  and  Good 
Will — Contracts  Not  to 
Engage  in  Competition — 
Exception  in  Statute  as  to. 

Sale  of  Business  and  Good 
Will — Laundry  Not  a 
Manufacturing  Establish- 
ment. 

Agreement  to  Refrain  from 
Entering  Into  Business. 

Agreements  Between  Brew- 
ers— Not  to  Sell  to  One 
Indebted — To  Raise  Price. 

Agreement   Between   Brick- 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  390 


layers'  Union  and  Mason      §  427, 
and     Builders'      Associa- 
tion. 428. 
§  415.  Associations  of  Cattle  Own- 
ers, Buyers  and  Sellers — 
By-Laws  and  Rules.  429. 

416.  Agreement  Between  Cotton 

Seed  Oil  Manufacturers — 
Withdrawal  of  Agent  by 
One.  430. 

417.  Corporation    Composed    of 

Cnished  Granite  Dealers 
— Agreement  as  to  Blue- 
stone.  431. 

418.  Consolidation  of  Gas  Com- 

panies— Agreements     Be-         432. 
tween. 

419.  Agreement    Limiting    Right 

to  Buy  Grain.  433. 

420.  Agreement      Between      Ice 

Companies.  434. 

421.  Agreements  Between  Insur- 

ance Companies  or  Agents         435. 
to  Fix  Rates. 

422.  Agreements   Between   Lum- 

ber Dealers.  436. 

423.  Contracts  Between  Proprie- 

tors of  Newspapers  and 
Job  Printing  Establish- 
ments. 437. 

424.  Contracts    Between     News- 

paper Publisher  and  Car- 
riers. 438, 

425.  Agreements  Between  Pack- 

ing Companies  to  Control 

Price  of  Meat.  439. 

426.  Contracts     in     Respect     to 

Patented  Articles. 


Agreements  Between  Physi- 
cians— Schedule  of  Prices. 

Physicians — Dissolution  of 
Partnership  —  Agreement 
Not  to  Practice. 

Agreements  Between  Dealers 
in  Plumbers'  Supplies 
and  Master  Plumbers — 
Plumbers'    Association. 

Agreements  Between  Pub- 
lishers— Price  at  Retail — 
Not  to  Sell  to  Certain 
Class. 

Association  for  Distribut- 
ing News. 

Agreement  Between  Retail- 
ers Not  to  Purchase  from 
Certain  WTiolesalers. 

Agreements  Between  Salt 
Manufacturers. 

Contracts  Relating  to  Tele- 
phone Service. 

Telegraph  Companies — Serv- 
ice of  Is  Not  a  Commod- 
ity. 

Agreement  Between  Theat- 
rical Owners  or  Managers 
— Plays  Not  Commod- 
ities. 

Combination  to  Induce  Em- 
ployees to  Break  Con- 
tracts with  Employers. 

Undertaking  by  Corpora- 
tions to  Induce  Employees 
to  Trade  with  Another. 

Contract  to  Instruct  in 
Treatment  of  Scalp  and 
Hair— To  ITse  Only  Cer- 
tain Remedies. 


§390.  Consolidation  of  Several  Corporations— Trans- 
fer of  Property  to  One. 

Under  a  statute  declaring  any  combination  guilty  of 
the  crime  of  conspiracy  where  its  object  is  to  regulate, 
control  or  fix  the  price  of  merchandise  or  to  limit  in  any 
way  the  output  of  any  articles,  if  contracts  are  entered 
into  for  the  consolidation  of  several  corporations  or  in- 
terests engaged  in  the  same  line  of  business  for  the  pur- 

429 


§  390  STATE   STATUTES — VIOLATIONS — 

pose  of  controlling  the  market  and  suppressing  compe- 
tition, it  is  decided  that  it  is  immaterial  upon  the  question 
of  the  invalidity  of  the  contract  that  no  effort  has  in 
fact  been  made  to  control,  raise  or  fix  the  price  of  the 
article  in  the  market,  and  that  such  contract  is  void  both 
under  the  statute  and  independent  thereof.^ 

In  Minnesota  a  statute  forbids  entering  into  any  pool, 
trust,  agreement,  combination  or  understanding  whatso- 
ever with  others  in  restraint  of  trade,  or  to  limit,  fix, 
control,  maintain,  or  regulate  the  price  of  any  article  of 
trade,  manufacture,  or  use,  or  to  prevent  or  limit  com- 
petition in  the  purchase  and  sale  of  such  articles.^  Under 
this  statute  it  has  been  decided  that  an  agreement 
between  several  corporations,  competitors  in  business, 
and  the  stockholders  of  each,  providing  for  the  transfer 
to  one  of  said  corporations  of  all  the  property  of  the 
others,  in  return  for  which  the  corporation  taking  title 
agrees  to  issue  to  each  stockholder  an  amount  of  its 
capital  stock  in  proportion  to  his  interest,  and  containing 
agreements  as  to  the  future  selection  of  directors  and  dis- 
tribution of  dividends  is  only  a  nominal  purchase  and 
sale  of  the  properties  and  is  a  pooling  or  combination  of 
interests  within  the  meaning  of  the  statute.^ 

But  a  statute  which  prohibits  one  competing  corpora- 
tion from  buying  out  the  stock  of  another  competing 
corporation  has  been  held  to  have  no  application  to  a 
contract  where  one  of  the  contracting  parties  is  a  cor- 
poration and  the  other  an  individual.  Thus  it  was  so 
held  where  a  contract  was  entered  into  between  an  in- 
dividual owning  a  local  telephone  system  and  a  corpora- 
tion which  maintained  a  long  distance  line,  the  terms  of 
which  contract  provided  for  a  connection  between  the 
two  lines.'' 

1  Merchants'  Ice  &  Cold  Storage  Co.  v.  Rohrman,  138  Ky.  530,  128  S. 
W.  599. 

2  Section  5168,  Minn.  R.  L.,  1905. 

'  State  V.  Creamery-  Package  Mfg.  Co.,  110  Minn.  415,  126  N.  W.  623. 

*  Cumberland  Telephone  &  Telegraph  Co.  v.  State  ex  rel.  Attorney 
General  (Miss.,  1911),  54  So.  670,  construing  Miss.  Code  of  1906,  §  5005, 
as  amended  by  the  Laws  of  1910,  p.  222. 

430 


PARTICULAR   CONTRACTS  AND   COMBINATIONS    §§391,392 

Where  a  monopoly  in  violation  of  a  statute  has  been 
created  by  a  corporation  by  the  consolidation  of  several 
other  corporations  and  companies,  a  corporation  subse- 
quently organized  as  its  successor  and  composed  to  a 
large  extent  of  the  same  interests,  to  which  all  of  the 
property  so  acquired  is  conveyed  will  not  be  regarded  as 
an  innocent  purchaser  so  as  to  enable  it  to  enforce  the 
monopolistic  contracts  of  its  predecessor  on  the  theory 
that  it  was  not  guilty  of  any  impropriety. 


5 


§  391.  Contract  Between  Rival  Corporations  Each 
Obtaining  Interest  in  Other. 

A  contract  between  two  corporations  who  are  engaged 
in  the  same  line  of  business  by  which  each  obtains  an 
interest  in  the  other  and  its  profits  has  been  construed, 
where  it  is  not  illegal  upon  its  face,  as,  being  an  illegal 
restraint  of  trade  or  commerce,  or  as  bringing  about  a  mo- 
nopoly or  enhancing  prices  either  at  common  law  or  under 
a  statute  forbidding  such  agreements  or  contracts.^ 

§  392.  Where  Statute  or  Charter  Permits  Consolida- 
tion of  Corporations. 

Where  by  the  laws  of  a  State  domestic  corporations 
may  consolidate  and  either  a  domestic  or  foreign  corpora- 
tion may  acquire  and  hold  either  by  subscription,  pur- 
chase or  otherwise  stock  in  any  domestic  corporation,^ 
it  has  been  decided  in  Alabama  that  a  domestic  light  and 
power   corporation    may  acquire  stock  in  a  competing 

6  Merchants'  Ice  &  Cold  Storage  Co.  v.  Rohrman,  138  Ky.  530,  128  S. 
W.  599.  The  court  said:  "As  an  illustration  of  the  ingenuity  in  devising 
plans  to  evade  the  law  against  monopolies  and  combinations  this  is  a  fair 
example.  Here  an  effort  is  made  to  accomplish  by  indirect  methods  what 
would  be  in  another  shape  easily  marked  for  condemnation.  *  *  *  If  this 
kind  of  subterfuge  were  allowed  there  would  be  little  use  in  trying  to  check 
monopolies  or  put  the  seal  of  condemnation  upon  contracts  to  control  the 
market.  It  would  only  be  necessary  when  any  corporation  or  concern  had 
obtained  control  of  the  market  to  dispose  of  its  holdings  to  another  and 
new  corporation,  thus  evading  the  law  and  making  legal  an  obnoxious 
transaction.    There  is  no  merit  in  this  contention."    Per  Carroll,  J. 

« Fechteler  v.  Palm  Bros.  Co.,  133  Fed.  462,  66  C.  C.  A.  336. 

'  Code  of  Alabama,  1907,  §§  3481,  3640. 

431 


§  392  STATE   STATUTES — VIOLATIONS — 

corporation  and  that  by  so  doing  there  is  not  created  a 
monopoly  such  as  is  condemned  by  the  common  law  or 
the  statute  of  that  State.^  The  court  said:  ''It  is  thus 
manifest  that  the  legislature,  in  view  of  the  industrial 
and  business  conditions  of  our  people,  believed  the  good 
from  such  combinations  would  outweigh  the  evil  that 
might  result,  and  relied  upon  the  exercise  of  the  power 
to  regulate  their  rates  which  is  vested  in  the  State  and  its 
subordinate  municipal  agencies,  as  ample  safeguard  for 
the  public  weal  against  all  combinations  which  its  laws 
allowed.  It  did  not  and  does  not  view  such  combinations 
and  holdings  as  evils  but  rather  as  promotive  of  the  pub- 
lic good.  *  *  *  Light  and  power  companies  are  incor- 
porated under  the  general  laws,  and  derive  their  power 
and  franchises  from  the  State  and  though  a  consolidation 
between  them  might  result  in  exclusive  business  control 
of  a  particular  territory,  it  does  not  give  any  monopoly 
there  in  a  legal  sense,  since  anyone  is  free  to  obtain  a 
charter  for  a  like  purpose,  and  can  compete  with  them 
there,  if  the  municipal  authorities,  to  whose  control  the 
whole  matter  is  really  committed,  think  it  to  the  public 
interest  to  allow  the  use  of  the  streets  and  roads  for 
that  purpose.  Consolidation  of  enterprises  thus  engaged, 
authorized  by  the  legislature,  or  the  control  of  two 
corporations  so  engaged  by  the  same  individual,  when 
permitted  by  the  law  does  not  constitute  such  a  monop- 
oly as  is  condemned  by  the  common  law,  even  were  our 
statutes  controlling  that  matter  here  out  of  the  way."  ^ 
And  where  a  statute  authorized  the  formation  of 
a  corporation  thereunder  for  ''the  construction  or  pur- 
chase and  maintenance  of  mills,  gins,  cotton  compresses" 
and  other  purposes  and  a  charter  to  a  compress  company 
expressed  the  purpose  of  the  corporation  in  the  very 
language  of  the  statute  it  was  decided  that  it  could  not 
be  said  that  the  purposes  for  which  it  was  organized,  as 
expressed  in  the  charter,  furnished  any  evidence  of  an 

8  Henry  L.  Doherty  &  Co.  v.  Rice  (U.  S.  C.  C),  186  Fed.  204,  decided 
under  the  above  statutes  and  §§  7579,  7580,  of  Code  of  Alabama. 
'  Per  Jones,  J. 

432 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  392 

intention  to  violate  the  law.^°  It  was  contended  in  this 
case  that  the  acquiring  by  such  a  corporation,  on  the 
same  day,  of  six  compresses,  showed  an  intention  in  ob- 
taining the  charter  to  prevent  competition  in  violation 
of  the  anti-trust  act  by  acquiring  control  of  compresses 
in  different  parts  of  the  State.  The  court,  however,  said : 
"  The  corporation  could  lawfully  do  anything  expressed 
in  the  charter,  and  might  lawfully  buy  all  of  the  com- 
presses that  it  purchased.  *  *  *  in  determining  the  ques- 
tion of  intention,  we  must  consider  as  true  every  fact 
which  can  be  fairly  inferred  from  the  evidence,  and  we 
are  of  opinion  that  the  acquisition,  on  the  same  day, 
of  six  compresses,  situated  in  localities  distant  from  each 
other,  will  support  the  inference  that  the  purpose  of  the 
promoters  in  organizing  the  corporation  was  to  acquire 
these  properties,  and  if  the  facts  show  that  in  doing  so 
they  have  violated  the  law,  then  we  are  of  opinion  the 
evidence  would  justify  the  conclusion  that  their  inten- 
tion in  forming  the  corporation  was  to  accomplish  the 
unlawful  purpose.  It  is  not  unlawful  for  the  corporation 
to  buy  all  of  the  properties  that  it  acquired  nor  was  it 
unlawful  for  it  to  acquire  them  all  at  the  same  time, 
and  we  see  nothing  in  that  fact  which  tends  to  show  that 
the  object  at  the  time  of  organizing  the  corporation  was 
to  do  a  lawful  act  to  effect  an  unlawful  pm-pose."  ^^ 

In  New  York  it  has  been  decided  that  a  gas  company 
whose  certificate  of  incorporation  authorizes  it,  as  pro- 
vided in  the  Stock  Corporation  Law,^^  to  "purchase,  ac- 
quire, hold  and  dispose  of  the  stock,  bonds  and  other 
evidences  of  indebtedness  of  any  corporation,  domestic 
or  foreign,  and  issue  in  exchange  therefor  its  stock,  bonds 
or  other  obligations"  has  power  to  make  a  contract  to 
purchase  the  stock  and  bonds  of  a  company  owning  a 
franchise  which,  if  operated  adversely  to  or  in  rivalry 
with  the  power  company  might  be  ruinous  to  its  busi- 

1"  State  V.  Shippers'  Compress  &  Warehouse  Co.,  95  Tex.  603,  69  S.  W. 
58,  aff'g  (Tex.  Civ.  App.)  67  S.  W.  1049. 

"  Per  Brown,  J. 

"  Section  40  (Laws  of  1890,  chap.  564,  as  amended  by  Laws  of  1892, 
chap.  688). 

28  433 


§  393  STATE    STATUTES — VIOLATIONS — 

ness,  and  to  pay  therefor  with  stock  and  bonds  issued  by- 
it.  And  it  was  decided  that  such  a  contract  was  not 
obnoxious  to  another  pro\dsion  in  the  Stock  Corporation 
Law  ^^  as  being  a  combination  with  another  company 
for  the  creation  of  a  monopoly  or  the  unlawful  restraint 
of  trade,  or  the  prevention  of  competition  in  a  necessary 
of  life,  especially  where  it  is  not  shown  that  the  pur- 
chasing company  does  not  intend  to  use  the  plant  or 
exercise  the  franchise  acquired  under  the  purchase.  And 
it  was  also  held  that  it  did  not  effect  a  practical  consoli- 
dation of  two  corporations  contrary  to  the  method 
pointed  out  by  the  statute.^"* 

§  393.  Purchase  of  Assets  of  Corporation. 

An  anti- trust  law  prohibiting  any  corporation,  partner- 
ship or  individual  or  other  association  of  persons  what- 
soever from  creating,  entering  into  or  becoming  "a  member 
of  or  a  party  to  any  pool,  trust,  agreement,  combination, 
confederation  or  understanding  with  any  other  corpor- 
ation, partnership,  individual  or  any  other  person  or 
association  of  persons,  to  regulate  or  fix  the  price  of  any 
article  of  manufacture,  merchandise,  conamodity,  con- 
venience *  *  *  or  to  maintain  said  price,"  is  not  broad 
enough  to  prohibit  one  corporation,  in  good  faith,  in  the 
legitimate  pursuit  of  its  business,  from  purchasing  the 
assets  of  another  corporation  in  a  similar  business.  ^'^  The 
court  said:  "Its  terms  are  applicable  to  individuals  and 
partnerships,  as  well  as  corporations;  its  condemnation 
is  as  pronounced  against  the  individual  as  it  is  against 
the  corporation;  hence  it  follows,  if  this  statute  is  to  be 
construed,  as  prohibiting  corporations  from  purchasing, 
in  good  faith,  the  assets  of  another  corporation,  it  must 
be  applied  with  equal  force  to  the  rights  and  powers  of 
individuals.^^ 

"Section  7. 

1^  Rafferty  v.  Buffalo  City  Gas  Co.,  37  App.  Div.  (N.  Y.)  618,  56  N.  Y. 
Supp.   288. 

'*  State  ex  inf.  Crow  v.  Continental  Tobacco  Co.,  177  Mo.  1,  75  S.  W. 
737,  construing  Act,  1897,  p.  208. 

'6  Per  Fox,  J. 

434 


PARTICULAR   CONTRACTS   AND   COMBINATIONS       §§  394,  395 

§  394.  Mining  Corporation— Purchase  by,  of  Stock  in 
Another  Mining  Corporation. 

Where  a  mining  corporation  obtained  control  of  an- 
other similar  corporation,  by  purchasing  stock  and  ob- 
taining proxies,  for  the  purpose  of  suppressing  compe- 
tition between  two  otherwise  competing  companies  and 
creating  a  monopoly,  such  control  was  held  to  be  vio- 
lative of  a  statute  prohibiting  combinations  for  the  pur- 
pose and  with  the  intent  of  establishing  and  maintaining, 
or  attempting  to  establish  or  maintain  a  monopoly.  And 
the  fact  that  by  another  statute  such  purchasing  com- 
pany was  given  power  to  purchase  and  own  stocks  in  other 
mining  corporations  did  not  make  lawful  the  monopolistic 
control  so  obtained." 

§  395.  Contracts  Between  Common  Carriers— Con- 
solidation of  Railroad  Companies— Parallel  and  Compet- 
ing Lines. 

In  the  case  of  common  carriers  it  is  said  that  contracts 
between  them  to  prevent  competition  are  prima  facie 
illegal,  that  the  burden  is  on  the  carrier  to  remove  the 
presumption  and  that  until  it  is  removed  the  agreement 
goes  down  before  the  presumption.^^ 

A  constitutional  provision  that  ''no  railroad  *  *  *  or 
managers  of  any  railroad  corporation  shall  consolidate 
the  stock,  property,  or  franchises  of  such  corporation 
with  *  *  *  or  in  any  way  control  any  railroad  corpora- 
ls Bigelow,  Calumet  &  Hecla  Mining  Co.  (U.  S.  C.  C),  155  Fed.  869, 
construing  Pub.  Acts,  Mich.,  1899,  p.  409,  No.  255,  as  supplemented  by 
Pub.  Acts,  Mich.,  1905,  p.  507,  No.  329;  Pub.  Acts,  Mich.,  1905,  pp.  153, 
154,  No.  105. 

As  to  mining  contracts  being  a  violation  of  Sherman  Anti-Trust  Act, 
see  §  153,  herein. 

'« Chicago,  Indianapolis  &  Louisville  Ry.  Co.  v.  Southern  Indiana  Ry. 
Co.,  38  Ind.  App.  234,  70  N.  E.  843. 

As  to  violations  of  Sherman  Anti-Trust  Act  by  railroad  companies,  See 
§  151,  herein. 

The  question  whether  a  merger  of  railroad  lines  is  invalid  as  being  in 
violation  of  Article  XVII,  §  4,  of  the  Constitution  of  Pennsylvania,  for- 
bidding railroad  companies  owning  parallel  or  competing  lines  from  being 
consolidated  can  only  be  raised  in  a  proper  proceeding  by  the  Common- 
wealth. Tibby  Brothers  Glass  Co.  v.  Pennsylvania  Railroad  Co.,  219 
Pa.  St.  430,  68  Atl.  975. 

435 


§  395  STATE    STATUTES — VIOLATIONS — 

tion  owning  or  having  under  its  control  a  parallel  or 
competing  line"  is  held  to  clearly  evince  that  control  in 
any  manner  and  to  any  extent  was  intended  to  be  pro- 
hibited provided  it  was  such  as  is  calculated  to  enable 
the  one  railroad  by  means  of  a  contract  or  agreement 
for  an  interference  in  the  other's  affairs  to  keep  down 
competition  between  them.  The  manner  and  extent  of 
the  control  are  declared  to  be  immaterial.  ^^ 

In  Washington  it  has  been  declared  that  constitutional 
and  statutory  provisions  against  the  consolidation  of 
parallel  and  competing  transportation  lines  are  founded 
upon  principles  of  public  policy,  the  intention  being  to 
preserve  to  the  public  existing  facilities  offered  by  com- 
peting companies  so  that  their  efficiency  shall  not  be 
impaired  by  bringing  them  under  a  common  ownership 
and  control.  And  in  this  case  it  was  decided  that  such 
provisions  were  not  violated  by  an  arrangement  between 
two  railroad  companies  operating  competing  lines  between 
Spokane  and  Seattle  in  that  State,  whereby  each  sub- 
scribed for  one-half  of  the  capital  stock  of  a  new  and 
distinct  railroad  corporation  and  contributed  one-half 
of  the  cost  of  constructing  a  new  railroad  from  Spokane 
to  Portland,  Oregon,  opening  up  and  serving  new  terri- 
tory, each  road  continuing  its  individual  identity  and 
control.  ^° 

In  Georgia  it  is  decided  that  the  competition  the  de- 
feating or  lessening  of  which  the  provision  of  the  Consti- 
tution 2^  so  far  as  applicable  to  railroad  companies,  was 

"  Gulf,  Colorado  &  Santa  Fe  Ry.  Co.  v.  State,  72  Tex.  404,  10  S.  W.  81, 
13  Am.  St.  Rep.  815,  1  L.  R.  A.  849,  construing  §  5  of  Art.  10  of  the  Texas 
Constitution. 

»  State  ex  rel.  Cascade  R.  R.  Co.  v.  Superior  Court,  51  Wash.  346,  98 
Pac.  739.  The  court  said:  "It  is  difficult  to  understand  how  transportation 
facilities  can  be  impaired  when  two  existing,  separate  and  independent 
corporations,  each  of  which  continues  its  individual  identity,  organization, 
and  control,  subscribe  for  the  capital  stock  of  a  newly  created  corporation 
and  thereby  aid  in  building  a  railroad  which  opens  and  serves  additional 
territory.  It  would  appear  that  the  creation  of  the  new  corporation,  in- 
stead of  curtailing  the  transportation  facilities  already  enjoyed  by  the 
pubUc,  would  increase  the  same."    Per  Crow,  J. 

2'  Par.  4,  §2,  Art.  4  (Civil  Code,  §5800,  providing  that:  "The  general 

436 


PARTICULAR  CONTRACTS  AND   COMBINATIONS      §  395 

designed  to  prevent,  was  competition  between  lines  of 
railroad  viewed  with  reference  to  their  general  business 
in  and  through  the  territory  traversed  by  them,  and 
not  competition  which  might  incidentally  exist  at  mere 
points  or  particular  places.  So  it  was  decided  that  a 
combination  of  railroad  lines,  whatever  the  form  adopted 
for  bringing  it  about,  is  not  violative  of  this  provision  of 
the  Constitution,  even  though  it  might  lessen  or  defeat 
competition,  at  some  point  or  points,  if,  as  a  general 
result  of  the  combination,  the  public  at  large,  as  distin- 
guished from  the  people  of  special  or  particular  com- 
munities, was  in  consequence  benefited. -^ 

Whether  or  not  the  combination  of  any  two  given  lines 
of  railroad  would  be  contrary  to  a  provision  of  the  Georgia 
Constitution  prohibiting  any  combination  of  corporations 
which  tends  to  lessen  competition  in  their  respective 
business, 2^  is  a  question  which  cannot  be  settled  under 
any  rule  of  universal  application  but  one  which  must 
be  determined  in  each  case  upon  its  own  peculiar  facts 
and  circumstances.^"* 

In  New  York  the  provision  of  the  Railroad  Law  of 
1890,"  in  substance  enacting  that  in  cities  having  a 
population  of  eight  hundred  thousand  or  more  a  street 
surface  railroad  corporation  might  make  an  intertraffic 
contract  to  carry  a  passenger  for  a  continuous  trip  and 
for  a  single  fare  not  exceeding  five  cents  has  been  held 
not  to  apply  to  such  a  contract  made  in  1895,  in  a  city 
not  shown  to  have  then  had  such  a  population,  by  a  cor- 
poration organized  in   1885,  operating  a  street  surface 

assembly  of  this  State  shall  have  no  power  to  authorize  any  corporation  to 
buy  shares  or  stock  in  any  other  corporation  in  this  State  or  elsewhere,  or 
to  make  any  contract  or  agreement  whatever  with  any  such  corporation, 
which  may  have  the  effect,  or  be  intended  to  have  the  effect,  to  defeat  or 
lessen  competition  in  their  respective  business,  or  to  encourage  monopoly; 
and  all  such  contracts  and  agreements  shall  be  illegal  and  void."). 

"  State  V.  Central  of  Georgia  Railway  Co.,  109  Ga.  716,  35  S.  E.  37,  48 
L.  R.  A.  351. 

"  Const.,  Par.  4,  §  2,  Art.  4  (Civil  Code,  §  5S00). 

"  State  V.  Central  of  Georgia  Railway  Co.,  109  Ga.  716,  35  S.  E.  37,  48 
L.  R.  A.  351. 

»  Laws,  1890,  chap.  565,  §§  101,  103,  105. 

437 


§  396  STATE    STATUTES — VIOLATIONS — 

railroad  prior  to  April,  1889,  a  considerable  portion  of 
which  was  not  in  1895  in  the  city,  being  the  successor  of 
a  sunilar  railroad  which  had  been  operated  for  twenty 
years.  And  it  was  held  that  it  or  its  lessee  might  charge, 
for  a  continuous  trip,  a  fare  in  excess  of  five  cents.^® 

In  an  early  case  in  New  Hampshire  in  which  it  appeared 
that  two  railroads  had  entered  into  a  contract  or  arrange- 
ment whereby  each  should  retain  sixty  per  cent  of  its 
gross  earnings  between  all  competing  points  of  their  re- 
spective routes  and  Boston,  to  pay  running  expenses, 
and  the  remaining  forty  per  cent  of  such  gross  earnings 
should  constitute  a  common  fund,  to  be  equally  divided 
between  said  roads,  it  was  held  that  such  contract  came 
within  the  inhibition  of  an  act  of  that  State  entitled  "An 
act  to  prevent  railroad  monopolies"  and  which  prohibited 
the  consolidation  of  rival  and  competing  lines  or  the  run- 
ning and  operating  of  any  railroad  by  a  rival  and  com- 
peting line  under  any  business  contract,  lease  or  other 
arrangement  and  provided  that  each  railroad  must  be 
run  by  its  own  officers  and  agents  and  dependent  for  sup- 
port on  its  own  earnings.  ^^ 

§  396.  Contract  Between  Railroad  Company  and  Pal- 
ace Car  Company. 

A  contract  between  a  railroad  company  and  a  palace 
car  company  by  which  the  latter  was  given  the  exclusive 
right  for  a  period  of  fifteen  years  to  operate  sleeping  cars 
over  the  lines  of  the  former  is  not  violative  of  an  anti- 
trust act  forbidding  any  combination  or  agreement  to 
fix  or  maintain  any  standard  or  figure  whereby  the  cost 
of  transportation  shall  be  in  any  manner  affected  or 
established,  there  being  no  provision  in  such  contract 
that  the  charges  should  be  maintained  as  they  were  then 
fixed,  or  fixing  any  standard  of  charges  by  which  either 
company  should  be  governed,  and  there  being  no  provi- 

2«  Brooklyn  Elevated  R.  R.  Co.  v.  Brooklyn,  Bath  &  West  End  R.  R. 
Co.,  23  App.  Div.  (N.  Y.)  29,  48  N.  Y.  Supp.  665. 

"  Morrill  v.  Boston  &  Maine  Railroad,  55  N.  H.  331,  construing  Act  of 
1867,  chap.  8. 

438 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  397 

sion  for  a  pooling  or  combining  of  rates  between  such 
companies  but  each  being  at  Uberty  to  prescribe  its  own 
charges  and  to  change  them  at  pleasure.  The  only  re- 
striction or  reference  to  charges  was  that  the  sleeping 
car  company  should  not  charge  more  for  its  service  on 
those  lines  than  it  did  on  competing  lines.  And  such 
contract  was  held  not  to  "create  or  carry  out  restrictions 
in  the  free  pursuit  of  a  business  authorized  or  permitted" 
by  the  laws  of  the  State  since  such  provision  does  not 
create  a  new  business  for  any  person,  nor  does  it  give 
a  new  right  in  the  property  of  others,  but  its  object  is 
to  prevent  interference  with  business  authorized  and 
carried  on  in  accordance  with  the  laws  of  the  State.  The 
right  to  have  sleeping  cars  attached  to  passenger  trains 
was  not  authorized  to  be  pursued  on  a  railroad  without 
the  consent  of  the  owner  and  since  no  business  right 
existed  it  could  not  be  restricted.  And  it  was  also  decided 
that  under  such  contract  the  direction  of  the  ''affairs" 
of  neither  of  the  corporations  was  brought  under  the  con- 
trol of  the  other;  nor  were  the  affairs  of  both  corporations 
brought  under  the  management  of  another  corporation  or 
person:  nor  did  either  of  them  acquire  the  shares  or 
certificates  of  stock  or  bonds  of  the  other,  nor  did  the 
contract  transfer  to  either  company  any  ''franchise  or 
other  rights,  or  the  physical  properties"  of  the  other 
company  within  the  provisions  of  the  act  prohibiting 
monopolies.'^ 

§  397.  Merger  of  Street  Railways. 
In  New  York  it  has  been  decided  that  the  provisions 
of  the  Stock  Corporation  Law  ^^  or  of  the  Laws  of  1899, ^'^ 

=«  Ft.  Worth  &  Denver  City  Ry.  Co.  v.  State,  99  Tex.  34,  87  S.  W.  336, 
construing  §§  1,  2,  3,  of  Anti-Trust  Law  of  March  31,  1903  (Acts,  2Sth  Leg., 
p.  119). 

'"Section  7,  providing  that  "No  domestic  stock  corporation  and  no 
foreign  corporation  doing  business  in  tliis  State  sliall  combine  with  any 
other  corporation  or  person  for  the  creation  of  a  monopoly  or  the  unla\\-ful 
restraint  of  trade  or  for  the  prevention  of  competition  in  any  necessary  uf 
life." 

'"Chap.  690,  providing  that  "Everj'  contract,  agreement,  arrangement 
or  combination  whereby  a  monopoly  in  the  manufacture,  production  or 

439 


§  398  STATE    STATUTES — VIOLATIONS — 

designed  to  prevent  combinations  and  monopolies  in  re- 
straint of  trade  do  not  forbid  the  merger  of  street  rail- 
ways, since  the  legislature  by  various  enactments  upheld 
by  the  courts  has  expressly  authorized  the  merger  of  such 
corporations  under  certain  conditions.  The  court  declared 
that  the  policy  of  the  State  toward  such  corporations 
had  been  illustrated  by  a  continued  series  of  enactments 
regulating  and  controlling  them  to  a  minute  degree 
and  permitting  the  leasing,  merger  or  contracts  for 
the  use  of  parallel  or  competing  street  railways  and 
railroads  and  that  in  the  face  of  those  enactments  and 
that  control  it  seem.ed  to  be  a  violent  warping  of  the 
intention  of  the  legislature  to  attempt  to  apply  such 
provisions  to  the  railroads  of  the  State. ^^ 

In  a  case,  however,  decided  in  the  United  States  Cir- 
cuit Court,  the  conclusion  was  reached  that  under  these 
circumstances  there  was  a  combination  to  create  a  monop- 
oly within  the  prohibition  of  section  seven  of  the  Stock 
Corporation  Law.^^ 

§  398.  Contracts  Between  Railroad   Companies  and 
Express  or  Transfer  Companies— Exclusive  Right. 
Wliere  it  is  provided  by  statute  that  every  railroad 

sale  in  this  State  of  any  article  or  commodity  of  common  use  is  or  may  be 
created,  established  or  maintained,  or  whereby  competition  in  this  State 
in  the  supply  or  price  of  any  such  article  or  commodity  is  or  may  be  re- 
strained or  prevented,  or  whereby  for  the  purpose  of  creating,  establishing 
or  maintaining  a  monopoly  within  this  State  of  the  manufacture,  produc- 
tion or  sale  of  any  such  article  or  commodity,  the  free  pursuit  in  this  State 
of  any  lawful  business,  trade  or  occupation  is  or  may  be  restricted  or  pre- 
vented, is  hereby  declared  to  be  against  public  policy,  illegal  and  void." 

"  Matter  of  Interborough-Metropolitan  Co.,  125  App.  Div.  (N.  Y.)  804, 
111  N.  Y.  Supp.  186. 

»2  Burrow  v.  Interborough-Metropolitan  Co.  (U.  S.  C.  C),  156  Fed.  389. 
The  court  said:  "On  the  facts  alleged  in  the  bill,  which  the  demurrer  ad- 
mits, it  is  difficult  to  see  how  the  monopoly  shown  by  them  could  be  more 
complete.  By  it  every  surface  street  railroad  and  every  elevated  railroad 
and  every  subway  railroad  in  the  boroughs  of  Manhattan  and  the  Bronx 
are  combined  in  one  management  and  control.  No  one  can  go  up  or  down 
town  in  New  York,  without  using  one  of  these  roads  unless  he  takes  a  car- 
riage or  walks.  It  is  as  absolute  a  monopoly  of  the  means  of  the  transpor- 
tation of  passengers  in  New  York  as  can  be  imagined  which  is  not  legally 
exclusive."    Per  Holt,  J. 

440 


PARTICULAR  CONTRACTS   AND   COMBINATIONS      §  398 

company  operating  a  railroad  within  the  State  shall  fur- 
nish reasonable  and  equal  facilities  and  accommodations, 
and  upon  reasonable  and  equal  rates,  to  all  corporations 
and  persons  engaged  in  the  express  business, ^^  and  by 
an  anti-trust  act  a  trust  is  defined  as  "a  combination  of 
capital,  skill  or  acts  by  two  or  more  persons,  firms  or 
corporations,"  ^*  any  combination  of  the  kind  denounced 
by  the  anti-trust  act,  the  carrying  out  of  which  would 
limit  or  narrow  the  scope  of  business  express  companies 
are  permitted  to  carry  on  by  the  former  act,  is  neces- 
sarily one  to  create  or  carry  out  a  restriction  in  the  free 
pursuit  of  business,  within  the  meaning  of  the  anti- 
trust act  prohibiting  such  restriction.  So  a  contract 
which  showed  by  its  terms  that  its  purpose  was  to  secure  to 
certain  express  companies,  so  far  as  it  was  within  the  power 
of  the  parties  to  do  so,  the  exclusive  right  to  do  an  express 
business  upon  the  railroad,  and  to  exclude  other  express 
companies  from  the  enjoyment  of  like  right,  was  held 
to  be  a  violation  of  the  statute.  ^^ 

A  rule  or  regulation  by  a  carrier  of  passengers  whereby 
it  gives  to  a  transfer  company  the  privilege  of  soliciting 
the  patronage  of  its  passengers  upon  its  trains  does  not 
create  a  monopoly  and  is  not  violative  of  an  anti-trust  law 
which  provides  as  follows:  ''A  trust  is  a  combination  of 
capital,  skill  or  acts  by  two  or  more  persons,  firms,  cor- 
porations or  association  of  persons,  or  either  two  or  more 
of  them  *  *  *  to  create  or  carry  out  restriction  in  the 
free  pursuit  of  any  business  authorized  or  permitted  by 
the  law^s  of  this  State."  ^^  The  court  said:  ''It  is,  we 
think,  sufficient  answer  to  this  contention,  that  the  rule 
or  regulation  of  appellees  by  which  Green  was  permitted 
to  solicit  the  patronage  of  its  passengers  to  the  exclusion 
of  appellant  did  not  'create  or  carry  out  restrictions  in 
the  free  pursuit  of  any  business  authorized  or  permitted 

»» Tex.  Rev.  Stat.,  Art.  4540. 

"  Tex.  Anti-Trust  Act  of  1903. 

»  State  V.  Missouri,  Kansas  &  Texas  Ry.  Co.,  09  Tex.  516,  91  S.  W.  214, 
5  L.  R.  A.  (N.  S.)  783. 

'*  Lewis  V.  Weatherford,  Mineral  Wells  \'  Northwestern  Ry.  Co.,  36 
Tex.  Civ.  App.  48,  81  S.  W.  HI. 

441 


§§  399,  400     STATE    STATUTES — VIOLATIONS — 

by  the  laws  of  this  State,  because  the  only  restriction  im- 
posed is  with  respect  to  the  transaction  of  appellant's 
business,  on  appellee's  passenger  trains  which  he  is  no- 
where authorized  or  permitted  by  the  laws  of  this  State 
to  engage  in.  It  is  therefore  not  a  restriction  upon  the 
free  pursuit  of  his  lawful  business.  In  the  sense  that 
the  regulation  prevents  appellant  from  securing  the  pa- 
tronage of  appellee's  passengers  it  may  be  said  to  be  a 
restriction  upon  his  business.  But  the  least  reflection 
will  show  that  if  this  construction  of  the  law  were  to  be 
adopted  a  very  large  per  cent  of  the  everyday  contracts 
in  the  business  world,  such  as  those  of  leasing,  of  agency, 
of  service  and  the  like  would  be  reprobated,  a  result  never 
dreamed  of  by  the  legislators  who  enacted  the  statute."  " 

§  399.  Car  Service  Association  Merely  Agent  of  Sev- 
eral Railroads. 

A  car  service  association  which  is  but  merely  the 
agent  and  employee  of  various  railroads  joining  such  asso- 
ciation the  main  purpose  of  which  is  to  prove  of  benefit 
to  consignor,  carrier,  and  consignee  by  expediting  the 
transportation  of  freight,  facilitating  its  delivery  and 
insuring  prompter  and  more  satisfactory  service  for  all 
but  which  has  no  authority  to  control  the  management 
of  the  business  of  the  railroads  as  to  fix  the  charges  it 
may  assess  is  not  within  the  operation  of  a  statute  pro- 
hibiting trusts  or  combinations  between  two  or  more 
persons,  firms  or  corporations  by  which  any  other  person 
than  themselves,  their  proper  officers,  agents  and  em- 
ployees, shall,  or  shall  have  the  power  to,  dictate  or  control 
the  management  of  business.  ^^ 

§  400.  Agreements  Between  Steamboat  Companies. 
Where   defendants   were   rival    steamboat    companies 
organized  under  the  Act  of  1854  in  New  York,^^  and  had 

"  Per  Speer,  J. 

"  Yazoo  &  Mississippi  Valley  R.  R.  Co.  v.  Searles,  85  Miss.  520,  37  So. 
939,  68  L.  R.  A.  715. 

»«  Laws  of  1854,  p.  518,  chap.  232. 

442 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  401 

been  competing  for  the  transportation  of  passengers  and 
for  public  traffic  for  some  years,  the  rivalry  and  compe- 
tition between  them  being  very  severe  and  keen,  and  the 
result  of  which  would  be  for  the  benefit  of  the  public, 
suddenly  came  together  and  made  an  agreement  for  the 
purpose  of  running  the  boats  of  their  respective  lines  for 
joint  and  mutual  benefit  or  account,  thus  making  a  com- 
plete union  of  the  interests  of  the  two  companies,  at  all 
events,  providing  for  a  joining  of  the  companies  for  the 
protection  of  certain  supposed  mutual  interests  it  was 
decided  that  such  combination  was  in  violation  of  the 
act  entitled  "An  act  for  the  incorporation  of  companies 
to  navigate  the  lakes  and  rivers"  and  providing  that 
"No  such  company  shall  combine  with  any  other  com- 
pany formed  under  this  act  for  any  purpose."  ^° 

§  401.  Contracts  Between  Manufacturer  and  Pur- 
chaser Not  to  Resell  Below  Certain  Price— Proprietary 
Medicines— Uniform  Jobbing  Price. 

An  agreement  between  a  manufacture  of  goods  and  a 
customer  that  the  latter  will  not  resell  its  goods  at  a  less 
price  than  that  fixed  by  the  former  has  been  held  in 
Kentucky  not  to  be  in  violation  of  an  anti-trust  act  of 
that  State  prohibiting  any  combination  to  fix  or  regulate 
prices  or  to  limit  production.  ■'^ 

And  an  agreement  between  the  manufacturers  of 
proprietary  medicines  and  an  association  of  wholesale 
dealers  in  such  articles  to  sell  their  goods  at  a  uniform 
jobbing  price  for  fixed  quantities  to  such  dealers  only  as 
would  conform  to  the  manufacturer's  price  list  in  making 
sales  of  goods,  has  been  held  in  New  York  not  to  estab- 
lish a  monopoly  on  the  part  of  the  members  of  the  asso- 

«  Watson  V.  Harlem  &  New  York  Navigation  Co.,  52  How.  Prac.  (N. 
Y.)  348. 

As  to  violations  of  Sherman  Anti-Trust  Act  by  owners  of  vessels,  see 
§  152,  herein. 

«' Commonwealth  v.  Grinstead,  111  Ky.  203,  23  Ky.  Law  Rep.  590, 
63  S.  W.  427,  56  L.  R.  A.  709,  decided  under  Ky.  Stats.  3915. 

As  to  violations  of  Sherman  Anti-Trust  Act  by  manufacturers  of  pro- 
prietarj'  medicines,  see  §  138,  herein. 

443 


§  402  STATE   STATUTES — VIOLATIONS — 

ciation,  where  all  wholesale  dealers  have  the  right  to 
purchase  goods  from  the  manufacturers  upon  the  same 
terms  as  the  members  of  the  association,  upon  under- 
taking to  maintain  the  prices  established  by  the  manu- 
facturers. And  such  agreement  was  also  declared  not  to 
be  unlawful  as  in  restraint  of  trade  or  against  public 
policy,  although  it  did  away  with  competition  among 
dealers  as  to  prices,  where  it  placed  no  restriction  upon 
them  as  to  the  quantities  that  they  might  be  able  to  sell 
or  the  territory  within  which  they  might  transact  busi- 
ness. ^^ 

§  402.  Exclusive  Rights — Contracts  Between  Vendor 
and  Purchaser — When  a  Violation. 

Where  by  the  terms  of  a  contract  a  carriage  manu- 
facturer was  to  ship  all  of  its  vehicles  to  a  certain  party 
and  to  permit  its  goods  to  be  handled  by  no  other  persons 
within  the  State  except  at  a  certain  place,  and  the  person 
to  whom  they  were  shipped  was  to  handle  no  goods  of 
the  same  character  from  any  other  factory,  to  sell  the 
goods  so  shipped  at  specified  prices  free  of  all  expense 
to  the  shipper  and  there  was  no  clause  as  to  agency  or 
retention  of  title  in  the  shipper  it  was  held  that  the  con- 
tract was  not  one  creating  an  agency  but  was  to  be 
treated  as  an  agreement  entered  into  by  the  parties, 
intended  to  govern  and  control  contemplated  future 
purchases  and  sales  and  was  in  violation  of  the  statute 
against  trusts  and  conspiracies  against  trade.  ^^ 

And  where  a  contract  was  entered  into  between  a  brew- 
ing company  and  a  dealer  by  the  terms  of  which  the 
former  agreed  to  give  the  dealer  the  sole  representation 
and  sale  of  its  products  in  a  certain  locality,  to  furnish 
such  products  at  a  fixed  price  and  to  furnish  a  storage 
vault  and  delivery  wagon  and  the  dealer  agreed  to  fur- 

*^  Park  &  Sons  Company  v.  National  Wholesale  Druggists'  Ass'n,  175 
N.  Y.  1,  67  N.  E.  136,  62  L.  R.  A.  632,  96  Am.  St.  Rep.  578,  aff'g  54  App. 
Div.  223,  66  N.  Y.  Supp.  615. 

«  Columbia  Carriage  Co.  v.  Hatch,  19  Tex.  Civ.  App.  120,  47  S.  W.  288. 
Compare  Clark  v.  Cyclone  Woven  Wire  Fence  Co.,  22  Tex.  Civ.  App.  41, 
54  S.  W.  .392. 

444 


PARTICULAK   CONTRACTS   AND   COMBINATIONS      §  402 

nish  a  suitable  place  for  the  erection  of  the  vault,  free  of 
any  rental  charges,  to  use  his  best  endeavors  in  the  in- 
terest of  the  brewing  company  and  to  handle  no  other 
beer  than  that  of  such  company  during  the  term  of  the 
contract,  except  upon  the  latter's  written  permission,  it 
was  decided  that  the  effect  of  such  contract  was  to  create 
and  "carry  out  restrictions  in  trade"  and  "to  prevent  com- 
petition" in  the  "sale  and  purchase"  of  "commodities" 
within  the  terms  of  the  anti-trust  act  making  combina- 
tions, trusts  or  agreement  which  so  operated  illegal. ^^ 

And  where  a  statute  forbids  any  combination  or  agree- 
ment to  limit  the  price  of  a  commodity,  under  a  contract 
by  which  a  packer  agreed  to  sell  to  a  competitor  all  the 
case  oysters  which  he.  should  pack  during  certain  months 
of  the  year  except  three  car  loads  per  month,  half  of  his 
output,  and  that  he  would  be  bound  as  to  the  price  which 
he  would  charge  for  such  car  loads  by  the  price  fixed  by 
the  purchaser  of  the  other  half,  and  the  price  could  thus  be 
arbitrarily  fixed  without  any  reference  to  the  state  of 
the  market,  and  each  party  was  to  sell  at  the  same  price, 
no  matter  what  the  supply  or  demand  might  be,  the  court 
declared  that  the  contract  was  a  "plain  combination  and 
agreement  between  competing  manufacturers  not  to  sell 
anj'where,  to  anybody,  the  commodity  (oysters)  for  a  less 
price  than  that  at  which  the  other  sells.  The  appellee 
cannot  sell  except  at  prices  fixed  by  the  appellant,  and 
these  prices  may  be  fixed  arbitrarily,  without  regard  to 
the  market  in  any  way,  the  appellant  nowhere  agreeing 
that  it  should  be  controlled  by  the  demand  and  sup- 
ply." "^ 

Again,  under  a  statute  declaring  void  all  contracts 
designed  in  any  manner  to  prevent  or  restrict  free  com- 
petition in  the  production  or  sale  of  any  agricultural 
article  or  commodity,  a  contract  to  sell  lambs,  wherein 

**  Texas  Brewing  Co.  v.  Templeman,  90  Tex.  277,  38  S.  W.  27,  decided 
under  the  Act  of  March  30,  1899,  followed  in  Fuqua  Hinkic  &  Davi.s  v. 
Pabst  Brewing  Co.,  90  Tex.  298,  38  S.  W.  29,  35  L.  R.  A.  241,  reversing 
(Tex.  Civ.  App.)  3G  S.  W.  479,  in  which  a  similar  contract  was  construed. 

«  Barataria  Canning  Co.  v.  Joulian,  SO  Miss.  555,  31  So.  961,  per  \Miit- 
field,  C.  J. 

445 


§  403  STATE    STATUTES — VIOLATIONS — 

the  buyer  agrees  not  to  buy  any  other  lambs,  in  certain 
counties,  prior  to  the  date  fixed  for  delivery,  has  been  held 
void."® 

§  403.  Exclusive  Rights— Contracts  Between  Vendor 
and  Purchaser— When  Not  a  Violation. 

In  a  statute  providing  that  all  contracts  by  persons  who 
"control  the  output"  of  an  article  of  merchandise,  made 
to  prevent  competition  *'in  the  importation  or  sale  of 
articles"  imported  into  the  State,  the  parties  referred  to 
by  the  act  are  not  those  who  control  the  output  of  a  single 
factory  or  a  single  town,  the  statute  being  directed 
against  monopoly.  So  a  contract  by  which  a  person 
agreed  to  sell  all  the  sash  weights  it  should  make  during 
"the  remainder  of  the  year"  to  another,  was  held  not  to 
be  void  as  being  in  violation  of  such  an  act."*^ 

So  an  agreement  between  a  vendor  and  purchaser  of 
whisky  that  the  former  would  not  sell  any  liquor  of  the 
same  kind  in  three  cities  in  which  the  purchaser  was 
engaged  in  business  until  the  latter  had  closed  out  his 
purchase  was  held  in  Texas  not  to  be  a  violation  of  the 
statute  forbidding  combinations  "to  fix  or  limit  the 
amount  or  quantity  of  any  article"  or  "to  regulate  or 
fix  the  price  of  any  article."  ^^  The  provisions  of  the 
statute  against  limitations  on  the  amount  or  quantity  of 
an  article  was  construed  as  not  referring  to  the  amount 
to  be  sold  in  or  supplied  to  any  particular  conomunity 
or  territory  but  to  the  amount  or  quantity  in  existence, 
that  is,  to  what  is  generally  called  the  supply  or  output."^ 

And  a  contract  entered  into  between  a  photographic 
company  and  a  grocery  company  by  which  the  former 
was  to  furnish  the  latter  with  trading  tickets  each  of 

«  Bingham  v.  Brands,  119  Mich.  255,  77  N.  W.  940,  decided  under 
3  How.  Stat.,  §  9.354J.  The  court  said:  "By  the  terms  of  this  contract,  the 
plaintiffs  were  restrained  from  purchasing  lambs  in  Genesee  and  Shiawas- 
see counties.  The  contract  had  the  effect  to  restrict  free  competition  in 
those  counties  and  falls  within  the  very  terms  of  the  statute."    Per  Long,  J. 

"  Over  V.  Byram  Foundry  Co.,  37  Ind.  App.  452,  77  N.  E.  302. 

«  Tex.  Anti-Trust  Law,  1899  (Acts  of  1899,  p.  246). 

«  Norton  v.  Thomas  &  Sons  Co.,  99  Tex.  578,  91  S.  W.  780. 

446 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  403 

which  entitled  its  holder  to  a  photo  art  calendar  when 
traded  out  and  countersigned  by  the  grocery  company 
which  agreed  to  dispose  of  such  tickets  as  soon  as  pos- 
sible, and  by  which  the  photographic  company  agreed 
not  to  sell  to  any  other  grocery  company  in  that  locality 
such  trading  tickets  without  the  consent  of  the  other 
party  to  the  contract  has  been  held  not  to  be  in  violation 
of  a  statute  prohibiting  trusts,  monopolies  and  con- 
spiracies in  restraint  of  trade. ^° 

/^Again,  where  the  manufacturer  of  pianos  who  was 
located  in  Massachusetts  agreed  with  a  firm  in  Memphis, 
Tennessee,  that  the  latter  should  have,  to  the  exclusion 
of  all  others,  the  right  to  sell  pianos  of  the  former's  manu- 
facture in  certain  territory  contiguous  to  Memphis,  in 
Arkansas,  West  Tennessee  and  North  Mississippi,  it 
was  declared  that  the  legislature,  by  the  chapter  on 
trusts  and  combines,  did  not  intend  to  debar  a  person 
from  conducting  his  own  private  business  according  to 
his  own  judgment.  The  court  said:  "Indeed  there  is  no 
law.  Federal  or  State,  that  requires  a  person  to  sell  his 
goods  against  his  will,  to  any  other  person,  or  to  send 
agents  abroad  to  seek  business,  or  even  to  compel  him 
to  employ  agents  in  the  conduct  of  his  business.  These 
are  matters  of  private  judgment  and  discretion,  which 
belong  to  every  citizen  by  the  laws  of  nature;  they  are 
rights  inherent  in  every  freeman,  which  no  human  law 
can  rightly  supersede  or  mipair."  ^^ 

And  a  contract  by  which  one  corporation  agrees  and 
binds  itself  to  buy  all  its  raw  materials  from  and  to 
sell  all  its  manufactured  product  to  another  corporation 
is  not  in  violation  of  an  act  prohibiting  pools,  trusts  and 
combinations  in  the  absence  of  any  allegation  or  e\'idence 
that  the  contract  tended  to  produce  a  monopoly,  or  was 
in  restraint  of  trade,  or  enabled  the  parties  thereto,  or 
either  of  them,  to  monopolize  the  market  or  that  it  had 
anything  to  do  with  commerce.    A  party  asserting  that 

">  Forrest  Photographic  Co.  v.  Hutchinson  Grocery  Co.  (Tex.  Civ.  App., 
190S),  108  S.  W.  768. 
'•'  Houck  <fe  Co.  V.  Wright,  77  Miss.  476,  27  So.  616. 

447 


§  404  STATE   STATUTES — VIOLATIONS — 

such  a  contract  is  illegal  and  void  must  by  proper  aver- 
ments and  competent  evidence  show  such  invaUdity.^^ 

And  where  a  contract  was  for  the  sale  of  twenty-one 
fence  machines  and  certain  pickets  and  granted  to  a  per- 
son the  right  to  build,  weave,  and  construct  nine  fences 
in  a  specified  territory  under  letters  patent  and  such 
person  was  bound  to  purchase  the  wire  and  pickets,  or 
stays,  and  machines  used  in  building  the  fences  under 
said  patent  from  the  other  party  to  the  contract,  it  was 
decided  that  there  was  not  a  combination  against  trade 
and  intended  to  prevent  competition  within  the  meaning 
of  an  anti-trust  act  of  Texas.  ^^ 

So  contracts  entered  into  by  the  manufacturer  of  a 
certain  brand  of  saleratus  and  soda  with  jobbers  and 
dealers  in  that  commodity,  by  the  terms  of  which  the 
manufacturer  agreed  to  sell  the  brand  manufactured  by 
it  to  such  jobbers  and  dealers  at  a  reduced  price  in  con- 
sideration of  their  agreement  not  to  sell  it  or  different 
brands  of  the  same  article  manufactured  by  other  persons 
at  less  than  a  stipulated  price  have  been  held  not  illegal 
as  to  rival  manufacturers  of  saleratus  and  soda,  who 
do  not  allege  that  such  contracts  were  entered  into  with 
their  customers,  or  with  any  person  other  than  the 
regular  customers  of  the  first  mentioned  manufacturer, 
or  that  the  customers  of  such  rival  manufacturers  had 
been  induced  thereby  to  break  any  existing  contracts 
with  them.  Such  contracts  were  held  not  to  be  violative 
of  a  New  York  statute  ^''  declaring  illegal  contracts  re- 
straining or  preventing  competition  in  the  supply  or 
price  of  any  commodity  of  common  use  for  the  support 
of  Hfe  and  health.  ^^ 

§  404.  Exclusive  Contract — Sale  of  By-Product— Dis- 
tinguished from  Sale  of  Entire  Output. 

A  distinction  is  made  between  a  corporation  engaged 

"  Heimbuecher  v.  Goff,  Hower  &  Co.,  119  111.  App.  373. 
"  Clark  V.  Cyclone  Woven  Wire  Fence  Co.,  22  Tex.  Civ.  App.  41,  54 
S.  W.  392. 

"  Chap.  716,  Laws  of  New  York,  1893. 

"  Walsh  V.  Dwight,  40  App.  Div.  (N.  Y.)  513,  .58  N.  Y.  Supp.  91. 

448 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  405 

in  a  particular  line  of  business,  which  enters  into  a  com- 
bination to  dispose  of  all  of  its  products  to  a  competitor 
for  the  purpose  of  enabling  the  competitor  to  fix  prices 
and  control  the  markets  and  one  which  in  the  course  of 
its  principal  business  incidental  thereto  disposes  of  a 
by-product  or  commodity  in  which  it  does  not  deal.^^ 

Thus  it  was  so  held  in  a  case  in  Alinnesota  where  the 
defendant  gaslight  company  was  a  corporation  engaged 
in  the  business  of  manufacturing  gas  for  use  by  the 
citizens  of  St.  Paul.  The  gas  was  manufactured  from 
soft  coal,  and  one  of  the  residual  products  thereof  was 
coke,  which  the  company  accumulated  in  large  quantities. 
It  was  not  engaged  in  buying,  selling  or  dealing  in  coke 
or  other  like  fuel.  It  entered  into  a  contract  with  de- 
fendant coal  company,  by  which  it  agreed  to  sell  and  de- 
liver to  that  company  all  its  accumulations  of  coke,  and 
specially  agreed  not  to  sell  or  dispose  of  the  same,  or 
any  part  of  it,  to  any  other  person  or  company.  The 
court  held  that  as  the  coke  accumulated  by  the  gaslight 
company  was  a  mere  incident,  a  by-product,  resulting 
from  the  conduct  of  its  principal  business,  the  agreement 
to  sell  its  entire  output  to  defendant  coal  company  was 
not  an  unlawful  combination,  nor  a  violation  of  any  law 
of  the  State." 

§  405.  Contract  Giving  Exclusive  Right  to  Sell  Goods 
on  Certain  Premises. 

A  statute  prohibiting  a  combination  'Ho  create  or 
carry  out  restrictions  in  the  free  pursuit  of  any  business 
authorized  or  permitted  by  the  laws"  of  the  State  is 
construed  as  ha\ing  reference  to  restrictions  upon  such 
business  competition  as  a  person  is  entitled  under  the 
laws  of  the  State,  to  enter  into,  and  does  not  include  the 
case  of  an  agreement  giving  one  an  exclusive  right  to  sell 
goods  upon  the  premises  of  another.    The  court  said  in 

"  State  ex  rel.  Berryhill  v.  St.  Paul  Gaslight  Ck).,  92  Minn.  467,  100  N. 
W.  216. 

"  State  ex  rel.  Berryhill  v,  St.  Paul  Gashght  Co.,  92  Minn.  467,  100  X. 
W.  216. 

29  449 


§  40b       STATE  STATUTES — VIOLATIONS — 

this  case:  ''Were  any  restrictions  created  or  carried  out 
in  the  contract  under  consideration  against  the  free  pur- 
suit of  any  business  which  the  law  gave  others  the  right 
to  engage  in?  Did  others  have  the  right  under  the  law 
to  demand  of  the  appellant  that  they  be  permitted  to 
sell  goods  upon  its  premises?  The  right  to  sell  goods  upon 
the  premises  of  another  is  not  given  by  law  but  by  the 
consent  of  the  owner.  The  latter  has  the  right  to  say 
who  shall  or  who  shall  not  use  his  premises  for  any  such 
purpose.  The  right  to  give  an  exelusive  contract  for  the 
purpose  of  any  business  is  involved  in  every  lease."  ^^ 

But  in  a  case  in  Texas  an  action  was  brought  upon  a 
contract  by  which  a  coal  mining  company  owning  land 
upon  which  there  was  a  camp  called  Thurber  leased  to 
one  Lawson,  for  a  term  of  five  years,  premises  for  the 
purpose  of  selling  Uquor.  By  the  terms  of  the  contract 
the  company  was  not,  during  the  term  of  the  lease,  to  per- 
mit any  other  person  than  Lawson  to  sell  liquor  upon  any 
lands  owned  or  occupied  by  it;  was  to  issue  checks  to 
its  employees  and  to  redeem  such  checks  as  Lawson 
might  receive  for  liquor;  and  was  to  receive  as  rental  for 
such  premises  two-thirds  of  the  net  profits.  The  agree- 
ment disclosed  upon  its  face  that  it  was  "the  purpose  of 
this  lease  to  confirm  to  said  Lawson  the  exclusive  priv- 
ilege" of  selling  liquor  upon  the  company's  lands  during 
its  term.  The  court  held  that  there  was  a  combination 
the  purpose  of  which  was  to  create  and  carry  out  a  re- 
striction in  the  sale  of  liquors  at  Thurber  and  also  to 
prevent  competition  in  the  sale  and  purchase  thereof  and 
that  the  contract  created  a  trust  within  the  meaning  of 
the  statute  and  was  void.^^ 

§  406.  Agreement  Restraining  Purchaser  Using  Prem- 
ises for  Certain  Purpose. 

An  agreement,  in  connection  with  a  sale  of  property, 
which  the  vendor  could  devote  to  a  given  purpose  or 

*«Redland  Fruit  Co.  v.  Sargent,  51  Tex.  Civ.  App.  619,  113  S.  W.  330, 
per  Hodges,  J. 

69  Texas  &  Pacific  Coal  Co.  v.  Lawson,  89  Tex.  394,  32  S.  W.  871,  34  S. 
W.  919. 

450 


PARTICULAR   CONTRACTS   AND    COMBINATIONS    §§  407,  408 

not,  by  which  the  vendee  is  put  under  a  restraint  against 
employing  it  for  such  purposes,  the  vendor  having  a  busi- 
ness which  he  is  interested  in  protecting,  is  not  in  viola- 
tion of  an  anti-trust  act  aimed  at  combinations  formed 
for  the  purpose  of  restricting  the  output  or  enhancing  the 
price  of  goods.^°  The  court  said:  "An  agreement  pro- 
hibiting the  use  of  a  particular  piece  of  property  in  a 
specific  business,  or  prohibiting  one  of  the  parties  from 
engaging  in  a  competitive  business  for  a  reasonable 
time,  and  within  a  limited  area,  if  not  larger  than  neces- 
sary to  protect  the  other,  is  a  valid  and  enforceable 
agreement."  ®^ 

§  407.  Agreement  Between  Agent  of  Seller  and  Pur- 
chaser—Coal Oil. 

Where  an  agent  acting  under  directions  from  his  prin- 
cipal to  procure  the  countermand  of  orders  for  coal  oil 
given  to  a  rival  concern  gave  to  one,  who  had  given  such 
an  order,  a  certain  quantity  of  coal  oil  as  an  inducement 
for  him  to  countermand  such  order,  which  was  done 
there  was  held  to  be  a  violation  of  the  State  anti-trust  act 
prohibiting  combinations  to  lessen  competition  as  such 
agreement  was  made  by  the  agent  to  protect  the  oil  of 
his  employer  from  competition  with  that  of  the  rival 
company  and  with  a  view  of  lessening  full  and  free  com- 
petition in  the  sale  of  coal  oil.®^ 

§  408.  Contracts  Between  Principal  and  Agent. 

In  a  case  in  Texas  it  was  decided  that  it  was  not  the 
purpose  of  a  statute  prohibiting  a  ''combination  of 
capital,  skill  or  acts"  by  two  or  more  persons  for  certain 

6"  Hitchcock  V.  Anthony,  83  Fed.  779,  28  C.  C.  A.  80,  aff'g  71  Fed.  659, 
and  construing  Laws  Mich.,  1889,  Act  No.  225. 

*•  Per  Linton,  J.,  citing  American  Strawboard  Co.  v.  Haldeman  Paper 
Co.,  83  Fed.  619,  27  C.  C.  A.  634;  Navigation  Co.  v.  Windsor,  87  U.  S. 
(20  Wall.)  64,  22  L.  ed.  315;  Gibbs  v.  Gas  Co.,  130  U.  S.  396,  32  L.  ed. 
979,  9  Sup.  Ct.  553;  Stines  v.  Bowman,  25  Ohio  St.  580,  583;  Hubbard  v. 
Miller,  27  Mich.  15;  Association  v.  Starkey,  84  Mich.  80,  47  N.  W.  604; 
Timmerman  v.  Dener,  52  Mich.  34,  17  N.  W.  230. 

"-Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015. 

451 


§  409  STATE   STATUTES — VIOLATIONS     - 

purposes  ^^  to  interpose  any  obstacle  to  a  principal's 
contracting  with  his  agent  with  reference  either  to  the 
terms  or  the  subject-matter  of  the  agency.  So  the  court 
held  that  there  was  no  violation  of  the  above  statute 
in  the  case  of  a  contract  by  which  a  windmill  company 
gave  to  a  firm  the  exclusive  right  for  a  year  to  sell  wind- 
mills manufactured  by  the  former  in  certain  named 
counties  and  by  which  such  firm  agreed  to  thoroughly 
and  fairly  canvass  the  territory;  not  to  sell  above  or 
below  certain  prices;  not  to  keep  in  stock  or  engage  in 
the  sale  of  any  other  windmill  goods;  and  to  make  weekly 
returns  of  sales  and  monthly  settlements.  The  title  to 
the  windmills  shipped  to  such  firm  was  to  remain  in  the 
manufacturer  until  a  bona  fide  sale  had  been  made.  The 
court  held  that  by  such  contract  the  relation  of  principal 
and  agent  was  created,®*  and  said:  "In  the  case  before 
us  it  was  entirely  within  the  discretion  of  the  principal, 
before  as  well  as  after  the  contract  was  signed,  as  to 
how  many  of  its  windmills  it  would  send  into  the  named 
territory,  as  well  as  to  decline  to  sell  for  less  than  the 
net  price,  or  permit  its  agent  to  sell  for  others.  It  con- 
trolled them  all,  and  therefore  there  was  no  union  or 
association  of  otherwise  independent,  separate  and  pos- 
sibly competing  'capital,  skill,  or  acts'  and  hence  no  com- 
bination. We  therefore  answer  the  question  certified  in 
the  negative.  If  the  title  to  the  windmills  had  passed 
by  the  contract  and  shipment,  thus  establishing  the  re- 
lation of  vendor  and  vendee,  instead  of  principal  and 
agent,  between  the  parties  thereto,  a  different  result 
might  have  been  reached."  ^^ 

§  409.  Sale  of  Business  and  Good  Will— Contracts 
Not  to  Engage  in  Competition. 

A  statute  the  purpose  and  effect  of  which  is  to  prevent 
"competition  in  selling  or  fixing  the  price  or  preventing 
competition  in  buying"  is  not  violated  by  an  agreement 
of  one  selling  a  local  mercantile  business,  not  to  engage 

"Tex.  Acts,  1889,  chap.  117,  p7l41. 

"  Welch  V.  Phelps  &  Bigelow  Wind  Mill  Co.,  89  Tex.  653,  36  S.  W.  71. 

**  Per  Denman,  J. 

452 


PARTICULAR   CONTRACTS    AND    COMBINATIONS      §  409 

therein  in  competition  with  the  vendee  in  that  vicinity. 
Such  a  contract  when  reasonable  in  its  scope  and  as  to 
duration  and  territory  cannot  lend  itself  to  the  formation 
of  trusts  and  monopolies  unless  shown  to  be  one  of  many 
similar  contracts  tending  to  engross  that  particular  busi- 
iness  in  a  given  territory.  If  such  contracts  were  held 
invalid  it  would  not  tend  to  accomplish  the  purpose  of 
the  statute  but  would  operate  to  destroy  the  "good  will" 
which  one  has  built  up  in  his  business  by  rendering  it 
valueless  and  unsalable  if  its  possession  to  the  vendee 
cannot  be  guaranteed  by  the  seller  agreeing  not  to  engage 
in  the  same  business  in  the  same  place  in  competition 
with  his  vendee.®^ 

So  in  a  case  in  Minnesota  it  was  decided  that  a  contract 
not  to  engage  in  the  same  business  within  a  certain  limited 
territory,  a  distance  of  ten  miles  around  a  certain  village, 
for  a  limited  time,  entered  into  by  the  seller  of  a  business 
as  a  part  of  the  coUvsideration  was  not  void  as  being  in 
restraint  of  trade  and  in  violation  of  a  statute  construed 
as  having  application  to  those  combinations,  conspiracies 
and  trusts  which  had  for  their  purpose  the  restraint  of 
trade  or  commerce  or  which  tended  to  limit  or  control 
the  supply  of  any  article,  commodity  or  utility,  or  to 
limit,  control  or  raise  the  market  price  of  such  article 
and  which  interfere  with  open  and  free  competition." 

So  a  contract  for  the  sale  of  a  business  of  selling  fish, 
a  commodity  practically  limitless,  and  its  good  will, 
limited  as  to  time  and  territory  and  made  for  a  valuable 
consideration,  restraining  the  vendor  from  further  prose- 
cution of  the  business  is  not  in  genera?  restraint  and  does 
not  tend  to  create  a  monopoly  either  at  common  law  or 
under  the  anti-trust  statute  of  a  State  which  has  been 
construed  as  but  little  more  than  a  codification  of  the 
common  law  upon  the  subject.     Such  -a  contract  is  as- 

««  Wooten  V.  Harris,  153  N.  C.  43,  68  S.  E.  S98. 

As  to  contracts  in  purchase  of  good  will  and  business  being  a  \'iolation 
of  the  Sherman  Anti-Trust  Act,  see  §  130,  herein. 

"  Espenson  v.  Koepke,  93  Miah.  278,  101  N.  W.  168,  decided  under 
Laws,  1899,  chap.  359. 

453 


§  409  STATE    STATUTES — VIOLATIONS — 

signable,  is  enforceable  by  the  assignee,  and  the  fact 
that  the  assignee  of  the  vendee  subsequently  purchased 
the  business  and  good  \\411  of  rival  dealers  in  fish  and 
made  similar  respective  contracts  with  them  does  not 
make  the  original  contract  invalid.  And  where  the 
vendor,  after  selling  his  business,  formed  a  corporation 
with  other  persons,  who  either  knew  of  the  sale,  or  had 
similar  restrictive  covenants  with  the  vendee,  and  the 
corporation  continued  the  fish  business,  the  court  re- 
strained the  vendor,  the  corporation  and  its  incorporators, 
from  continuing  that  business  pendente  lite,  and  also 
restrained  certain  defendants  who  were  not  parties  to 
the  original  contract  nor  bound  to  the  vendee  by  re- 
strictive contracts,  from  carrying  on  the  fish  business  in 
conjunction  with  the  defendants  definitely  restrained.*^ 

And  in  Arkansas  it  has  been  decided  that  the  anti- 
trust act  of  1905,^^  was  not  violated  by  an  agreement 
between  several  local  insurance  agencies,  having  no  au- 
thority to  fix  the  price  or  premium  to  be  paid  for  insuring 
property,  to  transfer  their  business  and  good  will  to  an- 
other and  also  not  to  engage  in  the  same  business  for  a 
limited  time  and  within  a  limited  space,  the  declared 
object  of  such  agreement  being  to  decrease  the  expenses 
of  the  several  agencies  and  there  being  no  evidence  show- 
ing that  it  was  a  combination  for  the  purpose  of  fixing 
or  regulating  the  price  of  insurance,  or  that  it  could  have 
that  effect.'" 

And  where  one  of  two  partners  in  the  drug  business 
sold  his  half  interest  to  the  other,  agreeing  to  convey  his 
good  will  therein  to  the  remaining  partner  and  also  not 

M  Booth  &  Co.  V.  Seibold,  37  Misc.  R.  (N.  Y.)  101,  74  N.  Y.  Supp.  776. 

"Ark.  Acts,  190.5,  p.  1. 

70  Bloom  V.  Home  Insurance  Agency,  91  Ark.  367,  121  S.  W.  293.  The 
court  said:  "The  purpose  and  aim  of  this  contract  was  not  to  stifle  com- 
petition. Its  object  was  to  sell  and  transfer  a  business  and  the  good  will 
of  that  business.  To  maintain  that  good  will  in  its  integrity  as  a  thing  of 
value,  it  was  essential  that  the  vendor  should  not  solicit  and  thus  destroy 
that  custom  and  trade  which  he  had  sold.  It  was  therefore  not  invalid  for 
the  vendor  to  agree,  for  the  purpose  of  protecting  the  vendee  in  his  pur- 
chase of  that  good  will,  to  abstain  from  engaging  in  the  business  within  a 
limited  space  and  for  a  limited  time."    Per  Frauenthal,  J. 

454 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  409 

to  engage  in  the  drug  business  at  such  place  so  long  as 
the  purchaser  continued  to  engage  in  business  there,  it 
was  decided  that  as  the  contract  pleaded  and  proven 
was  not  unlimited  as  to  time  and  place  and  was  of  a  reason- 
able character  that  it  was  not  invalid  either  at  common 
law  or  under  the  Texas  anti-trust  acts  existing  prior  to 
the  act  of  1903.  And  it  was  held  that  as  the  contract 
was  entered  into  several  years  prior  to  the  passage  of  the 
latter  act  and  had  become  executed  at  that  time  such 
act  could  not  be  held  to  apply  to  it7^ 

In  another  case  where  a  physician  sold  his  home  and 
his  good  will  as  a  practicing  physician,  agreeing  not  to 
practice  medicine  within  a  radius  of  ten  miles  of  the 
place  in  which  he  was  practicing,  it  was  decided  that  such 
agreement  was  not  invalid  either  at  common  law  or 
under  the  statute  relating  to  combinations  in  restraint 
of  trade." 

Again,  where  a  person  bought  another's  goods  together 
with  the  good  will  of  his  business  and  the  seller  agreed 
that  he  would  not  for  one  year  thereafter  do  a  like  busi- 
ness in  the  same  town  and  to  use  every  effort  to  secure 
for  the  buyer  all  the  patronage  and  custom  that  he  had 

"  Crump  V.  Ligon,  37  Tex.  Civ.  App.  172,  84  S.  W.  250. 

"  Wolff  V.  Hirschfield,2.3  Tex.  Civ.  App.  670,  57  S.  W.  572,  decided  under 
Rev.  Stats.,  Art.  5313.  The  court  said:  "In  the  case  of  Gates  v.  Hooper, 
we  entertained  upon  the  subject  the  view  of  appellant's  counsel,  but  they 
were  not  approved  by  the  Supreme  Court.  Gates  v.  Hooper,  90  Tex.  563. 
It  was  there  declared  that  a  transaction  of  this  character  was  vahd,  for  the 
reason  that  it  was  not  a  combination  of  persons,  and  that  it  was  the  sale 
of  the  'good  will'  which  was  a  subject  of  purchase  and  sale,  that  is  to  say, 
property.  See  also  Beach  on  Monopolies,  §  18.  There  is  some  difference 
between  this  and  the  case  of  Gates  v.  Hooper,  as  pointed  out  by  appellant, 
in  that  the  sale  there  was  of  a  stock  of  goods  and  the  good  will  of  the  mer- 
cantile business  connected  therewith.  Here  the  sale  was  of  defendant's 
home,  together  with  his  good  will  as  a  practicing  phj-sician  wnthin  certain 
limits,  the  property  not  necessarily  having  connection  with  the  practice 
sold.  But,  as  both,  or  either,  of  these  were  valid  subjects  of  sale,  we  do 
not  regard  that  there  is  any  substantial  difference  in  the  cases.  If,  as  the 
authorities  hold,  the  practice  of  a  physician  is  a  thing  of  value,  and  as  such 
is  a  proper  subject  of  a  contract  of  sale,  a  sale  thereof  with  such  contract 
restrictions  as  are  reasonably  necessary  to  make  the  sale  effectual,  would 
not,  imder  the  ruling  in  Gates  v.  Hooper,  fall  within  the  prohibition  of 
cur  statute."     Per  James,  C.  J. 

455 


§  410       STATE  STATUTES — VIOLATIONS — ' 

enjoyed,  there  was  held  to  be  no  "trust"  or  ''combina- 
tion" within  the  meaning  of  an  anti- trust  act  making 
unla\\^ul  any  "trust"  and  defining  a  trust  as  "a  com- 
bination of  capital,  skill  or  acts,"  to  carry  out  restriction 
in  trade,  to  limit  or  reduce  production,  increase,  reduce 
or  control  prices  and  to  prevent  competition^' 

Under  a  Michigan  statute  denominated  as  one  pro- 
hibiting "certain  trust  combinations"  and  providing 
that  all  contracts  the  purpose,  object  or  intent  of  which 
shall  be  in  any  manner  to  prevent  or  restrict  free  compe- 
tition in  the  sale  of  any  article  or  commodity  produced 
by  mining,  manufacture,  agriculture  or  any  other  branch 
of  business  or  labor  shall  be  illegal  and  void  and  contain- 
ing an  exception  therein  as  to  contracts  for  the  sale  of 
the  good  will  of  a  trade  or  business,'^^  it  has  been  decided 
that  a  contract  for  the  purchase  of  the  business  and  good 
will  of  a  corporation  is  valid  which  by  its  terms  provides 
that  the  seller  will  not  engage  in  the  same  or  a  like 
kind  of  business  "in  the  territory  or  the  immediate 
vicinity  of  the  territory"  dealt  in  by  the  purchaser.^^ 

But  where  three  out  of  four  firms  engaged  in  the  lum- 
ber business  in  a  certain  place  bought  out  the  other  firm 
and  an  agreement  was  entered  into  that  neither  such 
firm  nor  either  of  the  members  thereof  should  go  back 
into  said  business  within  the  limits  of  such  city  for  a 
period  of  ten  years  from  the  date  of  the  agreement,  and 
the  object  of  such  agreement  being  to  prevent  competi- 
tion, it  was  decided  that  though  the  contract  was  valid 
and  binding  at  common  law  it  was  invalid  under  the 
statute  prohibiting  contracts  to  carry  out  restrictions  in 
trade  or  to  prevent  competition.^^ 

§  410.  Sale  of  Business  and  Good  Will— Contracts  Not 
to  Engage  in  Competition — Exception  in  Statute  as  to. 
Under  a  statute  making  invalid  all  contracts  or  agree- 

"  Gates  V.  Hooper,  90  Tex.  563,  39  S.  W.  1079,  rev'g  39  S.  W.  186. 
7*3  How.  Ann.  St.,  §  9354J. 

"  Davis  V.  A.  Booth  &  Co.,  131  Fed.  31,  65  C.  C.  A.  269,  modifying  order 
127  Fed.  875. 
^«  Comer  v.  Burton-Lingo  Co.,  24  Tex.  Civ.  App.  251,  58  S.  W.  969. 

456 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  410 

merits  by  which  any  person  agrees  not  to  engage  in  any 
trade  or  business  whether  reasonable  or  unreasonable, 
partial  or  general,  limited  or  unlimited,  excepting,  how- 
ever, any  such  contract  where  the  only  object  is  to  pro- 
tect the  vendee  or  transferee  or  the  good  will  of  the 
trade  or  business  sold  and  transferred  for  a  valuable 
consideration  in  good  faith  and  without  any  intent  to 
create,  build  up,  establish  or  maintain  a  monopoly,  it 
has  been  decided  that  in  transferring  all  their  interests 
as  stockholders  of  a  corporation  to  complainant  and  in 
stipulating  not  to  engage  in  a  certain  business  in  the  city 
where  the  sale  was  made  for  five  years  the  defendant 
vendors  were  within  such  exception."  The  court  said: 
"Technically,  the  sale  to  the  corporation  did  carry  the 
good  will  to  it,  but  the  stockholders  who  constituted  the 
corporation  became  the  real  owners  of  the  business  and 
the  good  will  in  proportion  to  their  shares,  for  they  were 
the  owners  of  the  artificial  body  which  they  were  per- 
mitted to  erect.  That  this  may  have  been  a  qualified 
right,  so  far  as  control  is  concerned,  may  be  admitted, 
but  such  as  it  was  they  attempted  to  sell  it  to  the  com- 
plainant, and  we  are  of  the  opinion  that  it  was  within  the 
exception  of  the  statute,  reasonably  construed.  In  this 
we  are  aware  that  we  are  at  variance  with  the  view  taken 
by  the  learned  court  of  California,  and  it  is  not  without 
hesitation  that  we  have  felt  constrained  to  reach  a  dif- 
ferent conclusion.  Counsel  seek  to  distinguish  that  case 
from  the  present,  but  we  think  that  it  cannot  fairly  be 
distinguished.  We  cannot  disapprove  of  the  logic  of  that 
opinion,  if  its  premises  be  admitted,  but  we  think  that  it 
may  reasonably  be  said  that  a  stockholder  in  a  corpora- 
tion has  such  an  interest  in  its  business  and  good  will 
within  this  statute,  as  to  make  a  purchaser  of  interest  and 
good  will  a  transferee  of  the  same,  which  appears  incon- 
sistent with  the  view  taken  in  that  case."  ^^ 

In  the  California  case  referred  to  by  the  court  the 

"  Buckhout  V.  Witner,  157  Mich.  406,  122  N.  W.  184,  decided  under 
§  6,  Act  No.  329,  Pub.  Acts  1905. 
^*  Per  Hooker,  J. 

457 


§  410  STATE   STATUTES — VIOLATIONS — 

Civil  Code  provided  that:  ''Every  contract  by  which 
anyone  is  restrained  from  exercising  a  lawful  profession, 
trade,  or  business  of  any  kind,  otherwise  than  is  provided 
by  the  next  two  sections,  is  to  that  extent  void."  By 
the  following  section  it  was  provided  as  follows:  "One 
who  sells  the  good  will  of  a  business  may  agree  with  the 
buyer  to  refrain  from  carrying  on  a  similar  business  within 
a  specified  county,  city,  or  part  thereof,  so  long  as  the 
buyer,  or  any  person  deriving  title  to  the  good  will  from 
him,  carries  on  a  like  business  therein."  '^  In  this  case 
it  was  alleged  that  defendant  who  was  a  stockholder  in 
the  plaintiff  corporation  had  sold  his  stock  therein  and 
his  interest  in  the  good  will  of  the  business  and  agreed 
not  to  engage  in  the  same  business  in  such  city  or  county, 
and  it  was  declared  that  a  stockholder  cannot  transfer 
the  good  will  of  the  corporation  as  he  has  no  vendible 
interest  therein  and  that  the  contract  was  not  within  the 
exception  of  the  statute  but  was  in  restraint  of  trade 
and  void.^° 

And  under  a  statute  prohibiting  contracts  restraining 
anyone  from  exercising  a  lawful  vocation  but  permitting 
in  the  case  of  the  sale  of  the  good  will  of  a  business  or 
of  the  dissolution  of  a  partnership  a  contract  not  to  carry 
on  a  similar  business  within  a  certain  county  or  city  it 
has  been  decided  that,  where  there  was  a  dissolution  of 
a  partnership  and  a  contract  reciting  the  sale  by  the 
retiring  partner  of  the  good  will  and  business,  an  agree- 
ment entered  into  at  a  subsequent  date  reciting  the  sale 
by  defendant  to  plaintiff  of  abstract  books,  iron  safe  and 
letter  press  for  a  certain  sum  and  stipulating  as  a  further 
consideration  that  plaintiff  should  give  defendant  the 
free  use  of  the  abstract  books  and  should  keep  them  in 
defendant's  office  and  that  defendant  should  not  compile 
abstracts  or  engage  in  the  abstract  business  was  in  vio- 
lation of  the  statute,  the  partners  not  being  partners  at 
the  time  of  the  subsequent  agreement,  and  the  sale  not 

"  Cal.  Civ.  Code,  §§  1673,  1674. 

«>  Merchants'  Ad-Sign  Co.  v.  Sterling,  124  Cal.  429,  57  Pac.  468,  46 
L.  R.  A.  142,  71  Am.  St.  Rep.  94. 

458 


PARTICULAR   CONTRACTS   AND   COMBINATIONS     §§411,412 

being  one  of  good  will,  as  it  was  sold  by  the  first  agree- 
ment and  there  was  no  mention  thereof  in  the  subsequent 
one.^^ 

§  411.  Sale  of  Business  and  Good  Will —Laundry  Not 
a  Manufacturing  Establishment. 

A  laundry  is  not  a  manufacturing  establishment  within 
the  meaning  of  the  provision  of  an  anti-trust  act  prohibit- 
ing contracts,  agreements  or  combinations  between  per- 
sons engaged  in  the  "manufacture  or  sale  of  any  article 
of  commerce"  for  the  purpose  of  fixing  the  price  or 
limiting  the  amount,  or  to  suspend  or  cease  the  sale  or 
manufacture  of  such  products.  So  such  provision  was  not 
violated  by  a  contract  for  the  sale  of  the  business  and 
good  will  of  a  laundry  which  as  part  consideration  for 
the  purchase  price  stipulated  that  the  vendors  should 
not  engage  in  the  laundry  business  in  said  city  for  a  period 
of  five  years.^-  The  court  said:  ''The  contract  in  ques- 
tion forbids  the  defendants  from  engaging  in  a  partic- 
ular business,  in  a  single  city,  for  a  limited  time.  It  is 
supported  by  a  valuable  and  sufficient  consideration. 
The  restriction  imposed  is  reasonably  necessary  for  the  pro- 
tection of  the  plaintiff's  interests  and  is  not  an  undue 
interference  with,  or  impairment  of,  the  rights  of  the 
pubUc."  *^  And  it  was  decided  that  an  agreement  of 
such  a  character  as  the  above,  not  being  within  the 
inhibition  of  the  statute,  might  in  a  proper  case  be  en- 
forced by  injunction. 

§  412.  Agreement  to  Refrain  from  Entering  Into  Busi- 
ness. 

A  contract  whereby  one  who  contemplates  entering 
into  a  certain  business  at  a  certain  place,  refrains  from 
doing  so  and  agrees  not  to  do  so  in  the  future  is  in  viola- 
tion of  a  statute  making  void  every  contract  by  which 

"  Prescott  V.  Bidwell,  18  So.  Dak.  64,  99  N.  W.  93,  decided  under  §§  1277, 
1278,  1279,  of  the  Rev.  Civ.  Code. 
82  Downing  v.  Lewis,  56  Neb.  386,  76  N.  W.  900. 
"  Per  Sullivan,  J. 

459 


§  413       STATE  STATUTES — VIOLATIONS — 

one  is  restrained  from  exercising  a  lawful  profession, 
trade  or  business  except  in  the  case  of  the  sale  of  the 
good  will  of  a  business.^^ 

§  413.  Agreements  Between  Brewers— Not  to  Sell  to 
One  Indebted— To  Raise  Price. 

An  agreement  between  brewers  that  they  will  not 
sell  to  any  person  who  is  in  debt  to  any  one  of  them 
until  such  debt  has  been  paid  has  been  held  to  violate 
a  statute  denouncing  any  agreement,  arrangement  or 
combination  made  with  a  view  to  lessen  full  and  free 
competition  in  the  importation,  manufacture  or  sale  of 
any  article.^^  The  court  said  in  this  case:  ''By  such 
understanding  and  agreement  between  the  brewers,  no 
brewer  would  sell  to  a  person  indebted  to  another  brewer 
for  beer,  and  consequently  the  party  indebted  was  de- 
prived of  the  right  of  having  them  to  compete  for  his 
trade.  He  was  deprived  of  the  benefit  of  competition 
and  left  at  the  mercy  of  his  particular  creditor  who  could 
impose  any  price  he  saw  fit.  Suppose  the  retail  dealers 
at  any  place  were  to  enter  into  an  agreement  that  they 
would  not  sell  to  anyone  who  was  indebted  for  goods  to 
either  of  the  others,  would  not  the  effect  be  that  the 
debtor  would  be  confined  to  the  one  merchant  and  sub- 
ject to  any  extortion  he  might  conclude  to  impose?  It 
would  not  be  contended,  at  least  it  ought  not,  that  a  law- 
ful agreement  could  be  made  that  but  one  member  of 
the  whole  number  could  sell  to  certain  persons  or  classes 
of  persons.  Yet  the  effect  of  the  agreement  is  as  broad 
as  that.  When  the  others  agree  not  to  sell  to  the  debtor 
of  the  creditor  member,  they  deprive  the  debtor  of  the 
right  to  buy  of  any  other  than  the  creditor.  The  agree- 
ment imposes  a  penalty  upon  a  condition  which  is  not 
unlawful,  but  merely  unfortunate.  The  effect  and  tend- 
ency of  such  agreements  are  wrong  and  are  not  only  under 
the  ban  of  the  statute  aforesaid,  but  they  are  against 
pubhc  policy."  ^^ 

**  Webb  Press  Co.  v.  Bierce,  116  La.  905,  41  So.  203. 
"  Heim  Brewing  Co.  v.  Belinder,  97  Mo.  App.  64. 
"  Per  Ellison,  J. 

460 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  414 

Where  a  statute  forbids  any  arrangement,  agreement 
or  understanding  for  the  purpose  of  regulating  or  con- 
trolling, or  fixing  the  price  of  any  merchandise,  or  proj)- 
erty  of  any  kind,  a  combination  among  brewers,  to  in- 
crease the  price  of  beer  to  the  extent  of  the  war  tax 
therein  and  which  has  for  its  purpose  the  throwing  the 
entire  burden  of  the  tax  upon  the  purchasers,  by  raising 
the  price  of  an  intoxicant,  violates  the  statute  even 
though  the  law  does  not  favor  the  increased  use  of  intoxi- 
cants." 

§  414.  Agreement  Between  Bricklayers'  Union  and 
Mason  and  Builders'  Association. 

An  agreement  between  a  bricklayers'  union  and  a 
mason  builders'  association,  whereby  the  members  of  the 
latter  were  to  include  in  their  contracts  for  building,  all 
cutting  of  masonry,  interior  brickwork,  installing  of 
concrete  blocks,  all  of  certain  designated  fireproofing 
work,  and  were  not  to  lump  or  sublet  the  installation, 
if  the  work  in  connection  therewith  was  bricklayers'  work 
as  recognized  by  the  trade;  the  men  employed  upon  the 
construction  of  the  walls  to  be  given  the  preference  and 
which  provided  that  no  members  of  the  bricklayers' 
union  should  work  for  anyone  not  complying  with  the 
rules  and  regulations  agreed  to,  has  been  held  not  to  be 
a  contract,  agreement  or  combination  to  create  a  monop- 
oly '4n  the  manufacture,  production  or  sale  *  *  *  of  any 
article  or  commodity  of  common  use"  within  the  meaning 
of  a  statute  making  contracts  or  combinations  of  this 
character  illegal  and  void.^^ 

"  Commonwealth  v.  Bavarian  Brewing  Co.,  23  Ky.  L.  Rep.  2334,  66 
S.  W.  1016. 

**  National  Fireproofing  Co.  v.  Mason  Builders'  Assn.,  169  Fed.  259,  94 
C.  C.  A.  535,  construing  N.  Y.  Laws,  1899,  p.  1514,  chap.  690,  which  pro- 
vides as  follows:  "Everj'  contract,  agreement,  arrangement  or  combina- 
tion, whereby  a  monopoly  in  the  manufacture,  production  or  sale  in  this 
State  of  any  article  or  commodity  of  common  use  is  or  may  be  created, 
estabUshed  or  maintained,  or  whereby  competition  in  this  State  in  the 
supply  or  price  of  any  such  article  or  commodity  is  or  may  be  restrained 
or  prevented,  or  whereby,  for  the  purpose  of  creating,  estabhshing  or 
maintaining  a  monopoly  within  this  State  of  the  manufacture,  production 

461 


§  415        STATE  STATUTES — VIOLATIONS — 

§  415.  Associations  of  Cattle  Owners,  Buyers  and 
Sellers — By-Laws  and  Rules. 

A  statute  making  unlawful  any  trust  or  combination 
for  the  purpose  of  creating  or  carrying  out  restrictions 
in  trade  or  commerce  or  aids  to  conunerce,  or  to  carry 
out  restrictions  in  the  full  and  free  pursuit  of  any  busi- 
ness authorized  or  permitted  by  the  laws  of  the  State,^^ 
is  \dolated  by  an  association  of  persons  and  corporations 
engaged  in  the  business  of  buying  and  selling  live  stock 
and  practically  controlling  that  business  at  the  place 
of  operation,  which  has  a  by-law  forbidding  its  members 
to  buy  or  sell  live  stock  for  others  without  charging  a 
commission  therefor  of  at  least  fifty  cents  a  head.^° 

But  where  a  voluntary  association  formed  for  the 
mutual  benefit  of  its  members,  in  the  business  of  buying 
and  selling  cattle  on  the  market,  adopted  a  rule,  or  a  by- 
law, prohibiting  one  another  from  dealing  in  the  market, 
either  with  non-members  engaged  in  the  same  business 
or  with  others  who  dealt  with  such  non-members,  and 
they  enforced  it  by  other  rules  and  by-laws  making  its 
violation  punishable  by  fine  or  expulsion  from  the  asso- 
ciation it  was  held  that  because  such  rules,  or  by-laws, 
operated  directly  on  the  members  of  the  association 
alone,  and  only  indirectly  and  remotely  on  those  outside 

or  sale  of  any  such  article  or  commodity,  the  free  pursuit  in  this  State  of 
any  lawful  business,  trade  or  occupation,  is  or  may  be  restricted  or  pre- 
vented, is  hereby  declared  to  be  against  public  policy,  illegal  and  void." 

89  Kan.  Laws,  1897,  chap.  265,  §  1;  Gen.  Stat.,  1901,  §  7864. 

90  State  V.  Wilson,  73  Kan.  343,  84  Pac.  737.  The  court  said  in  this  case: 
"The  business  of  buying  and  selling  cattle  is  one  permitted  by  the  laws  of 
this  State.  An  agreement  among  the  members  of  an  association  which 
practically  controls  this  business  at  a  great  commercial  center  that  they 
will  make  no  purchases  or  sales  for  others  without  charging  as  a  commis- 
sion for  their  services  at  least  fifty  cents  for  each  head  of  cattle  handled 
obviously  creates  a  restriction  in  the  full  and  free  pursuit  of  that  business. 
It  also  seemingly  creates  a  restriction  in  commerce."    Per  Mason,  J. 

In  Kansas, chap.  158  of  the  Laws  of  1891  (Gen.  Stat.,  1901,  §§  2439-2441), 
prohibiting  combinations  to  prevent  competition  among  persons  engaged 
in  buying  and  selling  live  stock  was  superseded  by  the  general  Anti-Trust 
Law  of  1897  (Laws,  1897,  chap.  265;  Gen.  Stat.,  1901,  §§  7864-7874);  State 
V.  Wilson,  73  Kan.  343,  84  Pac.  737. 

As  to  violations  of  Sherman  Anti-Trust  Act  by  associations  of  cattle 
dealers,  see  §  149,  herein. 

462 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  415 

of  it,  the  latter  did  not  have  sufficient  interest  to  main- 
tain an  action  of  injunction  to  restrain  the  association 
from  the  enforcement  of  the  penal  provisions  in  question. 
And  the  court  said  that  there  were  many  statutory- 
provisions  condemnatory  of  what  are  called  trusts  and 
monopoHes  but  that  none  of  them  gave  a  right  of  action 
in  equity  to  individuals  who  did  not  on  general  equitable 
principles  already  possess  it.  The  court  then  referred  to 
a  statute  which  it  declared  would  seem  to  interdict 
membership  in  the  association  so  long  as  it  maintained 
the  by-laws  in  question,^'  but  that  it  was  entirely  penal 
in  character  and  its  provisions  enforceable  only  by  crim- 
inal prosecution;  that  equity  does  not  give  a  private 
right  of  action  to  an  individual  for  the  doing  of  a  wrong- 
ful act,  merely  because  the  statute  has  denounced  the 
act  as  a  crime  and  that  the  enactment  of  a  statute  for 
the  suppression  of  a  public  wrong  does  not  vest  in  the 
individual  a  right  of  action  to  suppress  it.^- 

And  a  statute  prohibiting  the  entering  into  of  any 
pool,  trust  or  combination  to  control  or  limit  the  trade 
in  any  article  or  thing  or  to  limit  competition  in  such 
trade  by  refusing  to  buy  from  or  sell  to  any  person  or 
corporation  any  such  article  for  the  reason  that  such 
person  or  corporation  is  not  a  member  of  or  a  party  to 
such  pool,  trust  or  combination  is  not  violated  by  a  by- 
law of  a  live  stock  exchange  providing  for  the  expulsion 
of  a  member  who  has  been  proved  guilty  of  a  violation 
of  commercial  honesty  and  forbids  its  members  from 
having  any  further  dealings  with  him.  The  object  of 
such  a  statute  is  to  promote  the  public  welfare,  and  not 
to  outlaw  harmless  combinations  or  those  which  are  bene- 
ficial in  their  nature.  And  the  enforcement  of  such  a 
by-law  would  tend  to  inspire  confidence  and  to  increase 
and  not  to  limit  competition  and  trade.^' 

"  Kan.  Laws,  1891,  chap.  158,  §  2. 

"  Downes  v.  Bennett,  63  Kan.  653,  66  Pac.  623,  55  L.  R.  A.  560,  88  Am. 
St.  Rep.  256. 

"Gladish  v.  Kansas  City  Live  Stock  Exchange,  113  Mo.  App.  726,  89 
S.  W.  77. 

463 


§§  416,  417  STATE   STATUTES — VIOLATIONS — 

§  416.  Contract  Between  Cotton  Seed  Oil  Manufac- 
turers—Withdrawal of  Agent  by  One. 

Under  a  statute  making  unlawful  any  trust,  combina- 
tion or  contract  to  hinder  competition  in  the  sale  or  pur- 
chase of  a  commodity  and  providing  that  ''Every  con- 
tract or  agreement  to  enter  into  or  pursue  any  trust  and 
combine,  and  every  contract  or  agreement  made  by  an- 
other with  any  trust  and  combine,  or  with  any  member 
of  a  trust  and  combine,  for  any  purpose  relative  to  the 
business  of  such  trust  and  combine,  is  void,  and  cannot 
be  enforced  in  any  court, "  a  contract  entered  into  between 
two  cotton  seed  oil  manufacturers  is  invalid  which  by  its 
terms  provides  for  the  withdrawal  by  one  from  a  certain 
territory  of  its  agent  for  the  purchase  of  cotton  seed  such 
party  to  be  protected  from  liability  to  the  agent  by  the 
other  party  who  agrees  to  furnish  the  former  a  certain 
amount  of  seed.^^ 

§  417.  Corporation  Composed  of  Crushed  Granite 
Dealers — Agreement  as  to  Bluestone. 

Where  a  corporation  was  organized  composed  of  sev- 
eral crushed  granite  dealers  in  St.  Louis  for  the  purpose 
of  buying  and  selling  crushed  granite  and  the  sole  stock- 
holders of  such  corporation  were  the  chief  officers  of  the 
individual  members,  and  the  several  members  of  the 
corporation  entered  into  separate  contracts  with  it  to 
sell  to  it  all  the  crushed  granite  they  produced  at  an 
agreed  upon  price  and  in  case  they  sold  to  any  other 
person  a  penalty  of  a  specified  amount  per  ton  was  to 
be  paid  by  them  it  was  decided  in  an  action  against 
one  of  the  members  to  recover  the  penalty  so  provided 
for;  that  all  of  such  contracts  were  links  and  necessary 
links  in  the  combination  which  was  illegal  under  the 
statute.^^ 

An  agreement  between  the  producers  of  nearly  the 

9<  Kosciusko  Oil  Mill  &  Fertilizer  Co.  v.  Wilson  Cotton  Oil  Co.,  90  Miss. 
.551,  43  So.  435,  8  L.  R.  A.  (N.  S.)  1053. 

"  Finck  V.  Schneider  Granite  Co.,  187  Mo.  244,  86  S.  W.  213,  106  Am. 
St.  Rep.  452. 

464 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  418 

whole  product  of  a  commodity  known  as  Hudson  River 
bluestone  and  of  it  least  ninety  per  cent  of  the  whole 
amount  sold,  and  a  company  which  engages  to  sell  all 
the  marketable  stone  produced  by  them  for  the  ensuing 
six  years  at  prices  fixed  by  an  association  composed  of 
such  producers,  and  to  apportion  the  sales  in  specified 
proportions  between  them,  no  sales  to  be  made  except 
through  the  company,  has  been  held  void  in  New  York 
as  against  public  policy,  in  that  it  threatens  a  monopoly 
whereby  trade  in  a  useful  article  may  be  restrained  and 
its  price  unreasonably  enhanced.^^ 

§  418.  Consolidation  of  Gas  Companies — Agreements 
Between. 

In  New  York  it  has  been  decided  that  the  provisions 
of  the  Stock  Corporation  Law  "  or  of  the  Laws  of  1899,^' 
prohibiting  combinations  to  create  a  monopoly,  or  for 
the  unlawful  restraint  of  trade  or  to  prevent  competition 
were  not  violated  by  the  organization  of  the  Consoli- 
dated Gas  Company  of  New  York  City  by  the  consoli- 
dation of  six  other  companies  and  its  subsequent  purchase 
of  stock  of  other  gas  and  electric  companies  under  the 
authority  of  the  provisions  of  the  Stock  Corporation 
Law  ^*  since  the  power  to  purchase  stock  of  other  cor- 
porations conferred  by  such  provision  must  be  exercised 
so  as  not  to  contravene  the  statutes  against  monopolies 
and  the  consolidation  of  public  lighting  companies,  even 
if  effected  for  the  purpose  of  preventing  competition,  did 
not  create  a  monopoly  within  the  meaning  of  the  statute, 
for  no  exclusive  right  was  thereby  attained,  nor  could 
the  price  of  gas  or  electricity  be  arbitrarily  fixed  by  the 
corporation  as  both  of  these  matters  were  ^\'ithin  the 
control  of  the  legislature  which  might  fix  the  maximum 

••Cummings  v.  Union  Blue  Stone  Co.,  164  N.  Y.  401,  58  N.  E.  925,  52 
L.  R.  A.  262,  79  Am.  St.  Rep.  655,  aff'g  15  App.  Div.  602,  44  N.  Y.  Supp. 
787. 

"  Section  7. 

9»  Chap.  690. 

»  Section  40. 

30  465 


§§419,  420      STATE   STATUTES — VIOLATIONS — 


rate  and  compel  the  production  and  sale  of  gas  to  con- 
sumers.^ 

In  Arkansas  it  has  been  decided  that  the  anti-trust 
law  of  1905  had  for  its  object  the  preventing  of  a  com- 
bination among  producing  competitors  to  fix  the  prices 
to  the  detriment  of  consumers  and  that  an  agreement 
by  a  company  having  a  franchise  to  supply  gas  to  the 
consumers  in  a  certain  city  to  purchase  natural  gas  from 
another  company  at  certain  fixed  prices  is  not  a  combina- 
tion to  fix  the  price  of  such  gas  within  the  prohibition 
of  the  act;  there  being  no  competition  as  to  the  supply  of 
natural  gas  between  the  parties  to  the  contract.  ^ 

§  419.  Agreement  Limiting  Right  to  Buy  Grain. 

An  agreement  entered  into  by  all  the  dealers  on  a  cer- 
tain market,  limiting  their  right,  severally,  to  buy  all 
the  grain  they  otherwise  might  on  such  market,  is  an 
agreement  in  restraint  of  trade,  and  falls  within  the 
penal  terms  of  an  anti-trust  act  forbidding  combinations 
to  create  or  carry  out  restrictions  in  trade  or  commerce.^ 

§  420.  Agreement  Between  Ice  Companies. 

A  combination  in  restraint  of  trade  was  held  in  Texas 
to  be  violative  of  the  anti-trust  statute  of  that  State 
where  it  was  shown  that  the  appellant  was  a  cor- 
poration authorized  by  its  charter  to  manufacture  and 
supply  ice  to  the  people  of  a  certain  city,  and  that 
subsequently  another  corporation,  whose  officers  were 
officers  of  the  appellant  corporation  and  other  companies 
in  the  same  business  in  that  city,  was  chartered  for  the 
same  purpose,  that  no  plant  was  erected  by  the  latter 
who  purchased  their  wagons  and  contracted  to  buy  the 
ice  manufactured  by  them  and  that  the  other  companies 
after  such  contract  was  entered  into  would  not  sell  their 

»  Matter  of  Attorney  General,  124  App.  Div.  (N.  Y.)  401,  108  N.  Y. 
Supp.  823. 

2  Ft.  Smith  Light  &  Traction  Co.  v.  Kelley,  94  Ark.  461,  127  S.  W.  975. 

«  State  V.  Smiley,  65  Kan.  240,  69  Pac.  199,  affirmed  196  U.  S.  447,  25 
Sup.  Ct.  289,  19  L.  ed.  546. 
4G6 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  421 

ice  to  anyone  but  the  latter  company  which  furnished 
the  public  with  ice  at  a  fixed  price/ 

§  421.  Agreements  Between  Insurance  Companies  or 
Agents  to  Fix  Rates. 

Insurance  has  been  held  to  be  a  commodity  within 
the  meaning  of  a  statute  prohibiting  the  formation  of 
any  combination  to  regulate  or  fix  the  price  of  ''oil, 
lumber,  coal  *  *  *  or  any  other  commodity."  So  it 
was  decided  that  a  compact  between  local  insurance 
agents  in  a  city  to  fix  the  rates  upon  all  risks  therein, 
imposing  certain  penalties  for  taking  of  risks  at  less  rates 
than  those  fixed  by  the  association  was  within  the  inhibi- 
tion of  such  a  statute.^ 

But  in  Kentucky,  under  a  statute  making  it  unlaw- 
ful to  form  any  pool,  trust,  combine  agreement  or  "for 
the  purpose  of  regulating  or  controlling  or  fixing  the 
price  of  any  merchandise,  manufactured  articles  or  prop- 
erty of  any  kind"  or  having  for  its  object  the  "fixing  or 
in  any  way  limiting  the  amount  or  quantity  of  any 
article  of  property,  commodity  or  merchandise  to  be 
produced  or  manufactured,  mined,  bought  or  sold"  it 

*  Crystal  Ice  &  Mfg.  Co.  v.  State,  23  Tex.  Civ.  App.  293,  56  S.  W.  562. 

"  Beechley  v.  Mulville,  102  Iowa,  602,  70  N.  W.  107,  71  N.  W.  428,  63 
Am.  St.  Rep.  479.  The  court  said  in  this  case:  "It  is  thought  by  appellants 
that  such  statute  has  no  application  to  insurance  companies,  but  the  only 
reason  assigned  for  it  is  that  the  same  subject  has  been  before  each  suc- 
cessive legislature  since  the  act  passed,  and  no  one  has  thought  that  the 
act  referred  to  such  companies.  However  that  may  be  we  have  no  doubt 
of  its  application  to  insurance  companies  because  of  the  language  of  the 
act.  There  is  a  manifest  purpose  to  make  the  section  comprehensive  ae 
to  the  subject-matter,  as  well  as  to  persons  both  natural  and  artificial, 
coming  within  its  prohibitions.  It  prohibits  combinations  to  fix  the  price 
of  oil,  lumber,  coal,  grain,  flour,  provisions,  or  any  other  commodity  or 
article  whatever.  Insurance  is  a  commodity.  '  Commodity '  is  defined  to  be 
that  which  affords  advantage  or  profit.  Mr.  Anderson  in  his  Law  Diction- 
ary defines  the  word  as  'convenience,  privilege,  profit,  gain,  popularity, 
goods,  wares,  merchandise.'  We  see  no  reason  why  in  the  act,  the  word 
should  be  restricted  to  its  popular  use.  It  is  common  to  speak  of  'selUng 
insurance.'  It  is  a  term  used  in  insurance  business,  and  law  writers  have, 
to  quite  an  extent,  adopted  it.  Again,  there  are  the  same  reasons  why  it 
should  be  protected  against  combinations  as  there  are  in  matters  clearly 
within  the  provisions  of  the  law."    Per  Granger,  J. 

467 


§  421  STATE   STATUTES — VIOLATIONS — 

has  been  decided  that  it  is  not  an  indictable  conspiracy 
within  the  meaning  of  the  statute  to  conspire  to  fix  in- 
surance rates.  The  court  in  this  case  did  not  decide  the 
question  upon  the  meaning  of  the  word  ''commodity" 
but  upon  that  of  ''property"  and  decided  that  the  latter 
word  did  not  include  the  right  to  enter  into  a  contract 
of  insurance  nor  to  fix  the  terms  upon  which  such  a  con- 
tract could  be  made.^  The  court  said  in  this  connection : 
"The  language  used  would  indicate  that  the  statute  was 
intended  to  prevent  pools  and  trusts  formed  for  the  pur- 
pose of  fixing  the  price  of  merchandise  and  manufactured 
articles.  Without  giving  undue  weight  to  the  argument 
that  the  punctuation  shows  the  word  'property '  to  be 
qualified  by  the  adjective  'manufactured '  it  seems  cer- 
tain that  the  ejusdem  generis  rule  of  construction  does 
apply,  and  that  property  referred  to  in  the  section  was 
property  of  the  same  general  class  or  nature  as  that 
described  previously  by  the  words  'merchandise  and  manu- 
factured articles.'  And  while  it  may  be  admitted  that  a 
contract,  either  for  labor,  or  for  indemnity  against  con- 
tingent loss,  like  an  insurance  contract  when  executed, 
becomes  property,  because  it  is  then  a  chose  in  action, 
the  right  to  enter  into  such  contracts,  which  belongs  to 
all  persons  capable  of  contracting, — as  well  natural  per- 
sons as  artificial  ones  authorized  by  their  organic  law  to 
make  such  contracts, — would  hardly  be  considered  to  be 
included  by  the  word  'property '  unless  that  word  were 
used  in  a  much  broader  sense  than  it  is  customarily  used 
by  lawyers  or  in  statutes  ".^ 

In  one  of  the  earlier  cases  involving  the  application 
of  an  anti-trust  statute  to  insurance  companies  it  was 
decided  that  foreign  insurance  companies  doing  business 
in  a  State,  that  combines  to  control  and  increase  the 
rates  of  insurance  on  property  within  a  city  in  the  State 
violate  the  provisions  of  an  act  entitled  "an  act  to  de- 
clare unlawful  trusts  and  combinations  in  restraint  of 

"  JEtna.  Insurance  Co.  v.  Commonwealth,  106  Ky.  864,  21  Ky.  Law  Rep. 
503,  51  S.  W.  624,  45  L.  R.  A.  355. 
7  PfT  DuRelle,  J. 

468 


PARTICULAR  CONTRACTS   AND   COMBINATIONS    §§  422,  42(i 

trade  and  products  and  to  provide  penalties  therefor" 
and  that  local  agents  who  attempt  to  and  do  enforce 
such  combined  rates  are  subject  to  prosecution  under  the 
provisions  of  the  act.^ 

§  422.  Agreements  Between  Lumber  Dealers. 

An  agreement  between  retail  lumber  dealers,  whereby 
one  dealer  agrees  to  "protect"  the  other  by  asking  a 
higher  price  than  the  other  for  the  same  bill  of  lumber 
submitted  to  both  for  prices  is  in  violation  of  a  statute 
prohibiting  contracts  in  restraint  of  trade.  And  an  agree- 
ment made  by  a  number  of  retail  lumber  dealers  in  a 
county  to  sell  lumber  and  building  materials  within  the 
county  at  certain  fixed  prices  and  to  divide  territory  is 
illegal  and  void  as  in  restraint  of  trade  and  competition 
and  will  be  enjoined.^ 

§  423.  Contracts  Between  Proprietors  of  Newspapers 
and  Job  Printing  Establishments. 

Where  the  proprietor  of  a  newspaper  and  a  job  print- 
ing plant  entered  into  a  contract  with  the  proprietors  of 
a  rival  newspaper  and  job  printing  plant  located  in  the 
same  town  by  which  he  agreed  to  discontinue  the  publi- 
cation of  his  paper  and  to  do  no  job  work  or  printing 
of  any  kind  within  the  county  for  a  term  of  five  years  in 
consideration  of  which  he  was  to  receive  from  the  other 
parties  to  the  contract  one-half  of  the  moneys  received 
by  them  for  the  publication  of  legal  notices  during  such 
term  it  was  decided  that  the  contract  was  not  a  violation 
of  a  statute  prohibiting  any  contract  by  which  anyone 
was  prohibited  from  exercising  a  lawful  profession,  trade 
or  business,  but  that  it  was  a  sale  by  such  person  of 
the  good  will  of  his  business  and  came  within  the  excep- 
tion in  such  statute  that  "one  who  sells  the  good  will 
of  a  business  may  agree  with  the  buyer  to  refrain  from 
carrjang  on  a  similar  business  within  a  specified  county, 

« State  V.  Phipps,  50  Kan.  609,  31  Pac.  1097,  18  L.  R.  A.  057,  54  Am.  St. 
Rep.  152,  decided  under  chap.  257  of  Kan.  Laws  of  1889. 
9  State  V.  Adams  Lumber  Co.,  81  Neb.  392,  116  N.  W.  302. 

469 


§§  424,  425     STATE    STATUTES — VIOLATIONS — 

city  or  a  part  thereof  so  long  as  the  buyer  or  any  person 
deri\'ing  title  to  the  good  will  from  him  carries  on  a  like 
business  therein."  ^'^ 

§  424.  Contracts  Between  Newspaper  Publisher  and 
Carriers. 

A  contract  between  a  publisher  of  a  newspaper  and  its 
carriers  which  imposes  upon  the  latter  as  the  condition 
of  their  being  retained  in  its  service  a  requirement  that 
they  shall  not  act  as  carriers  for  a  rival  newspaper  which 
is  on  the  eve  of  entering  into  competition  with  it  has 
been  held  to  be  no  violation  of  an  anti- trust  statute.  ^^ 
The  court  said:  "That  this  was  not  a  restriction  of  com- 
petition among  the  carriers  is  apparent,  since  they  were 
in  no  manner  in  competition  with  each  other.  Nor  was 
any  other  publisher  a  party  to  this  transaction.  Re- 
spondent simply  declined  to  compete  with  itself.  No  one 
was  concerned  in  this  agreement,  so  far  as  the  petition 
states,  except  respondent  and  its  agents.  In  other  words, 
attempt  is  made  to  allege  an  agreement  to  which  there 
was,  in  legal  effect,  but  one  party.  If  the  anti-trust 
statute  does  not  prohibit  the  refusal  of  a  single  individual 
to  sell,  save  to  customers  of  his  choice,  or  to  sell  at  all  ^^ 
neither  for  a  stronger  reason  does  it  deprive  respondent 
of  the  right  to  withdraw  the  power  to  represent  it  in  sell- 
ing its  paper  from  those  who  refuse  to  protect  its  interests 
by  refraining  from  aiding  its  competitors."  ^^ 

§  425.  Agreements  Between  Packing  Companies  to 
Control  Price  of  Meat. 

Where  it  appeared  that  certain  packing  companies 
had  entered  into  an  agreement  for  the  purpose  of  con- 
trolling and  maintaining  the  prices  of  dressed  beef  and 

">  Mapes  V.  Metcalf,  10  N.  D.  601,  88  N.  W.  613,  decided  under  §  3927 
of  Rev.  Code,  1899. 

1'  Staroske  v.  Pulitzer  Pub.  Co.  (Mo.,  1911),  138  S.  W.  36,  construing 
Rev.  Stat.,  1899,  §  8978. 

'2  Whitwfill  V.  Continental  Tobacco  Co.,  125  Fed.  461,  60  C.  C.  A.  290, 
64  L.  R.  A.  689. 

'3  Per  Blair,  C. 

470 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  426 

pork  in  certain  cities  within  the  State;  that  they  formed 
an  association  which  met  once  a  week  for  the  purpose  of 
discussing  and  fixing  the  list  prices  to  be  charged  and 
agreed  at  these  meetings  to  maintain  such  prices  under 
a  penalty  for  each  violation  of  the  agreement;  that  the 
cooler  managers  gave  rebates  in  money  or  beef  in  many 
instances,  stating  that  they  could  not,  however,  sell  at 
less  than  the  fixed  prices  which  were  given  to  them  each 
week  and '  the  rebates  being  given  to  circumvent  the 
others  in  the  combine:  that  such  managers  had  advised 
the  buying  by  their  customers  of  a  quantity  of  meat, 
saying  the  price  would  increase  on  a  certain  day,  which 
it  did;  that  after  meat  which  had  been  in  the  coolers  a 
certain  length  of  time,  and  known  as  "concession  meat" 
was  allowed  to  be  sold  at  a  price  less  than  that  fixed 
after  other  cooler  managers  had  examined  and  agreed 
thereto ;  and  that  all  of  said  combinations  were  abandoned 
after  the  attorney  general  had  begun  the  initiatory  steps 
in  the  prosecution  it  was  decided  that  the  law  against 
pools,  trusts,  agreements  and  combinations  to  regulate  or 
fix  the  price  of  any  article  was  violated  and  that  under  the 
circumstances  a  judgment  of  ouster  might  be  given  but 
that  the  ends  of  justice  would  be  satisfied  by  the  imposi- 
tion of  a  fine  and  the  payment  of  all  costs  in  the  case.^"* 

§  426.  Contracts  in  Respect  to  Patented  Articles. 

In  Wisconsin  a  statute  providing  that  smy  foreign  cor- 
poration which  shall  enter  into  any  combination,  con- 
spiracy, trust,  pool,  agreement  or  contract  intended  to 
restrain  or  prevent  competition  in  the  supply  or  price 
of  any  article  or  commodity  or  to  control  or  fix  the  price 
of  any  commodity  shall  have  its  authority  to  do  business 
in  the  State  canceled  and  annulled, ^^  as  not  extending 
to  contracts  made  in  reference  to  the  sale  of  a  patented 

»« State  ex  inf.  Crow  v.  Armour  Packing  Co.,  173  Mo.  356,  73  S.  W.  645, 
61  L.  R.  A.  464,  96  Am.  St.  Rop.  515,  followed  in  State  ex  inf.  Crow  v. 
Swartzchild  &  Sulzberger  Co.,  173  Mo.  394,  73  S.  W.  1132. 

As  to  ^^olations  of  Sherman  Anti-Trust  Act  by  dealers  in  fresh  meat,  see 
§  148,  herein. 

"Wis.  Laws,  1905,  chap.  506,  §  1770g. 

471 


§  427  STATE   STATUTES — VIOLATIONS — 

article. ^^  The  court  said:  "While,  under  the  patent 
laws,  a  patent  creates  a  monopoly,  it  is  not  a  monopoly 
of  what  existed  before  and  belonged  to  others,  which  is 
the  true  idea  of  a  monopoly,  but  it  is  a  monopoly  of 
what  did  not  exist  before  and  what  belongs  to  the  patentee. 
In  consequence  it  does  not  create  an  odious  monopoly, 
and  the  rights  of  patentees  thereunder  are  to  be  liberally 
construed."  ^" 

§  427.  Agreement  Between  Physicians— Schedule  of 
Prices. 

A  statute  relating  to  an  unlawful  combination,  pool 
or  trust  to  control  the  price  or  limit  the  quantity  of  any 
article  of  merchandise  or  commodity  is  aimed  at  unlaw- 
ful combinations  in  restraint  of  trade,  and  does  not 
prohibit  physicians  from  associating  themselves  together 
for  the  purpose  of  agreeing  upon  a  schedule  of  prices 
to  be  charged  for  their  professional  services.  ^^ 

16  Butterick  Publishing  Co.  v.  Rose,  141  Wis.  533,  124  N.  W.  647. 

"  Per  Barnes,  J.,  quoting  from  30  Cyc.  816. 

As  to  contracts  between  owners  of  patents  and  between  owners  and 
licensees  under  the  Sherman  Anti-Trust  Act,  see  §§  134-137. 

isRohlf  V.  Kasemeier,  140  Iowa,  182,  118  N.  W.  276.  The  court  said: 
"The  only  ground  upon  which  appellant  can  stand  with  any  show  of  plau- 
sibiUty  is  that  labor  is  a  commodity  to  be  bought,  sold,  or  produced  as 
merchandise.  This  is  a  strained  and  unnatural  construction,  and  gives  to 
the  word  '  commodity '  a  meaning  which  is  perhaps  admissible,  but  is  not 
the  commonly  accepted  one.  *  *  *  The  statute  in  question  was  aimed  at 
unlawful  conspiracies  or  combinations  in  restraint  of  trade,  and  was  man- 
ifestly not  intended  to  cover  labor  unions.  It  is  the  right  of  miners,  citizens, 
laborers,  or  professional  men  to  unite  for  their  own  improvement  or  ad- 
vancement or  for  any  other  lawful  purpose,  and  it  has  never  been  held,  so 
far  as  we  are  able  to  discover,  that  a  union  for  the  purpose  of  advancing 
wages  is  unlawful  under  any  statute  which  has  been  called  to  our  atten- 
tion. *  *  *  And  it  would  be  a  strained  and  unnatural  conclusion  to  hold 
that  a  statute  aimed  at  pools  and  trusts  should  be  held  to  include  agree- 
ments as  to  prices  for  labor  because  the  word  '  commodity '  is  used  therein. 
As  the  right  to  combine  for  the  purpose  of  securing  higher  wages  is  recog- 
nized as  lawful  at  common  law,  a  statute  enacted  to  prohibit  pools  and 
trusts  should  not  be  held  to  apply  to  combinations  to  fix  the  wages  for 
labor,  unless  it  clearly  appears  that  such  was  the  legislative  intent.  What- 
ever of  doubt  there  may  be  regarding  the  power  of  the  legislature  to  do  so, 
we  do  not  think  that  the  act  in  question  covers  combinations  to  fix  the 
labor  price  whether  that  labor  be  skilled  or  unskilled."    Per  Deemer,  J. 

472 


PARTICULAR  CONTRACTS  AND  COMBINATIONS     §§428,429 

§  428.  Physician— Dissolution  of  Partnership— Agree- 
ment Not  to  Practice. 

Where  two  physicians  practicing  their  profession  in  a 
certain  city,  as  copartners,  entered  into  a  written  con- 
tract for  the  dissolution  of  their  copartnership,  one  pur- 
chasing the  property  of  the  copartnership  and  the  other 
agreeing  not  to  practice  medicine  in  the  vicinity  of  such 
city,  it  was  held  that  such  contract  was  invalid  and 
in  violation  of  the  statute  prohibiting  contract  by  which 
one  is  restrained  from  exercising  a  lawful  profession, 
trade  or  business  of  any  kind  except  in  the  case  of  the 
sale  of  the  good  will  of  a  business  when  the  seller  may 
agree  not  to  carry  on  a  similar  business  within  a  speci- 
fied county,  city  or  town,  so  long  as  the  buyer  continues 
in  business  or  in  the  case  of  the  dissolution  of  a  part- 
nership when  an  agreement  may  be  made  that  none  of 
them  shall  carry  on  a  similar  business  within  the  same 
city  or  town  where  the  partnership  business  has  been 
transacted.  The  court  declared  that  the  contract  was 
not  within  the  first  provision  as  it  was  not  Umited  to  a 
time  during  which  the  plaintiff  should  carry  on  a  like 
business  and  that  the  second  provision  was  to  be  con- 
strued as  not  meaning  that  any  one  of  them  would  re- 
frain from  carrying  on  a  similar  business  that  they  might 
agree  that  none  of  them  would  do  so.^^ 

§  429.  Agreements  Between  Dealers  in  Plumbers* 
Supplies  and  Master  Plumbers— Plumbers'  Association. 

Where  all  the  wholesale  dealers  in  plumbers'  supplies 
and  a  large  majority  of  the  master  plumbers  of  Detroit 
and  its  suburbs  organized  a  club,  the  rules  of  which  pro- 
\dded  that  the  wholesalers  should  sell  to  no  one  not  a 
master  plumber,  and  should  sell  to  members  at  prices 
fixed  bv  a  certain  list  and  charge  nonmembers  a  higher 
price  than  members;  that  members  would  buy  all  their 
supplies  of  the  wholesale  members,  and  in  figuring  esti- 
mates on  jobs  would  be  governed  by  the  price  list  sup- 

»  Hulen  V.  Earel,  13  Okla.  24G,  73  Pac.  927,  construing  Wilson's  Revised 
Statutes,  §§  S19,  S20,  821. 

473 


§  430  STATE   STATUTES — VIOLATIONS — 

plied  by  the  club,  and  submit  their  estimates  to  the 
secretary  of  the  club  before  putting  in  their  bids  it  was 
held  that  the  club  constituted  a  combination  in  restraint 
of  trade  within  the  Michigan  Anti- trust  Act  of  1889.2° 

And  in  a  case  in  Missouri  where  an  agreement  was 
entered  into  between  a  plumbers'  association  and  manu- 
facturers and  dealers  whereby  supplies  would  only  be 
sold  by  the  latter  to  members  of  the  association  who 
were  in  turn  to  boycott  any  dealer  who  sold  to  one  not 
a  member,  there  was  held  to  be  an  illegal  conspiracy  in 
violation  of  the  statute  and  that  it  was  competent  for  the 
court  to  restrain  the  parties  to  the  agreement  from  keep- 
ing its  terms  or  demanding  that  they  be  kept  and  thus 
leave  them  or  each  of  them  free  to  deal  or  not  to  deal 
with  appellant  who  was  injured  by  their  refusal  to  do  so." 

§  430.  Agreements  Between  Publishers— Price  at  Re- 
tail— Not  to  Sell  to  Certain  Class. 

An  agreement  between  publishers  representing  ninety- 
five  per  cent  of  the  books  published  in  the  United  States, 
and  ninety  per  cent  of  the  business  done  in  the  book 
trade,  that  all  copyrighted  books  published  by  any  of 
them  after  a  specified  date  should  be  published  and  sold 
at  retail  at  net  prices;  that  such  net  copyrighted  books 
and  all  other  books,  whether  copyrighted  or  not,  or 
whether  published  by  them  or  not,  should  be  sold  by 
them  to  those  booksellers  and  jobbers  only  who  would 
maintain  the  retail  net  price  of  such  net  copyrighted  books 
for  one  year,  and  to  those  booksellers  and  jobbers  only 
who  would  furthermore  sell  books  at  wholesale  to  no 
one  known  to  them  to  cut  or  sell  at  a  lower  figure  than 
such  net  retail  price  or  whose  name  would  be  given  to 
them  by  the  association  as  one  who  cut  such  prices; 
and  that  evidence  should  not  be  required  by  the  book- 
seller or  jobber  in  order  to  restrain  him  from  selling  to 
one  who  had  been  blacklisted  but  that  all  that  should 

2°  Hunt  V.  Riverside  Co-Operative  Club,  140  Mich.  538,  104  N.  W.  40, 
112  Am.  St.  Rep.  420. 

*'  Walsh  V.  Association  of  Master  Plumbers,  97  Mo.  App.  280. 

474 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  431 

be  required  to  govern  his  action  and  to  prevent  hini 
from  selling  to  such  persons  should  be  that  the  name 
had  been  given  to  him  by  the  association  as  one  who 
cut  such  prices  is  construed  as  an  agreement  which  while 
purporting  to  secure  to  the  owner  and  publisher  of  copy- 
righted books  the  monopoly  permitted  by  Federal  law, 
may,  and  as  practically  construed  by  the  parties  does  oper- 
ate in  fact  so  as  to  prevent  the  sale  of  books  of  any  kind 
or  at  any  price  to  any  dealer  who  resells,  or  is  suspected 
of  reseUing,  copyrighted  books  at  less  than  the  arbitrary 
net  price,  whether  such  dealer  be  a  member  of  the  asso- 
ciation or  not.  Such  an  agreement  undertakes  to  inter- 
fere with  the  free  pursuit  of  a  lawful  business  in  which 
a  monopoly  is  not  secured  by  the  Federal  statute,  that 
is,  of  dealing  in  books  which  are  not  protected  by  copy- 
right. And  this  agreement  was  held  by  the  New  York 
Court  of  Appeals  to  be  in  violation  of  the  laws  of  that 
State  enacted  to  prevent  monopolies  in  articles  or  com- 
modities of  common  use  and  to  prohibit  restraint  of 
trade  or  conunerce.'^^ 

§  431.  News  Association  for  Distributing. 

A  statute  prohibiting  any  pool,  trust,  agreement,  or 
combination  "to  regulate  or  fix  the  price  of  any  article 
of  manufacture,  mechanism,  merchandise,  commodity, 
convenience,  repair,  any  product  of  mining,  or  any  article 
or  thing  whatsoever  or  the  price  or  premium  to  be  paid 
for  insur3.nce  of  property"  or  to  fix  or  limit  the  produc- 
tion of  the  things  whose  price  may  not  be  regulated  or 
fixed  ^^  has  been  held  to  have  no  application  to  a  cor- 
poration formed  for  the  purpose  of  gathering  and  distrib- 
uting news,  the  business  of  which  is  held  to  be  one  of 
personal  service,  an  occupation.    And  it  was  decided  that 

"  Straus  V.  American  Publishers'  Association,  177  N.  Y.  473,  69  N.  E. 
1107,  64  L.  R.  A.  701,  101  Am.  St.  Rep.  819,  aff'g  85  App.  Div.  446,  83  N. 
Y.  Supp.  271,  50  N.  Y.  Supp.  1064,  and  decided  under  the  Anti-Monopoly 
Act  of  1899  (Laws,  1899,  chap.  690). 

As  to  violations  of  Sherman  Anti-Trust  Act  by  holders  of  copyrighte, 
see  §  133,  herein. 

"  Mo.  Rev.  Stat.,  1899,  §  8965. 

475 


§§  432,  433    STATE   STATUTES — VIOLATIONS — 

there  was  no  element  of  property  ''affected  with  a  public 
interest  which  could  furnish  a  basis  for  the  charge  of  a 
monopoly.  "^^ 

§  432.  Agreement  Between  Retailers  Not  to  Pxirchase 
from  Certain  Wholesalers. 

An  agreement  between  retailers  not  to  purchase  from 
wholesale  dealers  who  sell  direct  to  consumers  within 
prescribed  localities  amounts  to  a  conspiracy  in  restraint 
of  trade  within  the  meaning  of  the  anti-trust  statute  of 
Mississippi  ''intended  to  hinder  competition"  in  the  pro- 
duction, importation,  manufacture,  transportation,  sale 
or  purchase  of  a  commodity."  -'^ 

§  433.  Agreements  Between  Salt  Manufacturers. 

Where  a  contract  was  entered  into  by  which  one  of 
the  parties  agreed  to  purchase  their  entire  demands  of 
salt  from  the  other  at  the  hst  prices  of  the  latter  for  a 
period  of  two  years,  that  they  would  not  purchase  any 
other  salt  from  any  other  parties  and  would  not  import 
or  cause  to  be  imported  or  bring  any  salt  to  the  Pacific 
Coast  of  North  America  other  than  such  salt  as  they  might 
purchase  from  such  other  party  and  to  discourage  in  any 
possible  manner  any  such  shipments  or  importations  of 
salt  by  any  other  parties,  it  was  decided  that  such  con- 
tract was  in  violation  both  of  the  Sherman  Anti-Trust 
Act  ^^  and  also  of  a  provision  of  the  Civil  Code  of  Cali- 
fornia providing  as  follows:  "Every  contract  by  which 
anyone  is  restrained  from  exercising  a  lawful  profession, 
trade  or  business  of  any  kind,  otherwise  than  is  provided 
by  the  next  two  sections,  is  to  that  extent  void,"  "  which 

"  State  ex  rel.  Star  Publishing  Co.  v.  Associated  Press,  159  Mo.  410,  60 
S.  W.  91,  51  L.  R.  A.  151,  81  Am.  St.  Rep.  368.  But  compare,  as  to  charge 
of  monopoly,  Inter-Ocean  Publishing  Co.  v.  Associated  Press,  184  111.  438, 
56  N.  E.  822,  48  L.  R.  A.  568,  75  Am.  St.  Rep.  184. 

25  Retail  Lumber  Dealers'  Assoc,  v.  State  (Miss.,  1909),  48  So.  1021, 
case  affirmed  in  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30 
Sup.  Ct.  535,  54  L.  ed.  826;  Code  Miss.,  1906,  chap.  145,  §  5002  (Laws, 
1900,  chap.  88);  compare  Laws  Miss.,  1908,  p.  124,  chap.  119. 

2«  Act  Cong.,  July  2,  1890. 

27  Cal.  Civ.  Code,  §  1673. 

47G 


PARTICULAR   CONTRACTS   AND   COMBINATIONS      §  433 

referred  to  agreements  not  to  carry  on  a  similar  business 
in  cases  of  a  sale  of  the  good  will  of  a  business  and  of  a 
sale  by  a  partner  in  anticipation  of  a  dissolution  of  partner- 
ship.^^ 

In  another  case  plaintiff  agreed  to  sell  to  defendant  all 
the  salt  it  manufactured.  The  contract  contained  a 
provision  whereby  it  was  possible  for  defendant,  upon 
payment  of  a  certain  sum  as  rental,  to  stop  the  manu- 
facture of  salt  by  plaintiff.  Its  president,  who  made  the 
contract  with  defendant,  knew  that  defendant  controlled 
many  other  salt  producers,  and  was  engaged  in  an  attempt 
to  control  the  salt  market  through  contracts  with  pro- 
ducers. He  also  assisted  defendant  in  its  attempt  so  to 
control  the  rnarket.  Prior  to  the  making  of  the  contract 
sued  upon,  the  parties  had  prepared  another  contract, 
which  was  rejected  because  counsel  advised  that  it  was 
illegal.  All  the  evidence  was  inconsistent  with  a  legiti- 
mate sale  of  salt,  except  the  denials  of  plaintiff's  presi- 
dent, and  these  were  qualified  by  the  facts  admitted. 
The  court  held  that  a  verdict  should  have  been  directed 
for  defendant  on  the  ground  that  the  contract  wa.s  il- 
legal.-^  This  was  decided  under  a  statute  making  illegal 
all  contracts  or  agreements  entered  into  or  knowingly 
assented  to,  the  purpose,  object  or  intent  of  which  shall 
be  to  restrict  or  regulate  the  amount  of  production  or  the 
quantity  of  any  article  or  to  regulate,  control  or  fix  the 
price  thereof  or  to  restrict  or  prevent  free  competition 
therein.^" 

Again,  where  a  contract  was  entered  into  by  which  one 
of  the  parties,  Getz,  Bros.  &  Co.  agreed  to  purchase  their 
entire  demands  of  salt  from  the  other,  The  Federal  Salt 
Co.,  at  the  list  prices  of  the  latter  for  a  period  of  two 
years,  that  they  would  not  purchase  any  other  salt  from 
any  other  parties  and  would  not  unport  or  cause  to  be 

MGetz  Bros.  &  Co.  v.  Federal  Salt  Co.,  147  Cal.  115,  81  Pac.  416,  109 
Am.  St.  Rep.  114. 

»  Detroit  Salt  Co.  v.  National  Salt  Co.,  134  Mich.  103.  96  X.  W.  1.  One 
judge  dissented,  being  of  the  opinion  that  there  was  sufficient  evidence 
consistent  with  legality  to  raise  a  question  for  the  jury. 

'« 3  Mich.  Comp.  Laws,  §  11377. 

477 


§  434  STATE   STATUTES— A'lOLATIONS — 

imported  or  bring  any  salt  to  the  Pacific  Coast  of  North 
America  other  than  such  salt  as  they  might  purchase 
from  the  party  of  the  second  part  and  to  discourage  in 
any  possible  manner  any  such  shipments  or  importations 
of  salt  by  any  other  parties  and  upon  the  same  date  an- 
other contract  was  entered  into  by  the  same  parties  by 
which  Getz  Bros.  &  Co.  sold  all  salt  in  transit  to  San 
Francisco  to  The  Federal  Salt  Co.  in  consideration  of 
ten  thousand  dollars,  it  was  decided  in  an  action  upon 
two  checks  for  five  thousand  dollars  each,  given  for  such 
sum,  that  the  checks  with  the  contracts  formed  parts  of 
one  transaction  and  were  to  be  construed  together  and 
that  the  contract  being  an  entire  one  and  illegal  both 
under  the  Sherman  Anti- trust  Act  ^^  and  the  provisions 
of  the  Civil  Code,^^  no  action  could  be  maintained  upon 
the  checks. ^^ 

§  434.  Contracts  Relating  to  Telephone  Service. 

Where  two  telephone  companies  entered  into  a  con- 
tract by  the  terms  of  which  each  party  agreed  to  transmit 
all  messages  destined  to  points  on  the  lines  of  the  other 
party  not  reached  by  its  own  system  or  wires  to  and  over 
the  lines  owned  or  controlled  by  the  other  party  and  also 
agreed  not  to  enter  into  any  contract  with  any  other 
person,  firm  or  corporation  whereby  any  of  the  rights, 
privileges  or  advantages  acquired  by  either  party  to  the 
contract  might  be  impaired,  it  was  decided  in  a  recent 
case  in  Missouri  that  such  contract  was  not  in  restraint 
of  trade  or  one  tending  to  create  a  monopoly  but  that 
it  appeared  from  the  facts  of  the  case  that  the  object 
of  such  contract  was  to  foster  competition  as  between 
such  companies  and  a  rival  company.^* 

A  contract  between  a  long  distance  telephone  company 
which  did  not  operate  at  a  certain  place  and  an  individual 

"  Act  Cong.,  July  2,  1890. 

32  Cal.  Civ.  Code,  §  1673. 

"  Getz  Bros.  &  Co.  v.  Federal  Salt  Co.,  147  Cal.  115,  81  Pac.  416,  109 
Am.  St.  Rep.  114. 

^^  Home  Telephone  Co.  v.  Sarcoxie  Light  and  Telephone  Co.  (Mo.,  1911), 
139  S.  W.  108. 

478 


PARTICULAR   CONTRACTS   AND    COMBINATIONS      §  434 

owning  a  local  telephone  system  which  operated  a  local 
system  at  such  place  by  the  terms  of  which  a  connection 
between  the  two  lines  was  provided  for,  the  local  system 
in  consideration  therefor  agreeing  that  it  would  not 
extend  its  lines  so  as  to  conflict  with  the  business  or 
interests  of  the  other,  would  not  make  any  connection 
with  any  other  lines,  would  not  extend  its  lines  outside 
of  the  county,  and  would  give  its  long  distance  business 
exclusively  to  the  other  has  been  held  not  to  be  in  vio- 
lation of  a  code  provision  ^^  which  makes  unlawful  as  a 
trust  and  combine  any  ''combination,  contract,  under- 
standing, or  agreement,  expressed  or  implied,  between 
two  or  more  corporations,  or  firms,  or  associations  of 
persons,  or  between  one  or  more  of  either  with  one  or 
more  of  the  others"  in  "restraint  of  trade"  or  to  "monop- 
olize, or  attempt  to  monopolize,  the  production,  control, 
or  sale  of  any  commodity,  or  the  prosecution,  manage- 
ment or  control  of  any  kind,  class  or  description  of  busi- 
ness." ^^  The  court  construed  the  provisions  as  to  con- 
tracts in  restraint  of  trade  and  in  regard  to  monopoly 
as  meaning  those  contracts  that  were  invalid  and  against 
public  policy  before  the  enactment  of  the  statute.  As 
to  this  particular  contract  it  was  said:  "What  is  unreason- 
able about  it  in  the  absence  of  proof  showing  that  it  was 
designed  for  the  purpose  of  stifling  competition  or  creat- 
ing a  monopoly?  These  two  companies  were  not  com- 
petitors. This  contract  bears  every  mark  of  a  contract 
entered  into  in  good  faith  and  'only  for  the  purpose  of 
affording  a  fair  protection  to  the  interests  of  the  party 
in  whose  favor  it  was  made,  and  not  so  wide  in  its  scope 
and  operation  as  to  interfere  with  the  interests  of  the 
public.  *  *  *  The  contract  promoted  the  efficiency  of 
both  systems,  and  made  both  of  greater  use  to  the  public 
as  well  as  more  valuable  to  the  owners.  If  the  contention 
that  this  contract  is  illegal  is  to  prevail,  the  court  must 
hold  that  while  either  of  these  systems  could  lawfully 

»  Miss.  Code  of  190G,  §  5002,  as  amended  by  the  Laws  of  1908,  p.  124. 
"Cumberland  Telephone  &  Telegraph  Co.  v.  State  ex  rel.  Attorney 
General  (Miss.,  1911),  54  So.  670. 

479 


§§  435,  436     STATE    STATUTES— VIOLATIONS — 

purchase  the  other,  and  stipulate  that  the  selUng  system 
would  not  engage  in  business  for  a  reasonable  period  of 
time  and  within  a  territory  reasonably  necessary  for  the 
protection  of  the  purchasing  company,  yet  when  they  do 
the  lesser  thing  of  only  buying  and  selling  the  right  to 
use  the  long  distance  in  connection  with  the  local  busi- 
ness, leaving  both  systems  to  manage  and  control  their 
business  without  interference  with  the  other,  the  lesser 
contract  is  illegal.  The  contract  *  *  *  was  not  in  vio- 
lation of  the  law.  It  was  based  upon  a  valuable  considera- 
tion to  both  systems  and  was  not  inimical  to  the  public 
interest  in  any  way."  " 

§  435.  Telegraph  Companies— Service  of  Is  Not  a 
Comjnodity. 

In  New  York  it  has  been  decided  that  a  telegraph  com- 
pany does  not  manufacture,  produce  or  sell  a  commodity 
or  article  in  common  use  such  as  is  within  the  prohibition 
of  the  anti- trust  act  of  that  State,  ^^  it  being  declared 
that  in  the  popular  and  received  import  of  the  word  a 
"commodity"  is  a  tangible  article  and  that  in  view  of 
the  laws  of  the  State  relating  to  telegraph  companies,  it 
would  be  wresting  the  meaning  to  a  particular  purpose  to 
hold  that  the  service  or  labor  of  transmitting  a  telegram 
is  such  a  conunodity  as  is  contemplated  by  the  act.^^ 

§  436.  Agreement  Between  Theatrical  Owners  or 
Managers—  Plays  Not  Commodities. 

In  New  York  it  is  decided  that  entertainments  and 
plays  of  the  stage  are  not  articles  or  commodities  of 
common  use.^° 

The  court  declared  in  this  case  that  plays  and  enter- 
tainments of  the  stage  are  not  articles  or  useful  com- 
modities of  common  use  and  that  the  business  of  owning, 
leasing  and  controlling  theaters,  and  producing  plays 
therein  is  not  trade.    This  conclusion  was  reached  where 

"  Per  Mayes,  C.  .1. 

'» Laws,  1899,  chap.  690. 

"9  Matter  of  Jackson,  57  Misc.  R.  (N.  Y.)  1,  107  N.  Y.  Supp.  799. 

«  People  V.  Klaw,  55  Misc.  R.  (N.  Y.)  72,  106  N.  Y.  Supp.  341. 

480 


PARTICULAR   CONTRACTS   AND   COMBINATIONS     §§  437,  438 

it  appeared  that  persons  who  owned  or  controlled  theaters 
throughout  the  country  arranged  for  booking  transactions 
at  their  theaters  so  as  to  enable  companies  to  save  expense 
by  making  continuous  tours  without  retracing  their  steps; 
had  agreed  not  to  produce  in  their  theaters  attractions 
controlled  by  rival  interests  and  only  such  attractions  as 
agreed  not  to  play  in  any  city  where  they  had  a  theater 
and  binding  parties  by  booking  contracts  to  play  in  their 
theaters  in  cities  where  they  had  them  or  to  remain  out 
of  such  cities  and  not  to  play  in  certain  cities  during 
specified  periods  of  time  and  not  to  play  in  other  theaters 
in  the  United  States  and  Canada  during  the  theatrical 
season  covered  by  such  booking  contracts. 

§  437.  Combination  to  Induce  Employees  to  Break 
Contracts  with  Employers. 

Where  there  is  a  combination  of  two  or  more  persons 
to  injure  one  in  his  trade,  by  inducing  his  employees  to 
break  their  contracts  with  him  or  to  decline  to  longer 
continue  in  his  employment  it  is  decided  that  such  com- 
bination is,  if  it  results  in  damage,  actionable,  and  that 
a  former  member  of  such  an  illegal  combination,  whose 
connection  with  it  was  severed  before  the  filing  of  the 
suit,  will  not  be  denied  the  protection  of  a  court  of  equity 
against  an  illegal  act  of  such  combination  because  of  his 
previous  connection  therewith.  These  principles  were 
announced  in  a  case  where  the  complaint  alleged  that 
the  defendants  formed  a  combination  among  the  em- 
ploying printers  to  control  and  fix  the  price  of  printing 
done  in  the  city  of  Atlanta,  and,  because  the  plaintiff 
refused  to  affiliate  with  the  combination,  they  wrongfully 
interfered  with  its  business  and  maliciously  induced  its 
employees  to  break  their  contracts  with  it  and  refuse  to 
continue  in  its  employment  to  its  injury  and  damage. ^^ 

§  438.  Undertaking  by  Corporations  to  Induce  Em- 
ployees to  Trade  with  Another. 
An  undertaking  on  the  part  of  a  corporation  to  endeavor 

"  Employing  PriBters'  Club  v.  Doctor  Blosser  Ck).,  122  Ga.  509,  50  S.  E. 
363,  69  L.  R.  A.  90,  100  .Vm.  St.  Rep.  137. 

31  481 


§  439  STATE    STATUTES — VIOLATIONS — 

to  induce  its  employees  to  trade  with  another  is  not  a 
violation  of  a  law  prohibiting  the  formation  of  trusts  and 
monopolies." 

§  439.  Contract  to  Instruct  in  Treatment  of  Scalp  and 
Hair — To  Use  Only  Certain  Remedies. 

Under  the  Missouri  statute  declaring  all  agreements 
between  persons  which  tend  to  lessen  full  and  free  com- 
petition in  the  manufacture  and  sale  of  any  article,  prod- 
uct or  commodity,  and  all  agreements  under  the  terms  of 
which  it  is  stipulated,  agreed  and  understood  that  persons 
doing  business  in  the  State  shall  not  sell  or  offer  for  sale  any 
particular  article  or  commodity  and  shall  not  sell  or  offer 
for  sale  any  competing  commodity,  to  be  against  public 
policy  and  void,  it  has  been  decided  that  where  a  contract 
was  made  by  which  one  party  agreed  to  instruct  the 
other  party  thereto  in  a  method  of  treatment  of  the  scalp 
and  hair,  the  latter  agreeing  not  to  use  any  remedies  but 
plaintiff's  while  treating  patients  by  a  common  method 
to  which  the  former  had  no  exclusive  right,  such  agree- 
ment was  intended  and  adapted  to  prevent  the  use  of 
any  remedy  on  the  hair  except  plaintiff's  was  unlimited 
in  respect  of  territory  or  time  and  was  in  contravention 
of  the  statute.^' 

«  Redland  Fruit  Co.  v.  Sargent,  51  Tex.  Civ.  App.  619,  113  S.  W.  330. 
«  Pope-Tumbo  v.  Bedford,  147  Mo.  App.  692,  127  S.  W.  426,  decided 
under  Mo.  Rev.  Stat.,  1899,  §  8966. 


482 


REMEDIES  AND   DEFENSES 


CHAPTER  XXVII 


STATE  STATUTES — PROSECUTION — REMEDIES  AND  DEFENSES 


§  440.  Parties    Defendant  —  Who 
Subject  to  Prosecution. 

441.  Remedy  Provided  by  Statute 

Exclusive. 

442.  Statutes  Providing  for  Pun- 

ishment— Fine — Imprison- 
ment. 

443.  Liability  Where  Agreement 

Legal  When  Made — Effect 
of  Subsequent  Statute. 

444.  Statute  Construed  by  High- 

est Court  of  State — Re- 
view by  United  States 
Supreme  Court. 

445.  Annulment     of     Charter — 

Forfeiture  of  Franchise — 
Right  of  Stockholder  to 
Enforce. 

446.  AppUcation  to  Annul  Char- 

ter— Granting  of  in  Dis- 
cretion of  Court. 

447.  Foreign  Corporation — Oust- 

er of — When  Court  no 
Discretion. 

448.  Foreign    Corporations — Na- 

ture of  Right  to  Transact 
Business — Ouster  of. 

449.  Foreign  Insurance  Company 

— Authority  of  Insurance 
Commissioner  to  Revoke 
Certificate. 

450.  Suit  for  Injunction  by  Per- 

son  Injured — Defense. 

451.  Violation  of  Law  as  Prevent- 

ing Relief  Against  Ordi- 
nance —  Ceasing  Viola- 
tions. 

452.  Action  for  Damages — Person 

Injured  by  Conspiracy. 


§  453.  Action  by  Party   to   Illegal 
Contract  or  Combination. 

454.  Enjoining  Acts  Done  After 

Combination  Declared  Il- 
legal. 

455.  That  Corporation  a  Foreign 

One  Is  no  Defense. 

456.  That  Price    Not    Raised    Is 

no  Defense. 

457.  No  Defense  That  Complete 

Monopoly  Not  Obtained. 

458.  Motives  of  Those  Instigating 

Suit  Are  Immaterial. 

459.  Good  Motives  or  Intent  no 

Defense  Where  Statute 
Violated. 

460.  IllegaUty  of  Combination  or 

Contract  as  Defense — In- 
dependent of  Statute — 
Collateral  Contract. 

461.  Illegality  of  Combination  or 

Contract  as  Defense — 
Where  Permitted  by  Stat- 
ute. 

462.  Illegality  of  Combination  or 

Contract  as  Defense  Con- 
tinued— Instances. 

463.  Illegality  of  Combination  or 

Contract  as  Defense — Ac- 
tion for  Rent. 

464.  Illegality  of  Combination  or 

Contract  as  Defense — 
Contract  Made  Prior  to 
Statute. 

465.  Illegality  of  Combination  or 

Contract  as  Defense — 
WTiere  Statute  Prescribes 
no  Mode  of  Procedure 
for  Determining  Illegality. 

483 


§  440  STATE    STATUTES — PROSECUTION — 

§  466.  Combination  to  Raise  Price  §  467.  Illegality  of  Association  as 

— Defense  That  Law  Does  Defense  to  Action  by  for 

Not  Favor  Increased  Sale  Penalty, 
of  Article. 

§  440.  Parties  Defendant— Who  Subject  to  Prosecu- 
tion. 

Where  a  large  body  of  men  combine  for  a  particular 
purpose  and  agree  between  themselves  to  adopt  a  uni- 
form course  of  conduct  and  in  pursuance  of  such  agree- 
ment the  body  of  men  so  combined,  or  a  considerable 
number  of  them,  though  acting  separately  in  each  trans- 
action, pursue  the  course  of  conduct  agreed  upon,  the  law 
will  presume  that  the  acts  committed  were  the  result 
of  the  agreement,  and  will  hold  all  those  who  entered 
into  the  combination  and  agreement  as  instigators,  aid- 
ers and  abettors  of  the  acts  and  therefore  responsible 
not  only  each  for  his  own  act,  but  each  for  the  acts  of 
each  other  and  for  all.^ 

And  the  object  of  a  combination  being  against  public 
policy  and  illegal  the  individual  members  thereof  are 
liable  for  the  combined  acts  of  all  and  defendants  cannot 
be  relieved  from  the  legal  effect  of  their  acts  by  reason 
of  the  fact  that  the  organization  was  voluntary  and  that 
no  articles  of  association  were  reduced  to  writing.  The 
fact  that  the  agreement  for  an  illegal  combination  is  not 
a  formal  written  agreement  is  immaterial,  since  a  verbal 
understanding  or  agreement  or  a  scheme  not  embodied 
in  writing  but  evidenced  by  the  acts  of  the  parties  is 
sufficient.^ 

And  in  a  prosecution  for  forming  a  pooling  combination 
in  violation  of  a  statute,  the  conspirators  may  be  indicted 
either  jointly  or  severally.  Or,  if  they  combine  under  a 
corporate  name,  and  the  corporation  executes  the  purpose 

1  State  ex  rel.  Hadley  v.  Kansas  City  Live  Stock  Exchange,  211  Mo.  181, 
109  S.  W.  675. 

2  Chicago,  Milwaukee  &  Vermillion  Coal  Co.  v.  People,  214  111.  421,  73 
N.  E.  770,  aff'g  114  111.  App.  75,  and  citing  Ford  v.  Chicago  Milk  Shippers' 
Assn.,  155  111.  166,  39  N.  E.  651;  Harding  v.  American  Glucose  Co.,  182 
111.  551,  55  N.  E.  577;  Patnode  v.  Westenhaver,  114  Wis.  460,  90  N.  W. 
467;  United  States  v.  Barrett  (U.  S.  C.  C),  65  Fed.  62. 

484 


REMEDIES   AND    DEFENSES  §  441 

of  the  conspiracy,  then  the  corporation  may  be  indicted, 
either  alone,  or  jointly  with  those  or  any  of  them  entering 
into  the  conspiracy.^ 

And  in  a  case  in  Kentucky  it  is  declared,  that  although 
a  corporation  did  not  have  an  existence  when  an  alleged 
pooling  conspiracy  was  entered  into,  yet  that  if  it  was 
created  by  the  conspirators  for  the  purpose  of  executing 
their  agreement,  and  did  so,  it  becomes  a  party  to  the 
unlawful  scheme,  and  is  answerable  for  the  acts  of  those 
conceiving  or  entering  into  it.^ 

So  corporations,  and  their  officers  and  agents,  who 
conceive,  effect  and  carry  out  a  conspiracy  can  both  be 
considered  and  counted  in  the  two  or  more  necessary 
to  constitute  an  unlawful  conspiracy.  This  is  declared  to 
be  the  rule  independent  of  statute  and  to  be  founded  upon 
principle  and  in  furtherance  of  sound  public  policy.^ 

It  is  not  necessary  that  the  State  proceed  against  all 
the  members  of  a  conspiracy  and  the  indictment  may 
be  against  a  part  of  them  only,  it  being  said  that  there 
are  often  good  reasons  for  such  action. '^ 

§  441.  Remedy  Provided  by  Statute  Exclusive. 

Where  a  right  is  created  by  statute  and  a  remedy  for 
its  violation  is  given  by  the  same  statute  that  remedy  is 
exclusive  unless  the  statute  says  otherwise.  This  doc- 
trine is  announced  and  applied  in  construing  anti-trust 
statutes  in  Missouri.^  The  first  section  of  this  act  de- 
nounces every  pool,  trust,  agreement,  combination,  etc., 
to  regulate,  control  or  fix  the  price  of  any  article  therein 
referred  to,  or  to  limit  the  amount  of  any  product  or 
commodity  to  be  produced,  as  illegal.    By  the  next  two 

'  International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  352. 

*  International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  352. 

s  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015. 

« Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015. 

'  Mo.  Rev.  Stat.,  1899,  §§  8978-8981. 

485 


§  442       STATE  STATUTES — PROSECUTION — 

sections  it  is  made  the  duty  of  the  attorney  general 
and  the  prosecuting  attorneys  to  take  certain  action  to 
prevent  the  violation  of  the  statute  and  restrain  those 
who  should  violate  it.  These  two  sections  were  construed 
as  intended  for  the  correction  and  prevention  of  such 
unlawful  acts  by  proceedings  in  court  in  the  name  of  the 
State.  By  the  section  next  following  a  person  injured 
by  such  unlawful  act  is  given  a  remedy  which  is  by  a  suit 
for  damages  wherein  he  may  ''recover  threefold  the  dam- 
ages by  him  sustained  and  the  costs  of  the  suit,  including 
a  reasonable  attorney's  fee"  and  the  court  declared  that 
if  defendants  were  guilty  of  violating  the  act  as  was  con- 
tended by  the  plaintiff  and  the  latter  was  injured  thereby, 
the  remedy  for  such  injury  was  by  an  action  for  damages 
under  the  section  above  referred  to.  In  this  case,  however, 
it  was  decided  in  a  suit  at  law  under  that  section,  wherein 
marginal  deposits  had  been  made  on  sales  of  grain  for 
future  delivery,  that  if  a  proper  showing  were  made,  as 
of  insolvency  of  the  parties  or  fraud,  or  the  like,  a  court 
of  equity  might  hold  the  marginal  deposits  to  prevent 
their  dissipation  while  the  suit  was  pending.^ 

In  Mississippi  the  remedy  for  discrimination  in  rates 
by  telephone  companies  is  held  not  to  be  under  the  anti- 
trust laws  of  the  State  but  to  exist  under  the  statutes 
conferring  jurisdiction  upon  the  Railroad  Commission.^ 

§  442.  Statutes  Providing  for  Punishment— Fine — Im- 
prisonment. 

Under  a  statute  providing  that  a  violation  of  the  statute 
shall  subject  the  offender  to  a  prosecution  by  indictment 
and  in  other  sections  providing  for  the  punishment  of  the 
offender  by  fine  and  that  the  fine  imposed  for  a  violation 
"may"  be  recovered  by  an  action  of  debt  in  the  name 
of  the  people  it  has  been  decided  that  the  word  ''may" 
is  used  in  a  permissive  sense  and  that  the  State  has  the 

8  Albers  Commission  Co.  v.  Spencer,  205  Mo.  105,  103  S.  W.  523,  11  L. 
R.  A.  (N.  S.)  1003. 

'  Cumberland  Telephone  &  Telegraph  Co.  v.  State  ex  rel.  Attorney 
General  (Miss.,  1911),  54  So.  446. 

486 


REMEDIES   AND   DEFENSES  §  442 

right  to  either  prosecute  by  indictment  or  may  bring  an 
action  of  debt  to  recover  the  fine  imposed.^" 

And  where  a  State  anti-trust  law  fixed  penalties  at 
five  thousand  dollars  a  day  and,  after  verdict  of  guilty 
for  over  three  hundred  days  a  defendant  corporation  was 
fined  over  one  million,  six  hundred  thousand  dollars,  the 
United  States  Supreme  Court  declared  that  the  fine  was 
not  so  excessive  as  to  amount  to  deprivation  of  property 
without  due  process  of  law,  where  it  appeared  that  the 
business  was  extensive  and  profitable  during  the  period 
of  violation  and  that  the  corporation  had  over  forty 
million  dollars  of  assets  and  had  declared  dividends 
amounting  to  several  hundred  per  cent.^^ 

An  anti-trust  act  providing  that  it  shall  be  the  duty 
of  the  Secretary  of  State  to  address  to  the  president, 
secretary  or  treasurer  of  each  incorporated  company 
doing  business  in  the  State  a  letter  of  inquiry  as  to  whether 
such  corporation  "has  all  or  any  part  of  its  interest  or 
business  in  or  with  any  trust,  combination  or  association 
of  persons  or  stockliolders  as  named  in  the  preceding 
provisions  of  the  act,  and  to  require  an  answer  under 
oath"  and  that,  on  refusal  of  the  corporation  to  make  the 
required  oath,  the  prosecuting  attorney  shall  proceed 
against  the  corporation  ''for  the  recovery  of  the  money 
forfeit  provided  for"  in  the  act  has  been  construed  as 
not  imposing  a  penalty  upon  such  corporation  or  its 
ofiicers  for  failure  to  make  such  answer  or  declaring  that 
such  failure  shall  constitute  a  public  offense. ^- 

In  New  York  it  has  been  decided  that  a  proceeding 
against  an  alleged  unlawful  combination  instituted  by 
the  attorney  general  under  the  authority  of  the  Anti- 
Monopoly  Act  of  1899  ^^  was  not  too  late  because  the 

"Chicago,  Wilmington  &  Vermillion  Coal  Co.  v.  People,  214  111.  421, 
73  N.  E.  770,  aff'g  114  111.  App.  75. 

"  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L. 
ed.  417,  aff'g  (Tex.  Civ.  App.),  106  S.  W.  918. 

Instate  V.  International  Harve-ster  Co.,  79  Ark.  517,  96  S.  W.  119,  con- 
Btruing  Anti-Trust  Act  of  Jan.  23,  1905,  §  7,  and  distinguishing  People  v. 
Butler  Street  Foundr>s  201  111.  236,  66  N.  E.  349. 

"  Laws,  1899,  chap.  690. 

487 


§§  443,  444   STATE  STATUTES — PROSECUTION — 

combination  had  been  formed  before  the  proceeding  was 
commenced  and  even  before  the  statute  was  passed, 
since  the  act  was  a  substantial  re-enactment  of  an  earher 
statute,  and,  according  to  the  Statutory  Construction 
Law,  must  be  construed  as  a  continuation  thereof,  and  as 
it  aimed  to  prevent  the  consunmiation  and  maintenance 
of  unlawful  combinations,  it  reached  those  already  formed 
but  which  were  still  maintained  and  in  the  process  of  con- 
struction.^'* 

§  443.  LiabUity  Where  Agreement  Legal  When  Made 
—Effect  of  Subsequent  Statute. 

Even  though  it  would  be  giving  a  penal  statute  a  retro- 
active effect  to  make  it  apply  to  an  unlawful  agreement 
executed  prior  to  the  passage  thereof  by  a  defendant's 
predecessor  in  interest,  a  defendant  is  subject  to  conviction 
for  violating  the  act  after  its  enactment  by  making  itself 
a  party  to  and  carrying  out  its  illegal  provisions.  Though 
an  agreement  may  have  been  legal  when  made  yet  being 
a  continuing  one,  persons  acting  thereunder  in  carrying 
out  its  provisions  after  it  is  declared  to  be  illegal  bring 
themselves  within  the  terms  of  the  act.^^ 

§  444.  Statute  Construed  by  Highest  Court  of  State— 
Review  by  United  States  Supreme  Court. 

Where  the  highest  court  of  a  State  has  decided  that 
an  agreement  or  contract  amounts  to  a  restraint  of  trade 
within  the  meaning  of  an  anti-trust  act  of  that  State  the 
only  question  for  the  United  States  Supreme  Court  to 
consider  is  whether  such  statute  so  unreasonably  abridges 
freedom  of  contract  as  to  amount  to  deprivation  of  prop- 
erty without  due  process  of  law  within  the  meaning  of 
the  Fourteenth  Amendment.  This  doctrine  is  stated  in 
a  case  of  a  writ  of  error  to  the  Supreme  Court  of  the 

»*  Matter  of  Davies,  168  N.  Y.  89,  61  N.  E.  118,  56  L.  R.  A.  855,  rev'g 
55  App.  Div.  245,  67  N.  Y.  Supp.  492. 

"  Waters-Pierce  Oil  Co.  v.  Texas,  212  U.  S.  86,  29  Sup.  Ct.  220,  53  L. 
ed.  417,  aff'g  (Tex.  Civ.  App.)  106  S.  W.  918. 

As  to  violations  by  combinations  entered  into  before  passage  of  Sherman 
Anti-Trust  Act  (Act  of  July  2,  1890),  see  §  127,  herein. 

488 


REMEDIES  AND  DEFENSES  §  445 

State  of  Mississippi  in  which  the  latter  court  had  con- 
strued an  agreement  between  retail  dealers  in  lumber  not 
to  purchase  from  wholesale  dealers  who  sold  direct  to 
consumers  within  prescribed  localities.  ^^ 

So  in  an  earlier  case  the  United  States  Supreme  Court 
determined  that  it  would  not  inquire  whether  the  finding 
of  the  jury  was  against  the  evidence  but  would  take  the 
facts  as  found  and  consider  only  whether  the  State  statute 
was  violative  of  the  Federal  Constitution.  The  power  in  a 
State  court  to  determine  the  meaning  of  a  State  statute 
carries  with  it  the  power  to  prescribe  its  extent  and  limi- 
tations as  well  as  the  method  by  which  they  shall  be 
determined.'^ 

§  445.  Annulment  of  Charter  -Forfeiture  of  Fran- 
chise—Right of  Stockholder  to  Enforce. 

In  Missouri  under  the  laws  of  that  State  authorizing 
and  directing  the  attorney  general  to  institute  civil 
proceedings  by  information  in  the  nature  of  quo  warranto 
against  any  corporation  to  annul  its  charter  and  forfeit 
its  franchises  wherever  it  has  so  conducted  itself  as  to 
violate  the  anti-trust  laws  of  the  State  it  is  decided  that 
the  Supreme  Court  of  the  State  has  jurisdiction  and 
may,  upon  trial,  if  the  corporation  is  found  guilty,  make 
a  decree  of  forfeiture  and  may  also  in  addition  impose 
penalties  for  such  violations  of  the  law  as  it  may  deem 
proper.  Such  a  proceeding  is  a  civil  one  and  not  a  crim- 
inal one  within  the  meaning  of  the  Constitution  and  laws 
of  the  State  over  which  such  court  has  no  jurisdiction. 
And  it  is  immaterial  that  the  conduct  of  the  corporation 
was  a  violation  of  the  criminal  laws  of  the  State  by  which 
it  and  its  officers  are  rendered  amenable  to  the  penalties 
and  punishments  therefor.'^ 

"  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433,  30  Sup.  Ct.  535, 
64  L.  ed.  826.  See  also  Smiley  v.  Kansas,  196  U.  S.  447,  49  L.  ed.  546,  25 
Sup.  Ct.  276,  wherein  the  same  doctrine  is  announced;  National  Cotton 
Oil  Co.  V.  Texas,  197  U.  S.  115,  25  Sup.  Ct.  379,  49  L.  ed.  6S9. 

"  Smiley  v.  Kansas,  196  U.  S.  447,  49  L.  ed.  546,  25  Sup.  Ct.  276. 

"State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 
The  court  said:  "This,  however,  does  not  proceed  upon  the  theory-  that  the 

4S9 


§  446  STATE   STATUTES — PROSECUTION — 

And  likewise  in  New  York  it  is  declared  that  in  an 
action  by  the  people  against  a  foreign  corporation  for  a 
violation  of  the  various  State  statutes  prohibiting  monop- 
olies in  restraint  of  trade,  the  court  may  decree  a  for- 
feiture of  a  license  to  do  business  there  granted  by  the 
Secretary  of  State  pursuant  to  provisions  of  the  General 
Corporation  Law,  on  proof  of  a  systematic,  willful  and  con- 
tinuous violation  of  the  laws  of  State,  it  being  said  that 
a  special  act  of  the  legislature  is  not  necessary  to  annul 
the  license  of  a  foreign  corporation.^^ 

But  so  far  as  the  public  right  is  concerned  a  stock- 
holder, though  the  facts  pleaded  may  be  sufficient  to  show 
the  existence  of  a  trust  in  violation  of  the  law,  has  no 
standing  to  enforce  a  forfeiture  of  the  charter  of  the 
corporation.  And  so  far  as  his  individual  interest  may 
be  affected  he  has  no  standing  to  ask  that  the  corporation 
be  wound  up  and  its  assets  distributed  for  illegal  trans- 
actions where  it  appears  that  he  has  participated  in  the 
illegal  transactions  or  has  been  guilty  of  laches  in  acting.  2° 

§  446.  Application  to  Annul  Charter— Granting  of  in 
Discretion  of  Court. 

In  New  York  the  granting  of  an  application,  made 
under  the  Code  of  Civil  Procedure,  ^^  for  leave  to  annul 
the  charter  of  a  corporation  for  a  violation  of  the  laws  in 
regard  to  combinations  to  create  monopolies  and  in  re- 
straint of  trade  rests  in  the  sound  discretion  of  the  court. 
It  is  not  given  as  a  matter  of  right,  but  depends  upon 
whether  public  interests  require  the  action  to  be  brought.  ^^ 

corporation  has  been  guilty  of  a  crime  and  that  it  is  being  punished  there- 
for; but  upon  the  idea  that  there  is  an  imphed  or  tacit  agreement  on  the 
part  of  every  corporation  by  accepting  its  charter  and  corporate  franchises, 
that  it  will  perform  its  obligations  and  discharge  all  its  duties  to  the  public, 
and  that  by  failing  to  do  so  it  commits  an  act  of  forfeiture  which  may  be 
enforced  by  the  State  in  the  manner  before  suggested."    Per  Woodson,  J. 

19  People  V.  American  Ice  Co.,  135  App.  Div.  (N.  Y.)  180,  120  N.  Y. 
Supp.  41. 

«>  Coquard  v.  National  Linseed  Oil  Co.,  171  111.  480,  49  N.  E.  563,  aff'g 
67  111,  App.  20. 

bisection  1798. 

"  Matter  of  Attorney  General,  124  App.  Div.  (N,  Y.)  401,  108  N.  Y. 
Supp.  823. 

490 


REMEDIES   AND    DEFENSES  §  447 

And  in  Kansas  it  has  been  decided  that  where  a  foreign 
corporation  is  transacting  business  under  a  Ucense  granted 
by  the  State  and  violates  the  anti-trust  laws  of  the  State 
the  license  and  right  to  prosecute  business  within  the 
State  may  be  forfeited  and  set  aside  and  such  corporation 
wholly  ousted  from  the  State,  or  it  may  be  prohibited 
from  engaging  in  specific  practices  which  are  contrary 
to  the  laws  of  the  State.  And  where  in  such  a  case  a 
corporation  has  by  its  conduct  become  liable  to  a  com- 
plete ouster  the  court  may,  in  its  discretion,  make  a  limited 
or  qualified  order  of  ouster  prohibiting  certain  specific 
acts,  and  retain  jurisdiction  and  control  of  the  parties 
for  the  purpose  of  making  further  orders  in  the  premises 
should  just  and  proper  cause  arise  therefor  in  the  future.-^ 

§  447.  Foreign  Corporation— Ouster  of— When  Court 
no  Discretion. 

Under  a  statute  providing  that  every  foreign  corpora- 
tion admitted  to  transact  business  in  the  State  that  is 
guilty  of  entering  into  any  pool,  trust,  agreement,  com- 
bination or  understanding  in  restraint  of  trade,  within 
the  State,  shall  thereafter  be  prohibited  from  continuing 
its  business  therein,  ^'^  the  court  has  no  discretion  after 
the  corporation  is  found  guilty  in  an  action  begun  and 
prosecuted  under  such  statute  to  grant  any  other  or 
different  judgment  than  one  prohibiting  the  corporation 
from  continuing  its  business  within  the  State.  ^^  The 
court  said  in  this  case:  "The  legislature  had  the  right 
to  determine  what  the  penalty  should  be  or  they  might 
have  left  it  to  the  court  to  fix  the  penalty  and  determine 
the  character  of  the  judgment.  They  said  in  clear  and 
explicit  terms  that  a  foreign  corporation,  found  guilty 
of  entering  into  a  pool  or  combination  in  restraint  of 
trade,  'shall  be  prohibited  from  continuing  its  business 
in  the  State.'  Wliat  ground  is  there  for  saying  that  the 
court  may  disregard  this  direction?    It  seems  very  clear 

"  State  V.  International  Harvester  Co.,  81  Kan.  610,  106  Pac.  1053. 

"  Minn.  R.  L.  1905,  §§  5168,  5169. 

"State  V.  Creamery  Package  Mfg.  Co.  (Minn.,  1911),  132  N.  W.  268. 

491 


§  448       STATE  STATUTES — PROSECUTION — 

that  the  legislature  did  not  intend  that  the  court  should 
have  any  discretion  in  regard  to  the  punishment.  It 
would  have  been  easy  to  have  used  words  indicating  that 
the  court  might  exercise  its  discretion  but  difficult  to 
express  more  clearly  the  idea  that  the  whole  matter 
of  the  penalty  was  taken  from  the  court  and  determined 
by  the  legislature.  We  cannot  avoid  the  conclusion 
that  we  could  be  justly  accused  of  legislating,  were  we 
to  hold  that,  notwithstanding  the  plain  language  of  the 
statute,  the  court  may  impose  a  less  punishment,  or 
render  a  judgment  that  would  permit  defendant's  con- 
tinuing its  business  within  the  State.  We  do  not  feel 
warranted  in  holding  that  the  word  'shall '  should  be 
construed  as  'may  '  in  this  case.  It  is  quite  apparent  that 
the  legislature  meant  'shall.'  The  statute  is  mandatory 
in  its  terms,  and  there  is  nothing  that  leads  us  to  believe 
that  it  was  not  intended  to  be  mandatory  in  effect.  We 
hold  that  the  trial  court  had  no  power  or  discretion  to 
modify  the  judgment  as  requested."  ^^ 

§  448.  Foreign  Corporations — Nature  of  Right  to 
Transact  Business — Ouster  of. 

Foreign  corporations  do  business  in  a  State  not  by 
right  but  by  comity  and  the  State  may  at  its  pleasure 
revoke  the  privilege  which  it  has  granted  to  such  cor- 
porations. And  it  is  decided  that  provisions  of  an  anti- 
trust act  for  ousting  corporations  by  civil  action  from 
the  exercise  of  powers  and  privileges  which  have  been 
abused  is  declaratory  of  the  common  law." 

The  privilege  granted  to  a  foreign  corporation  to  do 
business  within  a  State  may  be  revoked  at  pleasure. 
The  revocation  of  such  permission  is  not  the  infliction  of 
a  penalty  nor  the  deprivation  of  a  right.  The  privilege 
is  like  any  other  license  and  the  withdrawal  or  cancella- 
tion of  it  in  consequence  of  the  commission  of  a  crime 
is  not  punishment  in  a  legal  sense.    So  it  has  been  decided 

M  Per  Bunn,  J. 

«  State  V.  Standard  Oil  Co.,  61  Neb.  28,  84  N.  W.  413,  87  Am.  St.  Rep. 
449. 

492 


REMEDIES   AND    DEFENSES  §  448 

that  the  action  under  an  anti-trust  law  for  ousting  a 
foreign  corporation  from  the  exercise  of  powers  and  priv- 
ileges which  it  has  abused  is  no  more  criminal  than  is  an 
action  for  damages  resulting  from  the  commission  of  a 
crime,  but  is  a  civil  action  both  in  substance  and  form.^^ 

So  it  is  said  in  a  case  in  Missouri  that  a  plaintiff  can- 
not shut  off  an  investigation  of  its  corporate  organization 
and  purpose  upon  the  plea  of  comity  due  it  as  a  foreign 
corporation,  the  doctrine  upon  this  subject  being  clear 
that  no  rights  are  conceded  to  a  corporation  of  a  sister 
State  which  are  denied  by  law  to  a  domestic  corporation, 
or  which  are  contrary  to  the  laws  or  public  pohcy  of  the 
State  into  which  the  foreign  corporation  enters  for  busi- 
ness. ^^ 

But  where  a  corporation  is  legally  organized  and  is  doing 
business  in  a  State  other  than  that  of  its  incorporation, 
the  condemnation  of  an  anti-combination  or  anti-trust 
statute  does  not  apply  to  the  method  of  its  organization, 
but  denounces  and  prohibits  the  unlawful  acts  as  a  legal 
existing  corporation.  And  where  the  purchase  by  such 
foreign  corporation  of  the  plants  or  assets  of  another 
corporation  is  made  in  good  faith,  and  in  the  legitimate 
management  of  its  business  such  transaction  is  not  un- 
lawful.3o 

Where  the  complaint  in  an  action  against  a  foreign 
corporation  for  violation  of  the  State  statutes  against 
monopolies  in  restraint  of  trade  is  framed  upon  the  theory 
that  the  people  are  entitled  to  relief  both  by  way  of 
injunction  and  by  the  cancellation  of  the  license  to  do 
business  in  the  State  and  contains  appropriate  allegations 
bearing  upon  the  right  to  such  relief,  the  court,  on  a  mo- 
tion to  strike  out  allegations  of  the  complaint,  will  not 
determine  the  rehef  to  which  the  people  may  become 
entitled  on  proof  of  the  facts  stated,  when  the  question 

^  State  V.  Standard  Oil  Co.,  61  Neb.  28,  84  N.  W.  413,  87  Am.  St.  Rep. 
449,  construing  §  4  of  the  Neb.  Anti-Trust  Act  (Comp.  Stat.,  1899,  cnap. 
91a). 

»  National  Lead  Co.  v.  Grate  Paint  Store  Co.,  80  Mo.  App.  247. 

'"  State  (Crow,  Attorney  General)  v.  Continental  Tobacco  Co.,  177  Mo. 
1,  75  S.  W.  737,  Anti-Combination  Statute,  Laws  Mo.,  1897,  p.  208. 

493 


§§  449,  450   STATE  STATUTES — PROSECUTION — 

is  not  free  from  doubt,  but  that  question  will  be  left  to 
the  trial  court.  ^^ 

Where  a  statute  provides  that  a  foreign  corporation 
found  guilty  of  entering  into  a  combination  or  agreement 
in  restraint  of  trade  shall  be  prohibited  from  continuing 
its  business  in  the  State  ^^  a  judgment  rendered  in  pur- 
suance of  such  statute  will  not  operate  to  prevent  such 
a  corporation  from  doing  an  interstate  business  within 
the  borders  of  such  State.^^ 

§  449.  Foreign  Insurance  Company— Authority  of  In- 
surance Commissioner  to  Revoke  Certificate. 

The  authority  of  an  insurance  commissioner  to  revoke 
the  certificate  of  a  foreign  insurance  company  permitting 
it  to  transact  business  within  the  State  is  controlled  and 
limited  by  the  statutes  vesting  power  of  revocation  in 
him,  and  he  cannot  revoke  for  a  cause  other  than  that 
specified.  So  where  such  an  officer  was  authorized  to 
revoke  such  a  certificate  only  in  case  a  company  should 
transfer  an  action  to  the  Federal  court,  or  in  the  case 
of  the  insolvency  of  the  company  the  fact  that  a  com- 
pany was  a  member  of  an  illegal  combination  in  vio- 
lation of  the  statute  was  held  not  to  be  a  ground  upon 
which  the  certificate  could  be  revoked,  and  it  was  decided 
that  the  commissioner  could  be  enjoined  from  taking  such 
action.^* 

§  450.  Suit  for  Injunction  by  Person  Injured— De- 
fense. 

In  a  case  in  Missouri  the  doctrine  is  stated  that  when 
a  defendant  is  called  into  court  to  answer  the  consequence 
of  his  unlawful  conduct  as  in  case  of  violation  of  the  anti- 
trust laws  whereby  a  plaintiff  has  been  made  to  suffer, 
it  is  no  defense  for  him  to  say  that  he  was  constrained 

"  People  V.  American  Ice  Co.,  135  App.  Div.  (N.  Y.)  180,  120  N.  Y. 
Supp.  41. 

"  Minn.  R.  L.,  1905,  §§  5168,  5169. 

»=>  State  V.  Creamery  Package  Mfg.  Co.  (Minn.,  1911),  132  N.  W.  268. 

"  Liverpool  &  London  &  Globe  Ins.  Co.  v.  Clunie  (U.  S.  C.  C),  88  Fed. 
160. 

494 


REMEDIES   AND   DEFENSES  §  451 

to  do  the  unlawful  act  for  fear  of  losing  the  custom  of 
a  large  trade  or  group  of  traders,  but  when  he  is  called 
into  a  court  of  equity  to  show  cause  why  he  should  not 
be  enjoined  from  yielding  to  such  restraint,  and  it  appears 
that  the  influence  which  is  pressing  him  is  an  unlawful 
influence  and  it  is  within  the  power  of  the  court  to  pre- 
vent it,  equity  will  not  leave  him  under  the  unlawful 
constraint  and  at  the  same  time  enjoin  him  from  yielding 
to  it,  but  it  will  exert  its  power  to  remove  the  cause  and 
then  there  will  be  no  occasion  for  an  in j unction. ^^ 

§  451.  Violation  of  Law  as  Preventing  Relief  Against 
Ordinance— Ceasing  Violations. 

In  a  case  in  Illinois  an  action  was  brought  by  a  gas 
company  against  a  city  in  that  State  to  restrain  the  en- 
forcement of  an  ordinance  fixing  the  price  of  gas,  on  the 
ground  that  the  low  price  practically  amounted  to  taking 
of  property  without  compensation  and  that  the  ordinance 
impaired  contract  rights.  The  case  was  tried  on  these 
questions,  but  they  were  ignored  by  the  court,  which 
decided  adversely  to  the  company,  although  the  master 
had  reported  that  the  rates  were  confiscatory,  on  the 
single  ground  that  the  company  had  for  a  period  violated 
the  anti-trust  law  of  Illinois  and  thereby  was  not  entitled 
to  relief.  The  United  States  Supreme  Court  decided 
that  although  parties  making  an  agreement,  unlawful  by 
the  anti-trust  act  of  Illinois,  may  while  the  agreement 
is  in  force  be  subject  to  its  penalties,  yet  whenever  they 
cease  to  act  under  the  agreement  the  penalties  also  cease. 
And  it  was  held  that  as  the  case  had  been  tried  on  one 
theory  and  decided  on  another,  and  injustice  had  prob- 
ably resulted,  the  judgment  should  be  reversed  and  sent 
back  so  that  the  terms  and  duration  of  the  alleged  agree- 
ment might  be  ascertained  and  taken  into  consideration 
in  determining  the  case.^^ 

*' State  ex  rel.  Hadley  v.  Kansas  City  Live  Stock  Exchange,  211  Mo. 
181,  109  S.  W.  675. 

»•  Peoria  Gas  &  Electric  Co.  v.  Peoria,  200  U.  S.  48,  50  L.  ed.  79,  25  Sup. 
Ct.  713. 

495 


§§  452,  453   STATE  STATUTES — PROSECUTION — 

§  452.  Action  for  Damages — Person  Injured  by  Con- 
spiracy. 

In  New  York  it  is  a  misdemeanor  under  the  law  for 
two  or  more  persons  to  conspire  to  commit  an  act  in- 
jurious to  trade  or  commerce,  ^'^  and  a  civil  action  is  main- 
tainable by  one  who  suffers  injury  as  the  result  of  a 
conspiracy  forbidden  by  the  criminal  law,  to  recover  the 
damages  which  he  has  sustained  at  the  hands  of  the  parties 
to  the  combination.^^ 

Where  a  combination  is  prohibited  and  made  criminal 
by  statute,  each  act  in  furtherance  of  the  object  of  the 
combination  is  unlawful,  and  any  person  suffering  special 
injury  on  account  of  any  of  such  acts  has  a  right  of  action 
to  recover  the  damages  sustained  by  him.  And  it  is  said 
that  it  makes  no  difference  whether  such  acts  if  done  by 
an  individual  not  in  the  combination  might  have  been 
lawful  and  a  person  suffering  therefrom  would  be  with- 
out remedy.  The  statute  makes  such  acts  when  done  by 
agreement  or  combination  of  several  unlawful  and  for 
that  reason  a  right  of  action  follows. ^^ 

A  conspiracy  cannot  be  made  the  subject  of  a  civil 
action  unless  something  is  done  which  without  the  con- 
spiracy would  give  a  right  of  action.  ^° 

§  453.  Action  by  Party  to  Illegal  Contract  or  Combina- 
tion. 

Where  an  anti-trust  statute  is  violated  by  an  organiza- 
tion, the  constitution  and  by-laws  of  which  regulate  the 
credit  to  be  allowed  its  members,  discriminate  in  the 
price  to  be  paid  against  persons  not  members,  control 
the  delivery  of  goods  and  provide  a  penalty  by  fine 
and  suspension  for  offending  and  defaulting  members, 
the  fact  that  a  dealer  was  a  member  of  such  organization 

"  Penal  Code,  §  168,  subd.  6. 

28  Kellogg  V.  Sowerby,  190  N.  Y.  370,  83  N.  E.  47,  rev'g  114  App.  Div. 
916,  100  N.  Y.  Supp.  1123. 

'9  Rourke  v.  Elk  Drug  Co.,  75  App.  Div.  (N.  Y.)  145,  77  S.  W.  373,  per 
Kellogg,  J. 

«  Beechley  v.  Mulville,  102  Iowa,  602,  70  N.  W.  107,  71  N.  W.  428,  63 
Am.  St.  Rep.  479. 

496 


REMEDIES  AND   DEFENSES  §  453 

and  participated  in  the  adoption  of  its  constitution  and 
by-laws  is  held  not  to  prevent  him  from  maintaining 
an  action  against  such  association  and  its  members  for 
damages  caused  by  the  boycotting  by  them  of  his  busi- 
ness after  he  was  suspended  for  violation  of  such  by-laws. 
The  acts  complained  of  having  been  performed  after  he 
ceased  to  be  a  member  and  without  his  consent,  he  is 
not  in  pari  delicto.''^  The  court  said:  "It  does  not  follow 
that,  because  plaintiff  was  at  one  time  a  member  of  the 
illegal  combination  with  intent  to  injure  in  this  manner 
defaulting  members,  after  ceasing  to  be  a  member  he  must 
suffer  without  redress  at  the  hands  of  his  former  co- 
conspirators. It  is  immaterial  whether  the  plaintiff  vol- 
untarily set  in  motion  the  proceedings  which  caused 
his  suspension  desiring  in  good  faith  to  withdraw  from 
the  association,  or  whether  he  was  expelled  for  reasons 
beyond  his  control;  the  result  is  the  same.  There  is 
nothing  in  the  record  to  charge  the  plaintiff  with  acting 
in  bad  faith, — that  he  induced  the  boycott  upon  his 
business,  thus  laying  the  foundation  for  an  action  in 
damages.  Under  the  conditions  disclosed  the  law  pre- 
sumes good  faith  on  his  part,  and  will  treat  him  as  a  re- 
former, and  entitled  to  all  the  benefits  of  the  reformation. 
The  application  of  the  principle  invoked  by  respondent 
would  place  a  burden  upon  reformation  and  a  premium 
upon  wrongdoing."  ^^ 

But  in  INIichigan  it  has  been  decided  that  a  local  in- 
surance agent  who  was  a  party  to  a  compact  within  the 
provision  of  the  Code  against  the  formation  of  com- 
binations to  regulate  the  price  of  commodities  ^^  cannot 
recover  damages  from  the  other  members  of  the  com- 
pact, and  the  insurance  company,  for  the  withdrawal  of 
the  agency  from  him  because  of  his  violation  of  the 
compact  agreement,  where  the  withdrawal  is  in  pursuance 
of  a  provision  of  the  compact  imposing  such  penalty 

"  Ertz  V.  Produce  Exchange  Co.,  82  Minn.  173,  84  N.  W.  743,  51  L.  R. 
A.  825,  83  Am.  St.  Rep.  419. 
"  Per  Lewis,  J. 
"McClain's  Code,  §5454. 

32  497 


§§  454,  455   STATE  STATUTES — PROSECUTION — 

for  a  violation  of  its  provisions,  and  the  company  has 
the  right  to  withdraw  its  agency  at  pleasure.  The  court 
declared  that  he  lost  nothing  but  agencies  which  the 
compact  gave  him  and  as  the  compact  was  illegal,  he 
lost  nothing  but  an  illegal  business,  made  so  by  a  con- 
spiracy to  which  he  was  a  party.''* 

§  454.  Enjoining  Acts  Done  After  Combination  De- 
clared Illegal. 

Members  of  a  combination,  who  after  such  combination 
has  been  declared  unlawful  by  the  highest  court  in  the 
State  for  the  purpose  of  carrying  out  the  objects  of  such 
illegal  combination,  spy  upon  another  person's  business, 
thereby  seriously  injuring  it,  will  be  enjoined  from  per- 
sisting in  such  espionage.  Thus  it  was  so  held  in  the  case 
of  a  combination  which  had  been  entered  into  to  prevent 
the  plaintiffs  from  purchasing  books  with  which  they 
could  carry  on  their  business  except  upon  such  terms  as 
were  imposed  by  the  corporation  which  constituted  the 
combination.*^ 

§  455.  That  Corporation  a  Foreign  One  Is  no  defense. 

The  fact  that  an  unlawful  pool,  trust  or  conspiracy 
in  restraint  of  trade  is  not  formed  in  the  State  in  which 
it  is  attempted  to  do  business  in  pursuance  thereof  does 
not  relieve  the  parties  thereto  from  the  operation  of  the 
laws  of  the  latter  State.  So  it  is  said  in  a  case  in  Mis- 
souri that  all  business  conducted  in  pursuance  of  such 
an  agreement  draws  to  it  those  illegal  elements  wherever 
transacted  and  that  it  is  wholly  immaterial  where  the 
unlawful  conspiracy  was  entered  into,  or  the  means  by 
which  it  was  formed,  if  as  a  matter  of  fact  the  commodities 
affected  by  such  agreement  are  sold  in  pursuance  thereof 
in  a  State  where  such  contracts  are  prohibited.*® 

"  Beechley  v.  Mulville,  102  Iowa,  602,  70  N.  W.  107,  71  N.  W.  428,  63 
Am.  St.  Rep.  479. 

«  Straus  V.  American  Publishers'  Assn.,  92  App.  Div.  (N.  Y.)  350,  86 
N.  Y.  Supp.  1091. 

«  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

498 


REMEDIES   AND   DEFENSES  §  455 

The  object  of  a  statute  being  to  prevent  the  formation 
of  combinations  to  regulate  and  fix  prices  or  to  limit  the 
amount  of  production  within  the  State  by  corporations 
or  by  individuals  or  by  individuals  doing  business  in  the 
State,  it  is  held  to  be  a  matter  of  indifference  whether 
such  corporations  are  organized  for  transacting  or  con- 
ducting business  within  such  State  or  not.  If  a  corpora- 
tion doing  business  in  the  State  violates  the  provisions  of 
the  statute  it  is  amenable  to  the  terms  thereof  whether 
or  not  it  was  organized  to  transact  or  conduct  business  in 
the  State.  So  an  indictment  has  been  held  sufficient 
though  it  failed  to  allege  that  the  defendants  were  incor- 
porated under  the  laws  of  the  State  in  which  the  prosecu- 
tion is  conducted  or  under  the  laws  of  some  other  State 
or  county,  an  allegation  that  they  were  incorporated 
being  sufficient.''^ 

A  foreign  corporation  which  enters  into  a  combination 
within  a  State  which  is  forbidden  by  the  laws  of  that 
State  must  stand  upon  the  same  footing  as  a  domestic 
corporation.  It  is  subject  to  all  the  penalties  provided 
by  the  laws  of  such  State  without  regard  to  the  place  of 
its  origin. ^^ 

While  the  legislature  of  a  State  has  no  extraterritorial 
power  to  punish  crime,  yet  if  a  foreign  corporation  doing 
business  within  a  State,  enters  into  or  becomes  a  mem- 
ber of  a  pool  or  trust,  beyond  the  limits  of  such  State, 
to  fix  the  price  of  property  therein,  then  the  crime  put 
in  motion  in  the  foreign  State  becomes  complete  when 
committed  within  the  State  in  pursuance  of  the  conspir- 
acy formed  in  the  foreign  State.  And  this  rule  applies 
to  corporations.^^ 

♦^Chicago,  Wilmington  &  Vermillion  Coal  Co.  v.  People,  214  111.  421, 
73  N.  E.  770,  aff'g  114  111.  App.  75. 

« Chicago  Wall  Paper  Mills  v.  General  Paper  Co.,  147  Fed.  491,  78 
C.  C.  A.  607. 

"  International  Harvester  Co.  v.  Commonwealth,  30  Ky.  Law  Rep.  716, 
99  S.  W.  637.  The  court  said  in  this  case:  "If  a  foreign  corporation  doing 
business  in  this  State  enters  into  or  becomes  a  member  of  a  pool  or  trust 
beyond  the  limits  of  this  State,  then  the  crime  is  clearly  committed  be- 
yond the  limits  of  this  State,  unless  the  pool  or  trust  is  to  fix  the  prices  of 

499 


§455  STATE   STATUTES — PROSECUTION — 

Where  a  pooling  conspiracy  to  raise  prices  is  entered 
into  beyond  the  jurisdiction  of  the  State  in  which  the 
statute  is  in  force,  the  fact  alone  of  such  conspiracy  is 
held  not  to  be  punishable  in  that  State,  whatever  its 
purpose  may  be.  If,  however,  the  conspirators,  in  further- 
ance of  their  scheme,  carry  it  into  effect  in  such  State 
then  the  offense  has  been  committed  there.  The  con- 
spiracy without  regard  to  the  time  when  and  place  where 
it  was  entered  into  becomes  the  efficient  cause  of  a  result 
in  that  State,  the  culmination  of  which  rounds  out  a  com- 
pleted act  beginning  with  such  conspiracy  and  ending 
with  its  accomphshment.^" 

But  in  construing  an  Illinois  statute  prohibiting  the 
formation  of  any  pool,  trust  or  combination  to  regulate 
or  fix  the  price,  or  to  fix  or  limit  the  amount  or  quantity, 
of  any  article  or  commodity,"  and  which  further  pro- 
vided that  ''any  purchase  of  any  article  or  commodity 
from  any  individual,  company  or  corporation  transacting 
business  contrary  to  any  provision  of  the  preceding  sec- 
tions of  this  act  shall  not  be  liable  for  the  price  or  pay- 
ment of  such  article  or  commodity,  and  may  plead  this 
act  as  a  defense  to  any  suit  for  such  price  or  payment, "  it 
was  decided  that  the  fact  that  a  corporation  selling  mer- 
chandise in  Illinois  had  been  formed  for  purposes  which 
were  prohibited  by  such  act  was  no  defense  to  a  suit  for 

property  in  this  State,  in  which  event  the  crime  put  in  motion  in  the  foreign 
State  took  effect  and  became  complete  in  Kentucky.  If  the  conspiracy  is 
formed  in  another  State  to  harm  or  destroy  property  in  this  State,  the 
crime  becomes  complete  when  the  property  is  destroyed,  and  the  courts 
of  this  State  would  have  the  right  to  punish  all  of  the  conspirators,  even 
though  but  one  of  them  crossed  the  line  and  destroyed  the  property,  pro- 
vided he  was  acting  in  pursuance  of  the  conspiracy."    Per  Nunn,  J. 

^  International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  352.  The  court  said:  "It  is  the  one  continuous  act.  It  is  like  the  case 
where  the  shot  being  fired  without  the  State  takes  effect  in  the  State,  result- 
ing in  homicide.  The  actor  may  be  without  the  jurisdiction  of  the  courts 
of  this  State,  and  so  was  his  act  alone  in  discharging  his  gun,  but  when  the 
result  in  this  State  constitutes  an  offense  here,  the  whole  transaction  being 
necessarily  one  act,  is  cognizable  by  the  courts  of  this  State  as  if  every  part 
of  the  act  transpired  here.  So  it  is  not  material  where  the  conspiracy  was 
entered  into  if  the  fact  to  be  investigated  is  the  result."    Per  O'Rear,  J. 

"  111.  Anti-Trust  Act  of  June  11,  1891  (Laws,  1891,  pp.  206,  207). 

500 


REMEDIES  AND  DEFENSES  §§  456,  457 

the  price  of  such  merchandise  unless  it  appeared  that 
such  corporation  was  formed  within  that  State.^^ 

§  456.  That  Prices  Not  Raised  Is  no  Defense. 

Upon  the  question  of  whether  a  combination  exists 
in  violation  of  a  statute  it  is  not  material  that  prices 
of  the  article  or  articles  manufactured  or  handled  have 
not  been  increased,  and  the  fact  that  such  is  the  case 
is  no  defense.  The  question  is  not  have  prices  been  in- 
creased but  is  it  within  the  power  of  the  alleged  combina- 
tion to  raise  them.  Evidence  that  they  have  not  been 
raised  would  in  no  way  tend  to  disprove  the  fact  that  a 
combination  has  been  formed  to  control  or  regulate 
prices  or  prevent  competition.  The  combination  instead 
of  raising  prices  might  lower  them  and  thus  by  the  latter 
method  more  effectively  than  by  the  former  prevent  or 
stifle  competition.  And  having  it  in  its  power  to  lower 
them  it  might  when  competition  had  been  overcome  and 
competitors  driven  out  of  business,  then  increase  them 
after  having  accomplished  the  result  which  the  statute 
was  intended  to  avert. 

So  it  is  said:  "The  material  consideration  in  the  case 
of  such  combinations  is  as  a  general  thing,  not  that  prices 
are  raised,  but  that  it  rests  in  the  power  or  discretion  of 
the  trust  or  corporation,  taking  all  the  plants  of  the 
several  corporations,  to  raise  prices  at  any  time,  if  it  sees 
fit  to  do  so.  It  does  not  relieve  the  trust  of  its  objection- 
able features,  that  it  may  reduce  the  price  of  the  articles 
which  it  manufactures,  because  such  reduction  may  be 
brought  about  for  the  express  purpose  of  crushing  out 
some  competitor  or  competitors."  ^^ 

§  457.  No  Defense  That  Complete  Monopoly  Not  Ob- 
tained. 

The  members  of  a  conspiracy  are  not  relieved  from 

"  Chicago  Wall  Paper  Mills  v.  General  Paper  Co.,  147  Fed.  491,  78 
C.  C.  A.  607,  citing  People  v.  Butler  Street  Foundry  Co.,  201  111.  236,  66 
N.  E.  349. 

'^  Harding  v.  American  Glucose  Co.,  182  111.  55\,  .").")  X.  E.  .'577,  74  Am, 
St.  Rep.  189,  64  L.  R.  A.  738,  per  Mr.  Justice  Magnul.r. 

501 


§§  458,  459   STATE  STATUTES — PROSECUTION — 

criminal  liability  therefor  by  the  fact  that  the  effect 
of  the  combination  was  not  to  give  the  members  of  the 
combination  a  complete  monopoly  of  the  trade  in  the 
commodity  affected  in  the  territory  in  which  such  com- 
modity was  sold.^^ 

§  458.  Motives  of  Those  Instigating  Suit  Are  Imma- 
terial. 

When  an  action  is  brought  in  the  name  of  the  State 
for  the  purpose  of  preventing  a  violation  of  such  a  statute 
the  questions  whether  such  action  was  well  brought  and 
is  maintainable  depend  upon  the  pleadings  and  the  evi- 
dence introduced  in  support  thereof  and  not  upon  the 
motives  inspiring  those  at  whose  instance  the  governor 
was  induced  to  order  the  suit  to  be  filed,  or  the  argu- 
ments presented  to  him  to  that  end." 

§  459.  Good  Motives  or  Intent  no  Defense  Where 
Statute  Violated. 

Good  motives  on  the  part  of  those  who  enter  into  a 
combination  in  restraint  of  trade  do  not  save  it  from  the 
condemnation  of  the  law.  The  fact  that  the  parties  to 
an  agreement  of  such  a  character  may  have  honestly 
believed  that  it  would  be  beneficial  instead  of  injurious 
to  commerce  does  not  render  it  legal.  The  law  denounces 
it  if  it  is  designed  to  prevent  competition  and  will  have 
that  effect  whatever  the  intent  of  the  parties. ^^ 

So  it  has  been  held  proper  to  instruct  the  jury  in  a 
prosecution  for  conspiracy  to  the  effect  that  it  is  im- 
material how  or  in  what  manner  a  conspiracy  may  be 
formed  so  long  as  it  sufficiently  appears  from  the  evidence 
that  it  was  formed  for  an  unlawful  purpose." 

So  in  the  case  of  an  agreement  between  brewers  that 

"  Chicago,  Wilmington  &  Vermillion  Coal  Co.  v.  People,  214  111.  421, 
73  X.  E.  770,  aff'g  114  111.  App.  75. 

"  Trust  Company  of  Georgia  v.  State,  109  Ga.  736,  35  S.  E.  323,  48  L. 
R.  A.  520. 

5"  Kellogg  V.  Sowerby,  190  N.  Y.  370,  83  N.  E.  47,  rev'g  114  App.  Div. 
916,  100  N.  Y.  Supp.  1123. 

"  People  V.  Sacramento  Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac.  712. 

502 


REMEDIES  AND   DEFENSES  §  460 

they  would  not  sell  to  any  person  who  waw  in  debt  to 
any  one  of  them  the  court  said  that  it  did  not  affect  the 
character  of  the  agreement  proven  that  the  brewers 
only  intended  a  worthy  purpose  since  intention  does  not 
avail  when  the  effect  is  within  the  statute.  ^^ 

§  460.  Illegality  of  Combination  or  Contract  as  De- 
fense— Independent  of  Statute — Collateral  Contract. 

Independent  of  any  statute  upon  the  subject  where  a 
claim  is  not  dependent  upon  an  illegal  or  unlawful  trans- 
action it  will  not  be  defeated  merely  because  in  the 
course  of  business  illegal  acts  were  conamitted  as  in  such 
a  case  the  claim  does  not  originate  nor  is  it  dependent 
upon  the  unlawful  acts.  If,  however,  a  claim  arises  from 
and  is  a  share  of  the  profits  resulting  from  such  a  trans- 
action to  which  the  claimant  was  a  party,  it  will  not  be 
enforced.  ^^ 

As  bearing  upon  the  latter  proposition  it  was  held  in 
a  case  in  Texas  that  a  contract  being  void  as  in  violation 
of  an  anti-trust  act  neither  of  the  parties  could  base  a 
cause  of  action  or  counterclaim  thereon  and  that  there- 
fore it  was  error  for  the  trial  court  to  allow,  over  plain- 
tiff's objection,  the  pleading  or  proof  of  any  fact  or  facts 
tending  to  support  a  defendant's  counterclaim  based 
thereon.^"^ 

At  common  law  it  is  no  defense  to  an  action  upon  a 
contract  which  is  in  itself  legal  and  valid  that  the  plain- 
tiff is  a  trust,  combination  or  monopoly  in  restraint  of 
trade.  So  though  a  corporation  is  a  trust  or  monopoly 
as  defined  by  the  laws  of  a  State,  its  independent  or 
collateral  contracts  are  held  to  be  just  as  valid  and 
enforceable  as  are  the  contracts  of  any  other  person  or 

"8  Heim  Brewing  Co.  v.  Belinder,  97  Mo.  App.  G4,  71  S.  W.  691. 

"Disbrow  v.  Creamery  Package  Mfg.  Co.,  110  Minn.  237,  125  N.  W. 
115. 

As  to  violation  of  Sherman  Anti-Trust  Act  (Act  of  July  2,  1890)  as  de- 
fense to  actions  on  contracts  and  for  infringement  of  patents,  trade-marka 
and  copyrights,  see  §§  155-159,  herein. 

•»  Texas  &  Pacific  Coal  Co.  v.  Lawson,  89  Tex.  394,  32  S.  W.  871,  34  S. 
W.  919. 

503 


§  460       STATE  STATUTES — PROSECUTION — 

corporation  unless  the  common-law  rule  has  been  changed 
by  statute.  So  in  a  case  in  Michigan  it  was  decided  that 
the  defense  that  a  foreign  corporation  is  an  illegal  com- 
bination or  trust  within  the  meaning  of  the  law  of  that 
State  ^^  is  not  available  in  an  action  of  assumpsit  for 
money  had  and  received  for  the  benefit  of  the  plaintiff, 
in  a  transaction  untainted  by  illegality. ^- 

So  in  a  late  case  in  Indiana  in  which  this  question 
arose  the  court  said:  "It  follows  that  where  the  sale  is  in 
no  way  connected  with  the  illegal  character  of  the  selling 
corporation,  but  one  made  in  the  regular  course  of  busi- 
ness, resting  upon  a  valid  and  independent  consideration, 
it  is  no  defense  to  an  action  for  the  goods  sold  that  the 
plaintiff  is  an  unlawful  combination,  since  the  sale  is 
collateral  to  the  illegality  of  the  combination."  ^^ 

With  respect  to  a  contract  which  is  independent  of 
an  illegal  combination,  and  is  merely  incident  to  other 

"  Act  No.  255;  Pub.  Acts,  1899;  Act  No.  329,  Pub.  Acts,  1905. 

"  International  Harvester  Co.  v.  Circuit  Judge,  163  Mich.  55,  127  N. 
W.  695.  The  court  said:  "We  are  here  dealing  with  a  corporation  that  is 
alleged  to  be  a  'trust'  or  monopoly;  one,  however,  which  as  it  appears  by 
its  articles  of  incorporation  was  lawfully  organized  for  a  legitimate  purpose 
and  business,  under  the  laws  of  Wisconsin.  It  has  comphed  with  the  laws 
of  this  State  regulating  foreign  corporations.  It  comes  into  a  court  of  this 
State,  and  sues  upon  an  independent  collateral  contract,  made  with  de- 
fendant, an  agent,  in  this  State — a  contract  in  no  way  tainted  with  the 
illegality  of  the  alleged  trust  or  combination,  and  one  not  prohibited  by 
our  statute.  Can  the  defense  here  sought  to  be  imposed  be  maintained? 
Assuming,  as  contended,  that  the  alleged  combination  was  illegal  if  tested 
by  the  principles  of  the  common  law,  still  it  would  not  follow  that  the  de- 
fendant could  refuse  to  pay  for  goods  bought  by  him  under  special  con- 
tract with  plaintiff.  The  illegality  of  such  combination  and  'trust'  would 
not  prevent  the  plaintiff  corporation  from  selling  goods  that  it  obtained 
from  its  constituent  companies  or  either  of  them.  It  could  pass  title  by 
sale  to  anyone  desiring  to  buy,  and  the  buyer  could  not  justify  a  refusal 
to  pay  for  what  he  bought  and  received  by  proving  that  the  seller  had 
previously,  in  the  prosecution  of  its  business,  entered  into  an  illegal  com- 
bination with  others  in  reference  generally  to  the  sale  of  articles  or  prod- 
ucts." The  court  referred  to  the  statutes  of  the  State  and  said  there  was 
not  a  word  in  them  which  gave  a  purchaser  of  goods  the  right  to  plead 
them  as  a  defense. 

See  also  Chicago  Wall  Paper  Mills  v.  General  Paper  Co.,  147  Fed.  491, 
494,  78  C.  C.  A.  607. 

"  Bessire  &  Co.  v.  Com  Products  Mfg.  Co.  (Ind.  App.,  1911),  94  N.  E. 
353,  per  Adams,  J. 

504 


REMEDIES   AND   DEFENSES  §  461 

and  innocent  purposes,  one  who  voluntarily  and  knowingly 
deals  with  parties  so  combined,  cannot  on  the  one  hand 
take  the  benefit  of  his  bargain  and  on  the  other  defend 
against  the  contract  on  the  ground  of  the  illegality  of 
the  combination.^^ 

§  461.  Illegality  of  Combination  or  Contract  as  De- 
fense— Where  Permitted  by  Statute. 

In  Kansas  it  has  been  decided  the  provision  of  a  statute 
that  when  actions  are  begun  in  that  State  it  shall  be  law- 
ful in  defense  thereto  to  plead  in  bar  or  in  abatement  that 
the  plaintiff,  or  any  other  person  interested  in  the  prosecu- 
tion of  the  case,  is  a  member  or  agent  of  an  unlawful 
combination  or  trust,  applies  to  actions  which  will  pro- 
mote the  purposes  of  the  unlawful  combination  or  trust, 
or  which  grow  out  of  the  same,  or  some  contract  or  busi- 
ness transaction  thereof  but  was  not  intended  to  deprive 
the  plaintiff  of  the  right  to  resort  to  the  courts  for  the 
protection  of  property,  rights  and  interests  in  no  way 
connected  with  such  combination  or  trust.^^ 

This  doctrine  is  well  stated  in  a  case  in  the  United 
States  Circuit  Court  where  in  an  action  upon  a  note 
given  to  a  corporation  it  was  set  up  in  defense  that  the 
corporation  was  a  member  of  a  combination  which  vio- 
lated the  laws  of  Kansas  forbidding  certain  combinations 
and  providing  that  any  contract  or  agreement  in  viola- 
tion of  such  laws  should  be  void  and  unenforceable  and 
that  when  any  civil  action  should  be  commenced  it  should 
be  lawful  to  plead  in  defense  thereof  a  violation  of  the 
provisions  of  the  act  or  that  the  cause  of  action  grew 
out  of  any  business  transaction  in  violation  of  the  act."^ 
The  court  decided  that  as  the  transaction  out  of  which 
the  contracts  grew  was  entirely  innocent  and  lawful  at 
conamon  law  it  was  no   defense  to  allege  that  the  de- 

"  Harrison  v.  Glucose  Sugar  Refining  Co.,  116  Fed.  304,  53  C.  C.  A.  484, 
58  L.  R.  A.  915,  citing  Dcnnehy  v.  McNulta,  86  Fed.  825,  30  C.  C.  A.  422, 
41  L.  R.  A.  609. 

«  Barton  v.  Mulvano,  .59  Kan.  313,  52  Pac.  883. 

M  Kan.  Laws,  1897,  chap.  265,  p.  481. 

505 


§  461       STATE  STATUTES — PROSECUTION — 

fendant  was  a  member  of  an  illegal  combination  unless 
it  might  be  sufficient  by  virtue  of  the  provisions  of  the 
act  and  that  such  provisions  were  not  intended  to  refer 
to  the  case  of  a  contract  with  a  member  of  a  combination 
when  such  contract  was  entirely  disassociated  from  the 
relation  of  a  member  of  an  unlawful  combination  to  such 
combination.^" 

Under  an  anti-trust  act  prohibiting  trusts  for  the  pur- 
pose of  carrying  out  restrictions  in  the  full  and  free  pur- 
suit of  a  lawful  business  and  permitting  in  a  civil  suit  a 
defense  of  a  violation  by  the  plaintiff  of  the  act,  an  asso- 
ciation of  live  stock  dealers  which  had  a  by-law  forbid- 
ding its  members  to  buy  or  sell  live  stock  for  others  for 

67  Boatmen's  Bank  v.  Fritzlein  (U.  S.  C.  C),  175  Fed.  183.  The  court 
said:  "If  the  contracts  were  made  in  furtherance  of  the  object  or  purpose 
of  the  unlawful  combmation,  then  it  is  clear  they  may  not  be  enforced, 
for,  in  such  case,  the  prohibition  of  the  law  attaches  to  them  and  makes 
them  unlawful.  While  to  all  contracts  made  with  the  express  intent  of 
furthering  the  object  and  purpose  of  that  by  law  prohibited,  and  while  to 
all  contracts  which  from  their  very  nature  will  be  presumed  to  have  been 
made  with  such  intent,  the  direct  or  necessary  effect  of  which  is  to  fiuther 
the  purpose  of  that  which  is  in  violation  of  law,  the  prohibition  of  the  law 
attaches  and  renders  nonenforceable,  yet  the  prohibition  of  the  law  does 
not  extend  and  attach  to  all  contracts  the  enforcement  of  which  may  in- 
directly or  incidentally  further  the  object  and  purpose  of  that  which  is  by 
law  prohibited.  And  the  reason  for  the  rule  is  plain  and  easy  of  compre- 
hension. For  example,  I  may  not  either  directly  or  indirectly  employ 
another  to  commit  a  crime  or  violate  the  law,  for  to  do  so  encourages  the 
commission  of  crime  and  law  breaking,  and,  if  I  do  so,  the  person  employed 
by  me  may  not  enforce  his  contract  for  compensation  against  me.  But, 
if  I  borrow  money  from  another,  or  employ  him  to  perform  for  me  a  special 
service,  I  may  not  defend  against  the  enforcement  of  my  contract  against 
me,  by  alleging  and  offering  to  prove  the  person  I  contracted  with  to  be  a 
member  of  a  band  of  counterfeiters  and  made  his  money  in  such  unlawful 
business,  or  that  he  obtained  the  special  knowledge  necessary  to  perform 
the  service  which  I  employed  him  to  perform  for  me  in  the  pursuit  of  an 
unlawful  or  criminal  occupation.  It  is  sufficient  that  my  contract  with 
him  be  legal,  although  the  borrowed  money  I  am  compelled  to  repay,  or 
the  sum  I  may  be  required  to  pay  him  for  his  service,  may  benefit  him  and 
may  be  by  him  employed  in  furtherance  of  his  unlawful  occupation  and 
thus  indirectly  and  incidentally  further  such  unlawful  pursuit  by  him. 
And  this  for  the  reason  that  courts  of  justice  will  not  inquire  into  the 
character,  reputation  or  business  of  parties  litigant  before  them  except  in 
so  far  as  the  nature  of  the  controversy  presented  involves  such  inquiry." 
Per  Pollock,  J. 
506 


REMEDIES   AND   DEFENSES  §  461 

less  than  a  certain  commission  was  held  to  be  in  violation 
of  the  act  and  it  was  decided  that  a  person  who  had 
entered  into  a  contract  with  a  member  of  the  association 
to  pay  a  commission  so  exacted  could  set  up  in  defense 
to  a  suit  on  the  contract,  the  fact  that  it  was  void,  as 
being  within  the  terms  of  the  act.  And  a  note  and  mort- 
gage, a  part  of  the  consideration  of  which  was  based  upon 
such  transaction,  were  likewise  held  to  be  void.^^ 

In  Oklahoma  it  is  provided  by  the  anti-trust  act  as 
follows:  ''Any  person  purchasing  provisions,  feed,  ma- 
terial, articles  of  merchandise,  or  any  commodity  from 
any  individual,  firm,  partnership  or  corporation,  trans- 
acting business  in  violation  of  the  provisions  of  this  act, 
such  person  so  purchasing  shall  not  be  liable  for  the  price 
or  payment  of  any  such  article  or  commodity  and  may 
plead  this  act  as  a  defense  in  any  suit  for  price  or  pay- 
ment." ^^  In  an  action  by  a  corporation  in  which  this 
statute  was  relied  upon  as  a  defense  and  the  plaintiff 
denied  that  the  contract  for  the  goods  or  merchandise 
was  made  in  Oklahoma  the  court  decided  that  there  being 
a  similar  statute  in  Missouri  which  was  also  pleaded  in 
defense '"'  under  the  laws  of  comity  between  different 
States,  the  provisions  of  the  Missouri  statute  not  being 
contrary  to  the  public  policy  of  Oklahoma  such  defense 
might  be  pleaded  as  a  bar  to  recovery  there  to  the  same 
effect  as  in  the  State  of  Missouri.  In  this  case  the  ques- 
tion also  arose  whether  the  contract  might  not  be  a 
Minnesota  one  as  to  which  the  court  said  that  as  the  laws  of 
that  State  had  neither  been  pleaded  nor  proved  they  were 
presumed  to  be  the  same  as  were  in  force  in  Oklahoma."^ 

In  order  to  fix  the  statutory  penalty  of  disability  to 
collect  a  debt  a  defendant  cannot  stop  merely  by  sho^\^ng 
the  combination  to  be  unlawful  at  common  law  but  he 
must  show  that  it  is  unlawful  under  the  statute.'^ 


«  State  V.  Wilson,  73  Kan.  343,  84  Pac.  737. 

«  See  chap.  83,  §  6739-6743,  Wilson's  Rev.  &  Ann.  St.  Okla.  1903. 
70  Section  8970,  Rev.  Stat.,  Mo.,  1899;  Am.  St.,  1906,  p.  4153. 
"  Wagner  v.  Minnie  Harvester  Co.,  25  Okla.  55S,  106  Pac.  969. 
"Heim  Brewing  Co.  v.  Belindcr,  97  Mo.  App.  64,  71  S.  W.  691. 

507 


§  462       STATE  STATUTES — PROSECUTION — 

§  462.  Illegality  of  Combination  or  Contract  as  De- 
fense Continued — Instances. 

Where  notes  are  executed  for  articles  purchased  under 
and  in  pursuance  of  the  terms  of  a  contract  which  is  a 
violation  of  a  State  anti-trust  act  prohibiting  contracts 
in  restraint  of  trade,  then  the  provisions  in  restraint  of 
trade  contained  in  such  contract  become  part  of  the 
consideration,  tainting  the  transaction  and  rendering  the 
notes  void."^ 

And  where  an  action  upon  a  contract  is  brought  for 
the  price  of  goods  sold  and  such  contract  is  void  under 
an  anti-trust  statute  such  contract  will  not  support  a 
defense  claimed  for  damages  for  a  breach  thereof.^* 

And  where  a  contract  is  in  violation  of  the  laws  of  a 
State  prohibiting  the  formation  of  trusts  and  monopolies 
and  a  plaintiff's  cause  of  action  as  stated  shows  that  he 
is  undertaking  to  recover  upon  such  contract  or  dam- 
ages for  its  breach  the  objection  on  this  ground  is  one 
which  may  be  availed  of  at  any  stage  of  the  proceedings 
as  it  goes  to  the  substance  of  the  petition. '^^ 

But  in  an  action  against  an  ice  company  for  damages 
for  breach  of  a  contract  to  deliver  ice  at  a  stipulated 
price  during  the  season  it  has  been  decided  that  attorney's 
fees  cannot  be  recovered  under  an  anti-trust  law,  which 
permits  of  such  a  recovery  in  cases  of  a  violation  of  the 
act,  by  showing  that  the  reason  the  company  violated 
its  contract  was  that  it  had  entered  into  an  unlawful 
combination  with  another  ice  company  and  contracted 
to  deliver  its  entire  output  to  the  latter.  Wlien  such 
failure  occurred  the  breach  was  complete  and  the  cause 
of  action  arose.  The  formation  of  the  trust  or  combi- 
nation in  such  a  case  is  collateral  to  the  contract  and  the 
acts  of  the  company  in  violating  it.  The  cause  or  motive 
of  the  breach  is  not  the  foundation  of  the  right  of  action 
and  such  cause  cannot  be  inquired  into.'^^ 

"  Columbia  Carriage  Co.  v.  Hatch,  19  Tex.  Civ.  App.  120,  47  S.  W.  288. 
^*  Pasteur  Vaccine  Co.  v.  Burkey,  22  Tex.  Civ.  App.  232,  5  S.  W.  804. 
"  Redland  Fruit  Co.  v.  Sargent,  51  Tex.  Civ.  App.  619,  113  S.  W.  330. 
""  Crystal  Ice  Co.  v.  Wylie,  65  Kan.  104,  68  Pac.  1086. 

508 


REMEDIES  AND   DEFENSES  §  462 

So  in  a  recent  case  in  Colorado  it  is  decided  that  one 
who  has  tortiously  assumed  possession  of  the  properties 
of  a  corporation,  cannot  defend  his  possession  by  the 
plea  that  the  corporation  was  organized  in  pursuance  of 
an  unlawful  combination  to  restrain  competition  nor 
upon  the  ground  that  the  corporation  has  purchased 
stock  in  other  corporations  in  violation  of  the  statute."^ 

And  where  the  existence  of  a  trust  or  combination  in 
violation  of  law  is  set  up  as  a  defense  to  a  claim  it  is 
proper  to  refuse  to  submit  such  defense  to  the  jury  on 
evidence  merely  that  there  was  an  association  of  per- 
sons in  the  same  line  of  business  as  the  plaintiff  which 
met  for  social  purposes  and  the  discussion  of  the  best 
methods  of  carrying  on  their  business,  it  also  appearing 
in  evidence  that  the  association  did  not  fix  prices  or  adopt 
any  regulations  which  would  tend  to  keep  down  com- 
petition.^^ 

So  it  is  no  defense  to  an  action  upon  a  contract  of  sale 
between  a  retailer  and  his  customer  that  there  is  a  con- 
tract between  the  plaintiff  and  the  one  who  manufactured 
the  goods  sold,  which  is  void  as  being  in  contravention 
of  the  anti-trust  law,  since  such  illegality  could  not 
affect  the  contract  between  the  plaintiff  and  defendant 
because  it  is  collateral  to  it."^ 

And  where  in  an  action  for  goods  sold  and  delivered 
the  defendants  sought  to  avail  themselves  of  the  defense 
that  the  plaintiff  was  an  unlawful  trust  or  combine  in 
violation  of  the  statute  it  was  held  that  as  the  pleas  did 
not  set  up  any  facts  from  which  the  court  could  see  that 
if  proven  the  unlawful  trust  or  combination  existed  and 
failed  to  show  that  the  sale  of  the  goods  was  in  further- 
ance of,  or  connected  with,  the  unlawful  combination, 
if  any  such  existed,  or  that  the  goods  were  sold  at  un- 
reasonable prices  produced  by  any  unlawful  combination, 
they  did  not  set  up  a  good  defense.*" 

"  Buckhorn  Plaster  Co.  v.  Consolidated  Plaster  Co.,  47  Colo.  516,  108 
Pac.  27. 
"  Wagoner  Undertaking  Co.  v.  Jones,  134  Mo.  App.  101,  114  S.  W.  1049. 
"  Houck  &  Co.  V.  Wright,  77  Miss.  476,  27  So.  616. 
"  WUey  &  Drake  v.  National  Wall  Paper  Co.,  70  111.  App.  543. 

509 


§  463       STATE  STATUTES — PROSECUTION — 

And  where  a  firm  contracted  with  another  firm,  whereby 
all  corn  and  oats  purchased  at  a  certain  place  should  be 
on  joint  account,  and  in  a  suit  by  the  members  of  the 
first  firm  against  the  other  for  a  partnership  accounting 
the  defense  was  that  the  contract  was  illegal  under  the 
Code  as  one  to  stifle  competition  ^^  and  one  of  the  de- 
fendants testified  that  he  so  understood  the  contract, 
but  plaintiffs  denied  that  they  had  such  understanding, 
and  it  appeared  that  the  parties  had  not  always  paid 
the  same  price  for  grain,  and  had  at  times  been  compet- 
itors, and  that  one  of  the  defendants  was  father-in-law 
of  one  of  the  plaintiffs,  and,  knowing  the  son-in-law's 
firm  was  of  limited  means  proposed  the  agreement,  it  was 
held  that  the  evidence  did  not  show  a  contract  illegal 
under  the  statute.^- 

Though  any  device  by  which  stockholders  of  a  cor- 
poration seek  to  avoid  the  liability  imposed  upon  them 
by  law  is  void  as  to  creditors  yet  such  proposition  is  not 
applicable  in  a  suit  against  a  subscriber  to  a  corporation 
who  failed  and  refused  to  become  a  stockholder.^^ 

§  463.  Illegality  of  Combination  or  Contract  as  De- 
fense— Action  for  Rent. 

Where  in  an  action  of  assumpsit  to  recover  for  rent 
alleged  to  be  due  under  a  lease  for  the  use  and  occupa- 
tion of  a  certain  strawboard  mill  owned  by  appellee  it 
was  set  up  in  defense  that  the  lease  was  not  made  in 
good  faith,  with  the  intent  and  purpose  of  passing  to  the 
lessee  the  possession  of  the  premises  described  but  on  the 
contrary  was  adopted  by  the  lessor  and  lessee  as  a  mere 
shift  or  device,  gotten  up  for  the  purpose  of  limiting  the 
production  of  strawboard  and  fixing  its  price  in  viola- 
tion of  the  laws  of  the  State,  the  court  held  that  it  was 
satisfied  that  such  was  the  case,  that  the  lease  was  not 
made  in  good  faith,  with  the  expectation  of  use  and  occu- 
pation by  the  lessee  but  was  a  mere  form  adopted  to  evade 

81  Iowa  Code,  §  5060. 

82  Wilson  V.  Morse,  117  Iowa,  581,  91  N.  W.  823. 

83  Hastings  Industrial  Co.  v.  Baxter,  125  Mo.  App,  494,  102  S.  W.  1075. 

510 


;  REMEDIES   AND   DEFENSES  §463 

the  law  and  to  enable  the  lessor  to  receive  the  stipulated 
rent  per  month  for  shutting  down  its  mill  and  allowing 
it  to  remain  idle  and  that  it  was  in  violation  of  the  statute 
entitled  "An  act  to  provide  for  the  punishment  of  per- 
sons, copartnerships  or  corporations  forming  pools,  trusts 
and  combines,  and  mode  of  procedure  and  rules  of  evi- 
dence in  such  cases."  ^' 

But  where  in  an  action  for  the  rent  due  on  the  lease  of 
a  salt  plant,  the  defense  was  that  the  lease  was  executed 
as  a  part  of  a  plan  of  a  certain  trust  to  limit  the  produc- 
tion of  salt,  raise  the  price  and  create  a  monopoly,  which 
the  lessor  knew,  and  that  the  defendant  was  acting  for 
the  trust  in  taking  the  lease,  and  not  for  himself,  it  was 
decided  that  defendant  could  not  show  that  the  trust 
was  the  real  principal  in  the  transaction  unless  he  coupled 
it  with  an  attempt  to  show  the  lessor's  participation  in 
the  scheme.^^ 

A  corporation  sued  for  the  rent  of  a  distillery,  cannot 
escape  liability  upon  the  ground  that  it  is  engaged  in  a 
combination  to  create  a  monopoly  of  commodities  in 
violation  of  the  statute,  when  there  is  no  evidence  that 
the  landlord  was  a  party  to  the  combination.*^ 

^*  American  Strawboard  Co.  v.  Peoria  Strawboard  Co.,  65  111.  App.  502, 
decided  under  Act  approved  June  11,  1891. 

85  Hartz  V.  Eddy,  140  Mich.  479,  103  N.  W.  852. 

^  Brooklyn  Distilling  Co.  v.  Standard  Distilling  &  Distributing  Co., 
120  App.  Div.  (N.  Y.)  237,  105  N.  Y.  Supp.  264,  affirmed  193  N.  Y.  551, 
86  N.  E.  564.  The  court  said:  "It  must  be  borne  in  mind  that  the  plain- 
tiff in  making  the  lease  did  not  in  any  way  become  a  party  to  the  illegal 
combination  or  participate  to  any  extent  in  any  scheme  to  avoid  the  statute 
by  controlling  the  manufacture  or  sale  of  the  commodity  referred  to.  The 
lease  was  the  only  contract  which  it  made  with  the  defendant.  It  could 
just  as  well  be  contended  that  a  contractor  who  had  built  the  distiller}'  for 
the  defendant,  with  knowledge  of  its  purpose,  was  not  entitled  to  recover 
the  contract  price  or  that  a  farmer  who  had  sold  his  com  to  the  defendant, 
knowing  its  purpose  in  buying  it,  could  not  recover  the  price  agreed  to  be 
paid,  as  it  can  that  the  plaintiff  is  not  entitled  to  recover  in  this  action. 
The  plaintiff,  as  we  have  already  seen,  took  no  part  in  the  illegal  combina- 
tion; could  derive  no  benefit  from  it  nor  from  the  incorporation  of  the  de- 
fendant or  the  carrying  out  of  its  purpose,  had  nothing  to  do  with  regu- 
lating the  quantity  of  alcohol  and  spirituous  liquors  to  be  produced,  or 
the  price  to  be  charged;  and,  therefore,  this  contract  is  clearly  distinguish- 
able from  those  where  premises  are  leased  to  be  used  for  an  immoral  pur- 
pose."   Per  McLaughlin,  J, 

511 


§§  464,  465   STATE  STATUTES — PROSECUTION — 

§  464.  Illegality  of  Combination  or  Contract  as  De- 
fense—Contract Made  Prior  to  Statute. 

Where  a  suit  was  brought  by  a  foreign  corporation  to 
recover  the  value  of  a  typewriting  machine  and  an  answer 
in  abatement  was  filed  alleging  that  prior  to  the  com- 
mencement of  the  action  the  plaintiff  had  entered  into 
an  agreement,  contract  and  combination  with  other 
manufacturers  of  typewriting  machines  in  violation  of 
the  anti-trust  act  of  the  State  it  was  decided  that  as  the 
contract  sued  upon  was  entered  into  and  performed  by 
the  plaintiff,  and  the  amount  thereof  was  due  and  pay- 
able, nearly  two  years  before  the  anti-trust  law  took 
effect,  such  act  had  no  application  to  the  contract  of  sale 
sued  upon.  The  court  said  that  the  law  was  prospective, 
and  not  retrospective  and  was  not  intended  to,  and  did  not, 
affect  contracts  previously  made,  nor  their  enforcement.^^ 

§  465.  Illegality  of  Combination  or  Contract  as  De- 
fense—Where Statute  Prescribes  no  Mode  of  Procedure 
for  Determining  Illegality. 

Where  a  defendant  in  an  action  for  the  price  of  goods 
seeks  to  avail  himself  of  the  defense  that  the  plaintiff 
is  a  member  of  an  unlawful  trust  or  combination  and  the 
statute  does  not  prescribe  any  method  of  procedure  for 
determining  such  fact,  it  is  decided  that  before  a  defendant 
can  avail  himself  of  such  defense  there  should  be  an  ad- 
judication of  a  competent  tribunal,  in  a  direct  proceeding 
instituted  for  that  purpose,  determining  that  such  seller 
is  a  trust  or  combination  in  the  sense  contemplated  by 
the  statute.^^  The  court  said:  "This  is  in  accord  with  the 
ordinary  rules  of  statutory  construction.  The  practical 
working  of  any  other  rule  could  not  fail  to  emphasize  the 
justice  and  necessity  of  so  holding  in  cases  similar  to  the 

"  Sterling  Remedy  Co.  v.  Wyckoff,  Seamans  &  Benedict,  154  Ind.  437, 
56  N.  E.  911,  citing  Security  Savings  &  Loan  Assn.  v.  Elbert,  153  Ind.  198, 
54  N.  E.  753;  Equitable  Loan  &  Investment  Assn.  v.  Peed,  153  Ind.  697, 
54  N.  E.  1096;  National  Home  Building  &  Loan  Assn.  v.  Black,  153  Ind. 
701,  55  N.  E.  743;  United  States  Saving  &  Loan  Co.  v.  First  Methodist 
Protestant  Church,  153  Ind.  702,  55  N.  E.  743. 

8«  Lafayette  Bridge  Co.  v.  City  of  Streator  (U.  S.  C.  C),  105  Fed.  729. 

512 


REMEDIES  AND   DEFENSES  §  466 

one  at  bar.  It  cannot  be  insisted  that  the  decision  in 
one  case  would  be  binding  or  even  persuasive  in  any- 
other  case.  Each  suit  to  recover  purchase  money,  in 
which  the  statute  is  pleaded  by  way  of  defense,  would 
call  for  a  separate  and  distinct  determination  of  the 
legal  status  of  the  plaintiff  thereby  making  the  claim  for 
purchase  money  merely  an  incidental  issue.  This  would 
be  true  even  if  the  amount  involved  were  but  five  dol- 
lars and  the  case  were  before  a  justice  of  the  peace.  The 
result  would  depend  upon  the  varying  conditions  of  each 
case  as  affected  by  the  skill  of  lawyers,  the  bias  of  jurors 
and  other  attendant  circumstances.  This  would  in- 
evitably lead  to  such  confusion  as  would  force  Federal 
courts  to  so  construe  the  statutes  as  to  protect  the  due 
and  regular  administration  of  justice  from  unconscionable 
prolixity  and  irreconcilable  adjudications."  ^^ 

And  in  a  case  in  Montana  it  was  decided  that  one  suing 
as  a  private  citizen  was  not  entitled  to  present  through  the 
medium  of  a  civil  action,  and  try  the  issue  whether  a 
corporation  constituted  a  monopoly  in  violation  of  the 
penal  code  rendering  it  liable  to  punishment  and  a  for- 
feiture of  its  franchises  and  property,  but  that  the  deter- 
mination of  such  issue  as  an  independent  ground  of  relief 
must  be  had,  if  at  all,  by  the  State,  and  in  its  own  behalf 
through  the  attorney  general,  since  it  was  no  concern  of 
plaintiff  as  a  private  citizen  if  the  State  neglected  or 
waived  its  right  to  so  act.^° 

But  in  a  case  in  Missouri  it  is  decided  that  the  vaHdity 
of  corporate  organization  may  be  collaterally  assailed 
where  the  unlawful  conspiracy  exists  in  the  articles  of 
association  of  the  corporation.^^ 

§  466.  Combination  to  Raise  Price— Defense  That 
Law  Does  Not  Favor  Increased  Sale  of  Article. 

Under  a  statute  making  unlawful  all  agreements  for 

89  Per  Kohlsaat,  J. 

^  MacGinnis  v.  Boston  &  Montana  Consolidated  Copper  &  S.  M.  Co., 
29  Mont.  428,  75  Pac.  89. 

91  Finck  V.  Schneider  Granite  Co.,  187  Mo.  244,  86  S.  W.  213,  106  Am. 
St.  Rep.  452. 

33  513 


§  467       STATE  STATUTES — PROSECUTION — 

the  purpose  of  controlling  the  price  of  any  article  and 
which  makes  no  exceptions,  it  is  no  defense  to  a  prosecu- 
tion for  making  an  agreement  to  raise  the  price  of  an 
article  that  the  law  does  not  favor  the  increased  use  of 
such  article.  Thus  it  was  so  held  where  there  was  a 
combination  of  a  number  of  brewers  to  raise  the  price 
of  beer  to  the  extent  of  the  war  tax  thereon.®^ 

§  467.  Illegality  of  Association  as  Defense  to  Action 
by  for  Penalty. 

Where  the  by-laws  of  an  association  are  void  as  in 

violation  of  an  anti-trust  statute  such  association  cannot 

recover  a  penalty  from  a  member  for  a  violation  of  such 

by-laws.®^ 

"  Commonwealth  v.  Bavarian  Brewing  Co.,  112  Ky.  925,  23  Ky.  Law 
Rep.  2334,  66  S.  W.  1016. 

93  BaUey  v.  Master  Plumbers,  103  Tenn.  99,  52  S.  W.  853,  46  L.  R.  A.  516. 


514 


STATE  STATUTES — PLEADING    §§  4(38,  459 


CHAPTER  XXVIII 


STATE  STATUTES — PLEADING 


§  468.  Rule  as  to  Certainty. 

469.  General  Rule  —  Indictment 

or  Information  in  Lan- 
guage of  Statute  Suffi- 
cient. 

470.  Legal  Conclusions. 

471.  Joinder  of  Defendants. 

472.  Not     Necessary    to    Allege 

Combination  in  a  Position 
to   Control   Market. 

473.  Necessity    of    Averring    In- 

tent, Purpose  or  Effect. 

474.  Averring    Terms    of    Agree- 

ment— Particular  Articles 
Subject  of. 

475.  Conspiracy   —   Means     by 

Wliich  to  Be  Effectuated 
Need  Not  Be  Charged. 


§  476.  Conspiracy — Averring  Names 
of  Persons  to  Be  In- 
jured. 

477.  In   Proceeding  by  Informa- 

tion to  Forfeit  Corporate 
Franchise. 

478.  Complaint  in  Action  to  Re- 

strain— New  York. 

479.  Necessity  of  Averring  Acts 

to    Be     in     Restraint    of 
Trade. 

480.  Rule  as  to  Party  Seeking  to 

Enforce  Forfeiture  —  De- 
fense That  Member  of  Il- 
legal Combination. 
48  L  Complaint  to  Recover  Pen- 
alty. 


§  468.  Rule  as  to  Certainty. 

An  indictment  under  the  anti-trust  act  of  a  State 
must,  as  in  all  other  cases,  be  sufficiently  definite  in  its 
statement  of  the  conspiracy  and  the  object  to  be  effected 
as  to  give  the  defendant  notice  of  the  particular  crime 
with  which  he  is  charged  and  to  so  describe  and  identify 
the  offense  that  the  judgment  in  such  case  can  be  relied 
upon  in  another  for  the  same  thing,  as  a  former  acquittal 
or  conviction.* 


§  469.  General  Rule— Indictment  or  Information  in 
Language  of  Statute  Sufficient. 

It  is  a  general  rule  that  an  indictment  or  information 
is  sufficient  which  sets  out  the  offense  in  the  language  of 
the  statute  except  where  the  facts  constituting  the  offense 

>  State  V.  Witherspoon,  115  Tenn.  138,  90  S.  W.  852. 

515 


§  469  STATE  STATUTES — PLEADING 

are  not  sufficiently  set  out  in  the  statute  so  as  to  advise 
the  defendant  of  the  nature  of  charge  against  him  so  that 
he  can  properly  prepare  his  defense  and  is  not  placed  at 
a  disadvantage  at  the  conduct  of  the  trial  on  his  part. 
This  rule  was  applied  in  the  case  of  an  information  under 
a  statute  in  Kansas  ^  making  unlawful  any  combinations 
made  with  a  view  or  which  tended  "to  prevent  full  and 
free  competition  in  the  importation,  transportation  or 
sale  of  articles  imported  into  this  State,  or  in  the  product, 
manufacture  or  sale  of  articles  of  domestic  growth  or 
product  of  domestic  raw  material  *  *  *  or  which  tend  to 
advance,  reduce  or  control  the  price  or  the  cost  to  the 
producer  or  to  the  consumer  of  any  such  products  or 
articles."  In  this  case  the  information  went  somewhat 
beyond  the  bare  letter  of  the  statute  and  stated  the 
name  of  one  of  the  parties  to  the  unlawful  agreement  and 
mentioned  the  specific  commodity  the  cost  of  which  was 
designed  to  be  affected.  It  was,  however,  contended 
that  the  information  was  defective  in  that  it  did  not 
contain  a  statement  of  the  character  of  the  agreement 
to  which  the  defendant  was  alleged  to  have  been  a  party 
or  the  means  by  which  the  control  of  the  price  was  sought 
to  be  accomplished.  The  court,  however,  decided  that 
it  was  not  necessary  to  specify  this  and  that  the  informa- 
tion was  sufficient.^ 

2  Kans.  Gen.  Stat.,  1909,  §  5118. 

3  State  V.  Glenn  Lumber  Co.,  83  Kan.  399,  111  Pac.  484.  The  court 
said:  "We  cannot  agree,  however,  that  it  is  necessary  for  the  State  to 
Bpecify  the  precise  nature  of  the  agreement,  or  do  more  than  to  characterize 
it  as  one  intended  and  adapted  to  accomplish  the  results  described  in  the 
statute.  Such  a  requirement  would  go  far  to  render  the  law  ineffective, 
since  it  would  often  be  difficult  or  impossible  for  the  prosecutor  to  ascer- 
tain with  certainty  the  details  of  the  combination  complained  of.  On  the 
other  hand,  a  case  could  hardly  arise  under  this  statute  in  which  an  accused 
person  could  be  seriously  hampered  in  his  defense  by  the  omission  of  an 
information  to  describe  with  exactness  the  nature  of  the  agreement  form- 
ing the  basis  of  the  charge."    Per  Mason,  J. 

This  decision  was  followed  in  State  v.  Monarch  Portland  Cement  Co. 
83  Kan.  808,  111  Pac.  487. 

Information  or  indictment  in  language  of  slatide  sufficient:  People  v.  Sac- 
ramento Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac.  712;  State  v.  Wither- 
spoon,  115  Tenn.  138,  90  S.  W.  852. 

516 


STATE  STATUTES — PLEADING  §  470 

Where  the  language  of  the  statute  is  sufficiently  de- 
scriptive of  an  offense  to  enable  a  person  to  know  the 
offense  charged,  an  indictment  will  be  sufficient  which 
follows  the  language  of  the  statute.'' 

So  upon  the  question  of  the  sufficiency  of  an  indictment 
for  a  violation  of  an  anti-trust  act  in  Tennessee  ^  it  was 
said  that  the  indictment  followed  and  was  in  the  language 
of  the  act  and  that  it  was  generally  true  that  an  indict- 
ment for  a  statutory  offense  which  substantially  follows 
the  statute  is  sufficient.^ 

So  under  a  statute  prohibiting  any  combination  for 
the  purpose  of  regulating  the  price  or  limiting  the  pro- 
duction of  any  article  of  property  it  is  decided  that,  as 
the  words  of  the  statute  are  descriptive  of  tlie  olTense, 
an  indictment  which  follows  the  language  of  the  statute 
is  sufficient,  it  not  being  necessary  to  allege  the  means 
adopted  to  effect  the  object  of  the  combination,  the 
offense  being  complete,  if  a  defendant  enters  into  an 
agreement  with  another  for  the  purpose  of  fixing  the 
price  of  any  merchandise.'^ 

§  470.  Legal  Conclusions. 

In  the  application  of  the  general  rule  that  legal  con- 
clusions should  not  be  stated  it  has  been  decided  that 
allegations  that  the  defendants  are  contriving  and  con- 
spiring to  obtain  exclusive  control  of  the  wholesale  and 
jobbing  trade  in  patent  medicines,  to  control  the  price 
at  which  such  goods  shall  be  sold,  and  to  destroy  and 
prevent  competition  between  wholesale  and  jobbing 
druggists,  are  held  to  be  conclusions  of  law  not  admitted 
by  demurrer.^ 

*  International  Harvester  Co.  v.  Commonwealth,  30  Ky.  Law  Rep.  716, 
99  S.  W.  637. 

<*  Tenn.  Acts,  1903,  chap.  140. 

"State  V.  Witherspoon,  115  Tenn.  138,  90  S.  W.  852. 

■  Commonwealth  v.  Grinstead  &  Tiusley,  108  Ky.  59,  22  Ky.  Law  Rep. 
377,  55  S.  W.  720. 

« Park  &  Sons  Company  v.  National  Wholesale  Druggists'  .\s8n.,  175 
N.  Y.  1,  67  N.  E.  136,  62  L.  R.  A.  632,  96  Am.  St.  Rep.  578,  aff'g  54  App. 
Div.  223,  66  N.  Y.  Supp.  615. 

517 


§  471  STATE  STATUTES — PLEADING 

§  471.  Joinder  of  Defendants. 

One  corporation  may  be  joined  with  another  in  a  pro- 
ceeding by  the  State  by  information  in  the  nature  of  quo 
warranto  to  forfeit  the  franchises  of  such  corporations  for 
violation  of  the  anti-trust  laws.^ 

Where  conspiracy  in  violation  of  a  statute  is  charged 
it  is  not  necessary  to  make  all  the  alleged  conspirators 
defendants  in  order  to  maintain  a  prosecution  against 
one.  The  gist  of  the  offense  is  in  the  formation  of  the 
combination  with  others  to  do  some  unlawful  act,  and 
where  the  information  charges  a  party  with  having  en- 
tered into  such  a  conspiracy  with  others,  not  made 
defendants,  it  is  sufficient  in  the  pleading  to  refer  to  the 
latter  as  "persons  unknown."  ^^ 

In  Kansas  it  has  been  decided  that  an  information 
drawn  under  the  anti-trust  laws  of  that  State,  wherein 
the  offenses  charged  consist  of  many  sales  of  commodities 
made  in  violation  of  a  provision  of  the  statute  ^^  is  not 
fatally  defective  because  in  its  introductory  statement 
several  combinations,  associations,  trusts  and  corporations 
are  mentioned  generally  of  which  the  defendant  is  averred 
to  have  been  a  member  when  the  alleged  sales  were  made.^^ 

»  state  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

w  People  V.  Sacramento  Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac.  712. 
In  this  case  the  Sacramento  Butchers'  Protective  Assn.  was  made  defend- 
ant and  also  Western  Meat  Co.  and  its  manager,  O'Keefe,  who  was  con- 
victed, and  it  was  claimed  that  the  information  was  defective  in  that  it 
failed  to  disclose  the  identity  of  the  persons  referred  to  therein  as  "certain 
and  divers  persons,  firms,  partnerships,  corporations  and  associations  of 
persons  constituting  and  composing  said  Sacramento  Butchers'  Protective 
Association,  the  names  of  whom  are  unknown  except  as  herein  stated." 

11  Section  2435,  Gen.  Stat.  Kan.,  1901. 

"  State  V.  International  Harvester  Co.,  79  Kan.  371,  99  Pac.  603.  The 
court  said:  "It  was  deemed  necessary  when  the  statute  was  drawn  to  use 
language  broad  enough  to  cover  every  conceivable  combination  through 
which  the  interdicted  acts  could  by  any  reasonable  possibility  be  per- 
petrated. It  was  thereby  made  necessary  for  the  pleader,  in  drawing  an 
information  like  the  one  under  consideration,  to  be  somewhat  general  in 
the  use  of  terms  to  designate  the  combination  to  which  the  defendant  be- 
longed. It  may  also  be  said  that  the  parts  of  the  information  specially 
complained  of  are  not  the  parts  which  charge  the  offense  of  which  the  de- 
fendant is  accused,  but  they  constitute  a  mere  statement,  introductory 
and  preliminary  to  the  charge.    Such  matters  of  inducement  need  not  be 

518 


STATE  STATUTES — PLEADING    §§  472,  473 

§  472.  Not  Necessary  to  Allege  Combination  in  a  Posi- 
tion to  Control  Market. 

The  object  of  a  statute  being  to  prevent  such  com- 
binations or  conspiracies  between  persons  engaged  in  a 
particular  line  of  business  as  will  destroy  free  compe- 
tition therein,  if  the  purpose  of  a  combination  is  to  re- 
strict trade  or  destroy  competition  in  the  sale  and  pur- 
chase of  "merchandise,  produce  or  any  commodity" 
as  declared  in  the  statute  or  if  such  combination  tends 
to  restrict  trade  or  prevent  free  competition  therein  it 
is  against  the  letter  and  object  of  the  law  and  it  is  not 
necessary  to  allege  in  order  to  state  the  offense  denounced 
by  statute  that  the  defendants  or  any  of  the  persons 
referred  to  in  an  information  as  being  connected  with 
the  alleged  combination  were  in  a  position  to  control  the 
market  in  the  sale  and  purchase  of  the  commodity  to 
which  the  charge  relates. ^^ 

§  473.  Necessity  of  Averring  Intent,  Purpose  or  Ef- 
fect. 

In  charging  offenses  against  corporations  under  an  anti- 
trust statute  the  rule  prevails  that  where  the  offense 
with  which  the  corporation  is  charged  is  the  violation 
of  a  positive  statute,  the  only  intent  necessary  to  the 
conunission  of  the  offense  is  the  intent  to  do  the  pro- 
hibited act  and  this  corporations  will  be  held  to  have 
when  they  act  through  their  authorized  agents  and 
officers.  ^^ 

Under  the  Kentucky  statute  it  has  been  held  essential 
in  order  to  show  that  a  combine,  agreement  or  under- 
taking is  unlawful,  to  state  facts  showing  that  it  was 
entered  into  for  the  purpose  of  increasing  the  price  of 

averred  so  definitely  and  with  that  degree  of  certainty  required  in  the 
charging  part  of  the  pleading  (1  Bouv.  Law  Diet.,  p.  1024).  It  seems  clear 
from  these  introductory  allegations  that  the  defendant  at  the  time  the 
alleged  sales  were  made  had  entered  into  one  or  more  of  the  i^rohibited 
organizations.  This  is  sufficient;  whether  it  belonged  to  one  of  such  organ- 
izations or  all  of  them  is  immaterial."    Per  Graves,  J. 

"  People  V.  Sacramento  Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac.  712. 

'♦  Standard  Oil  Co.  v.  State,  117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A. 
(N.  S.)  1015. 

519 


§  474         STATE  STATUTES — PLEADING 

the  article  above  its  real  value,  or  depreciating  the  price 
below  its  real  value.  ^^ 

§  474.  Averring  Terms  of  Agreement— Particular  Ar- 
ticles Subject  of. 

Under  a  statute  making  it  a  criminal  offense  to  enter 
into  a  trust,  combination  or  agreement  made  with  a 
view  to  lessen  or  which  tends  to  lessen  full  and  free  com- 
petition in  the  transportation  and  sale  of  articles  imported 
into  the  State  or  in  the  manufacture  or  sale  of  articles 
of  domestic  growth  and  which  tend  to  control  the  price 
or  cost  to  the  consumer  of  any  product  or  article  it  is 
decided  that  an  indictment  which  utterly  fails  to  state 
the  terms  of  the  agreement  or  arrangement  entered  into 
by  the  parties  and  the  particular  articles  imported  or  of 
domestic  manufacture  or  growth,  the  price  of  which 
such  agreement,  arrangement  or  conspiracy  tended  to 
control  and  lessen  or  advance  is  fatally  defective." 

16  Stahr  V.  Hickman  Grain  Co.,  132  Ky.  496,  116  S.  W.  784,  citing  Com- 
monwealth V.  International  Harvester  Co.,  131  Ky.  551,  115  S.  W.  703; 
American  Tobacco  Co.  v.  Commonwealth  (Ky.),  115  S.  W.  754. 

An  indictment  under  the  statute  prohibiting  pools,  trusts  and  other 
combinations  or  agreements  to  fix  the  price,  or  to  limit  the  amount  of 
merchandise  or  article  or  property  of  any  kind  should  allege  that  the  pur- 
pose or  effect  of  the  alleged  combination  or  pool  was  to  enhance  the  articles 
named  above  their  real  value,  or  to  depreciate  the  price  below  its  real  value. 
Commonwealth  v.  International  Harvester  Co.,  131  Ky.  551,  115  S.  W. 
703,  131  Ky.  708,  115  S.  W.  755,  holding  an  indictment  for  violation  of 
Ky.  Act,  May  20,  1890  (Ky.  Stats.,  1903,  §  3915)  to  be  insufficient. 

16  State  V.  Witherspoon,  115  Tenn.  138,  90  S.  W.  852.  The  indictment 
in  this  case  charged  that  the  defendant  "as  president,  director  and  agent 
of  the  Southern  Seating  &  Cabinet  Company,  in  Madison  County,  Ten- 
nessee" did  unlawfully,  knowingly  and  feloniously  carry  out  the  terms  of 
the  agreement,  combination  and  conspiracy  entered  into  by  the  Southern 
Seating  &  Cabinet  Company  with  the  American  School  Furniture  Com- 
pany, made  with  a  view  to  lessen,  and  which  tended  to,  and  did  lessen,  full 
and  free  competition  in  the  importation  and  sale  of  articles  imported  into 
the  State  and  the  manufacture  and  sale  of  articles  of  domestic  growth  and 
of  domestic  raw  material,  and  which  tended  to  and  did  advance  and  con- 
trol the  price  and  cost  of  such  product  and  article  to  the  consumer  and 
buyer.  The  court  held  that  this  was  insufficient  for  the  reasons  stated  in 
the  text.  The  court  said:  "The  indictment  would  apply  to  imported 
articles  as  well  as  domestic  articles,  and  to  domestic  manufactured  articles 
equally  with  articles  of  raw  material.  It  would  apply  equally  to  any  one 
of  the  hundreds  of  articles  of  commerce  which  are  imported  into  the  State, 

520 


STATE  STATUTES — PLEADING         §  475 

But  in  New  York  in  an  action  for  violation  of  a  statute 
prohibiting  monopolies  or  trusts  while  it  may  be  neces- 
sary for  the  plaintiff  to  plead  a  contract  relied  upon,  yet 
it  is  decided  that  it  is  not  required  to  set  forth  copies  or 
all  of  the  terms  thereof  but  is  only  required  to  allege  the 
effect  of  the  provisions  thereof  so  far  as  material,  not  to 
the  contract,  but  to  the  issues  presented  for  trial  which 
requires  merely  that  the  terms  and  provisions  of  the 
contract  be  sufficiently  stated  to  show  a  violation  of  the 
statute.  And  if  the  defendant  desires  a  copy  of  such 
contract  so  referred  to  its  remedy  is  by  a  motion  for  a 
bill  of  particulars,  and  not  to  make  the  complaint  more 
definite  and  certain.  ^^ 

The  chare;e  in  a  bill  that  the  action  of  a  railroad  com- 
pany was  due  to  an  agreement  between  the  defendant 
and  other  carriers  at  a  certain  meeting  the  terms  of 
which  are  unknown  to  the  complainant,  but  whose  tenor 
was  to  restrain  trade  and  commerce,  and  in  violation  of 
the  laws  of  the  State  and  of  the  United  States,  has  been 
held  to  be  broad  enough  to  let  in  full  evidence  as  to  what 
was  done  at  that  meeting  and  what  policies  were  outlined, 
and  what  division,  if  any,  was  made  of  the  traffic  at  that 
place  and  the  terms  of  that  division  and  the  circumstances 
connected  with  it.^^ 

§  475.  Conspiracy— Means  by  Which  to  Be  Effectuated 
Need  Not  Be  Charged. 

An   information    charging    a   conspiracy   at    common 

or  which  are  here  manufactured  or  otherwise  produced.  It  clearly,  for 
these  reasons,  fails  to  give  the  defendant  any  notice  of  the  nature  of  the 
charge  against  him,  or  of  the  particular  crime  with  which  he  is  accused, 
and  is  held  to  answer,  so  that  he  could  with  intelligence  prepare  his  de- 
fense. *  *  *  The  indictment  should  charge  the  particular  article,  whether 
imported  or  of  domestic  manufacture  and  growth,  in  relation  to  which  the 
contract,  arrangement  and  agreement  between  the  parties  is  made,  and 
the  effect  of  such  arrangement  upon  the  price  of  such  articles.  Without 
a  statement  of  these  facts  the  defendant  will  be  put  to  trial  without  pre- 
sentment or  indictment  and  will  be  denied  his  constitutional  right  to  know 
the  nature  and  cause  of  the  accusation  against  him."  Per  Mr.  Justice 
Shields. 

"  People  V.  American  Ice  Co.,  135  App.  Div.  (N.  Y.)  ISO,  120  N.  Y. 
Supp.  41. 

»8  Post  V.  Railroad,  103  Tenn.  1S4,  52  S.  W.  301,  55  L.  R.  A.  481. 

521 


§  475         STATE  STATUTES — PLEADING 

law  to  control  the  price  of  an  article  in  a  certain  city  is 
sufficient  where  it  alleges  that  the  defendants  unlawfully 
designed  to  prevent  open  competition,  unlawfully  agreed 
not  to  sell  the  article  at  less  than  fixed  prices  and  not 
to  sell  to  each  other's  customers  and  agreed  to  and  did 
raise  prices  with  intent  to  control  the  price  of  such  article 
generally  in  said  city.^^ 

In  an  indictment  for  conspiracy  under  an  anti-trust 
act  the  averments  as  to  the  conspiracy  and  the  object 
to  be  effected  should  be  so  definite  and  direct  as  to  give 
the  defendant  notice  of  the  particular  crime  with  which 
he  is  charged  and  so  describe  and  identify  the  offense 
that  the  judgment  in  such  case  can  be  relied  upon  in 
another  prosecution  for  the  same  thing,  as  a  former 
acquittal  or  conviction.  ^° 

The  gist,  however,  of  the  crime  of  conspiracy  is  in  its 
formation  for  an  unlawful  purpose  and  the  acts  con- 
stituting the  actual  execution  of  the  purpose  of  a  crim- 
inal conspiracy  are  only  evidence  of  the  existence  of  such 
conspiracy.  Such  acts  are  mere  probative  facts  and  an 
information  therefore  is  not  insufficient  because  the 
dates  upon  which  the  acts  of  the  alleged  conspirators 
committed  in  the  prosecution  of  such  conspiracy  occurred 
are  definitely  stated  and  fixed  therein.  ^^ 

And  in  a  prosecution  for  conspiracy  in  violation  of  an 
anti-trust  act  it  is  said  that  the  means  by  which  the 
unlawful  agreement  and  conspiracy  was  intended  to  be 
effectuated  or  the  evidence  tending  to  prove  the  unlawful 
agreement  need  not  be  set  out  and  that  it  is  sufficient 
to  charge  in  the  indictment  the  existence  and  object  of 
the  conspiracy,  without  any  statement  of  the  means 
intended  to  be  used  in  its  accomplishment,  the  means 
being  only  matters  of  evidence  to  prove  the  fact  of  con- 
spiracy.^^ 

'9  State  V.  Erickson,  54  Wash.  472,  103  Pac.  796. 

2«  State  V.  Witherspoon,  115  Tenn.  138,  90  S.  W.  852. 

2'  People  V.  Sacramento  Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac.  712. 

"  State  V.  Witherspoon,  115  Tenn.  138,  90  S.  W.  852,  citing  3  Whart. 
Crim.  Law,  §  1345;  1  Eddy  on  Combinations,  p.  226,  §  350;  Rex  v.  Eccles, 
1  Leach,  274;  Rex  v.  Gill  &  Henry,  2  B.  &  Aid.  204;  People  v.  Richards, 

522 


STATE  STATUTES — PLEADING    §§  476,  477 

Again,  a  charge  that  a  conspiracy  was  formed  unlaw- 
fully, fraudulently,  maliciously,  wrongfully  and  wickedly 
to  do  an  illegal  act,  though  not  in  the  language  of  the 
statute  has  been  construed  as  in  effect  charging  the  con- 
spiracy to  have  been  formed  with  a  fraudulent  or  mali- 
cious intent  wrongfully  and  wickedly  to  do  an  illegal 
act  injurious  to  the  public  and  to  be  sufficient.-' 

§  476.  Conspiracy — Averring  Names  of  Persons  to  Be 
Injured. 

In  an  indictment  for  conspiracy  in  violation  of  an  anti- 
trust statute  where  it  is  the  object  of  the  corporation  to 
injure  any  particular  person  or  corporation  specifically, 
the  indictment  should  aver  the  name  of  the  particular 
person  or  corporation  to  be  injured,  but  where  the  object 
is  to  injure  any  and  all  persons  who  may  come  wdthin 
the  range  of  the  operation  of  the  conspiracy  it  is  only 
necessary  to  aver  that  the  purpose  or  effect  of  the  con- 
spiracy was  to  injure  the  public.-^ 

So  in  an  indictment,  under  the  Mississippi  Code  of 
1892,^^  it  was  decided  that  the  indictment  should  aver 
that  the  effect  of  the  trust  was  to  injure  either  the  public 
or  any  named  person  or  corporation  in  the  State.  And 
in  this  case  where  it  was  claimed  that  there  was  a  trust 
between  fire  insurance  companies,  it  was  declared  that 
this  should  be  distinctly  and  directly  charged  and  not 
argumentatively  though  the  court  said  that  it  was  doubt- 
less true,  that  from  the  very  nature  of  a  fire  insurance 
trust  as  to  rates,  the  only  injury  possibly  predicable  of  its 
action  would  be  the  destruction  of  competition  as  to  rates.  ^^ 

§  477.  In  Proceeding  by  Information  to  Forfeit  Cor- 
porate Franchise. 

In  a  proceeding  by  the  State  by  information  in  the 

1  Mich.  216,  51  Am.  Dec.  75;  State  v.  Crowley,  41  Wis.  271,  22  Am.  Rep. 
719. 

"  Chicago,  Wilmington  &  Vermillion  Coal  Co.  v.  People,  214  lU.  421,  73 
N.  E.  770,  aff'g  114  111.  App.  75. 

^*  Fire  Insurance  Companies  v.  State,  75  Miss.  24,  22  So.  99. 

»  Section  1007. 

*»  Fire  Insurance  Companies  v.  State,  75  Miss.  24,  22  So.  99. 

523 


§  478  STATE  STATUTES — PLEADING 

nature  of  quo  warranto  to  forfeit  the  franchise  of  a  cor- 
poration for  misuser,  nonuser  or  usurpation  of  corporate 
powers  and  such  misuser,  nonuser,  or  usurpation  con- 
sists in  the  formation  of  and  entering  into  a  pool,  trust  or 
combination  in  violation  of  the  laws  of  the  State  all  that 
is  necessary  to  state  in  the  information  is  a  general  al- 
legation of  facts  constituting  the  same.  The  proceeding 
being  a  civil  one  the  facts  are  not  required  to  be  stated 
with  the  same  technical  strictness  with  which  crimes 
must  be  charged."  The  court  said  in  this  case:  ''When 
the  State  challenges  the  authority  of  a  corporation  to  do 
certain  things,  it  must  either  deny  the  charge,  or,  if  it 
is  exercising  the  authority  complained  of,  then  it  must 
justify  its  conduct  by  showing  that  it  possesses  that 
power  and  authority  under  its  charter;  and  the  State 
is  not  required  to  allege  and  prove  the  facts  constituting 
the  mode  or  manner  in  which  it  is  violating  the  law  and 
usurping  powers  not  granted  to  it  by  its  charter."  ^^ 

§  478.  Complaint  in  Action  to  Restrain— New  York. 

In  an  action  in  the  courts  of  New  York  State  under 
the  laws  of  that  State  to  restrain  an  alleged  unlawful 
combination  in  restraint  of  trade,  and  to  recover  damages 
it  has  been  decided  that  the  complaint  does  not  state  a 
cause  of  action  if  it  fails  to  show  that  the  defendants 
were  incorporated  for  or  unlawfully  combined  with  other 
persons  or  corporations  to  advance  or  control  prices  or 
trade,  or  to  discriminate  between  dealers,  or  regulate  com- 
petition, or  that  one  defendant  appointed  the  other 
defendant  its  sole  selling  agent  for  such  purposes.  ^^ 

^  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

^  Per  Woodson,  J. 

M  Locker  v.  American  Tobacco  Co.,  121  App.  Div.  (N.  Y.)  443,  106  N. 
Y.  Supp.  115,  affirmed,  195  N.  Y.  565,  88  N.  E.  289,  holding  that  mere 
allegations  showing  that  a  corporation,  with  allied  corporations,  controls 
ninety  per  cent  of  a  certain  trade  and  had  appointed  a  sole  selling  agent 
in  the  State  do  not,  standing  alone,  show  an  illegal  combination,  and  that 
the  mere  fact  that  one  defendant  controlling  ninety  per  cent  of  the  trade, 
has  appointed  a  sole  selling  agent  in  the  State  who  has  refused  to  sell  goods 
to  plaintiff,  does  not  show  a  violation  of  the  State  statute  (Laws,  1899, 
chap.  690),  for  it  is  the  inherent  right  of  every  person  to  refuse  to  maintain 

524 


STATE  STATUTES — PLEADING    §§  479;  480 

And  it  has  been  decided  that  a  complaint,  in  an  action 
for  a  violation  of  State  statutes  prohibiting  monopolies 
in  restraint  of  trade,  which  merely  alleges  that  the  de- 
fendant had  repeatedly  violated  the  statutes  of  the 
State  without  setting  forth  any  specific  acts  would  be 
insufficient  on  demurrer.  ^° 

Although  in  a  complaint  in  an  action  to  restrain  an 
alleged  unlawful  combination  in  restraint  of  trade  it  is 
alleged  that  one  defendant  manufacturing  certain  goods 
controls  the  business  of  other  manufacturers  and  pro- 
ducers, it  will  be  presumed  that  such  control  was  lawful 
in  the  absence  of  an  averment  of  an  unlawful  combina- 
tion between  them.^^ 

§  479.  Necessity  of  Averring  Acts  to  Be  in  Restraint  of 
Trade. 

Under  a  statute  providing  that  ''Every  contract,  com- 
bination in  the  form  of  trust  or  otherwise,  or  conspiracy 
in  restraint  of  trade  or  commerce,  within  this  State,  is 
hereby  declared  to  be  illegal"  an  indictment  should  allege 
that  the  acts  complained  of  were  in  restraint  of  trade 
within  such  State. ^^ 

§  480.  Rule  as  to  Party  Seeking  to  Enforce  Forfeiture 
—Defense  That  Member  of  Illegal  Combination. 

In  the  application  of  the  rule  that  a  party  seeking  to 
enforce  a  forfeiture  must  set  forth  in  his  pleading  every 
fact  necessary  to  show  that  he  is  entitled  to  it  and  that 
nothing  is  to  be  taken  by  implication  but  the  pleading 
is  to  be  strictly  construed,  it  has  been  decided  that,  where 
defendant  who  was  sued  upon  an  account  for  merchandise 

trade  relations  with  any  other  person  for  any  reason  or  for  no  reason,  and 
what  one  may  do  of  hia  own  right  he  may  do  through  an  agent. 

*>  People  V.  American  Ice  Co.,  135  App.  Div.  (N.  Y.)  180,  120  N.  Y. 
Supp.  41. 

"  Locker  v.  American  Tobacco  Co.,  121  App.  D.iv.  (N.  Y.)  443,  106  N. 
Y.  Supp.  115,  affirmed,  195  N.  Y.  565,   88  N.  E.  289. 

"  Howell  V.  State,  83  Neb.  448,  120  N.  W.  139,  holding  a  count  of  an 
indictment  not  to  charge  the  commission  of  an  offense  where  it  did  not  so 
allege. 

525 


§  481         STATE  STATUTES — PLEADING 

alleged  to  have  been  sold  in  another  State,  set  up  in 
defense  that  at  the  time  plaintiff  sold  said  merchandise 
he  had  become  a  party  to  a  trust  to  fix  the  price  thereof 
in  the  State  where  defendant  resided  and  had  sold  said 
merchandise  in  that  State  to  defendants  at  the  price  so 
fixed  but  failed  to  allege  that  plaintiff  was  transacting 
business  within  such  State  when  it  sold  the  merchandise 
to  defendant,  the  answer  was  insufficient.^' 

§  481.  Complaint  to  Recover  Penalty. 

A  complaint  against  an  insurance  company  seeking 
to  recover  a  penalty  for  a  violation  of  an  anti- trust  law,'^ 
which  alleges,  substantially  in  the  language  of  the  act, 
that  the  defendant,  while  engaged  in  business  in  the 
State,  became  and  was  "a  member  of  a  pool,  trust,  agree- 
ment, combination,  confederation,  or  understanding  with 
the  corporations  engaged  in  similar  business,  to  regulate 
or  fix  the  price  or  premiums  for  insuring  property,"  etc., 
is  held  not  to  be  demurrable  for  failure  to  allege  that  such 
pool,  trust,  agreement,  etc.,  was  formed  for  the  purpose 
or  had  the  effect  of  influencing  the  company's  business 
in  the  State,  it  being  declared  that  the  remedy  in  case 
the  complaint  is  indefinite  or  uncertain,  is  a  motion  to 
make  it  more  specific  and  certain.'^ 

»'  Frank  A.  Menne  Factory  v.  Harback,  85  Ark.  278,  107  S.  W.  991. 

"  Ark.  Acts,  1899,  p.  50. 

»« State  V.  ^tna  Fire  Ins.  Co.,  66  Ark.  480,  51  S.  W.  638. 


526 


STATE  STATUTES — EVIDENCE 


§482 


CHAPTER  XXIX 


STATE  STATUTES — EVIDENCE 


§  482.  Proof  of  Illegality  —  Evi- 
dence of  Circumstances 
in  Connection  with  Mak- 
ing of  Contract — Acts  of 
Parties — Declarations. 

Evidence  as  to  Intent. 

Same  Subject  —  Positive 
Evidence  Not  Required. 

Letters  as  Evidence  of  Con- 
spiracy —  Statements  of 
Parties. 

Combination  to  Raise  Prices 
— Evidence  to  Show  Rea- 
son for  Increase — Rebut- 
tal of. 

By-Laws  of  Association  or 
Corporation  as  Evidence. 

488.  Presumption    as    to    Inno- 

cence. 

489.  Burden  of  Proof — Illegality 

of   Contract — Partnership 
Accounting. 


483. 
484. 

485. 


486. 


487, 


§  490.  Sufficiency  of  Evidence — 
Proof  of  Conspiracy  to 
Raise  Prices. 

491,  Sufficiency    of     Evidence — 

Time  of  Entering  Into 
Conspiracy, 

492,  Damages  —  Conspiracy    — 

Erroneous  Exclusion  of 
Evidence  as  to  Intent  to 
Injure. 

493,  Evidence   of    Disloyalty   as 

Tending  to  Prove  Non- 
Existence  of  Trust. 

494,  Requiring      Production      of 

Books  and  Documents. 

495,  CompeUing  Witness  to  Tes- 

tify— Immunity  Statute. 

496,  Taking  of  Testimony  Before 

Trial  —  Examination  of 
Witnesses  —  Constitution- 
ality of  Statute. 


§  482.  Proof  of  Illegality— Evidence  of  Circumstances 
in  Connection  with  Making  of  Contract — Acts  of  Par- 
ties— Declarations. 

In  determining  whether  a  written  contract  is  unlawful, 
as  being  in  restraint  of  trade  and  in  violation  of  the 
anti-trust  laws,  it  is  competent  to  show  the  circumstances 
attending  the  making  of  the  contract,  the  object  in  view 
and  the  construction  placed  upon  it  by  the  parties,  as 
evidenced  by  their  dealings  under  it.^ 

So  in  a  case  in  Missouri  it  was  said  in  this  connection : 
"Of  course  there  was  no  written  agreement  forming  the 
trust,  for  that  was  '  inexpedient '  and  might  make  the 

>  Detroit  Salt  Co.  v.  National  Salt  Co.,  134  Mich,  103,  96  N.  W,  1, 

527 


§  482  STATE  STATUTES — EVIDENCE 

members  liable  to  prosecution  under  the  trust  laws,  as 
the  president  of  the  club  well  and  wisely  remarked  when 
the  club  was  formed.  When  people  set  out  to  do  acts 
that  are  either  mala  in  se  or  mala  prohibita;  they  do  not 
put  up  a  sign  over  the  door  or  a  stamp  on  the  act  declar- 
ing their  purposes  and  intent.  Concealment  is  generally 
their  prime  object.  But  as  such  matters  exist  without 
agreements  and  rest  upon  common  understanding  and 
practice,  so  the  proof  of  their  existence  may  be  of  the 
same  character,  and  while  such  laws  are  penal  in  their 
nature  and  should  be  strictly  construed  -  nevertheless  a 
pool  or  trust  may  be  as  conclusively  proved  by  facts  and 
circumstances  as  by  direct  written  evidence,  for  in  this 
respect  they  are  like  all  other  frauds."  ^ 

Where  the  testimony  establishes  a  conspiracy  the  acts 
and  declarations  of  a  coconspirator  made  in  furtherance 
of  the  common  design  are  admissible  against  all  of  the 
conspirators  and  this  is  held  to  be  true  although  such 
person  was  not  alleged  to  be  in  the  conspiracy,  if  it 
appears  from  the  evidence  that  he  was  a  party  thereto.^ 

So  a  pooling  conspiracy  to  raise  prices  in  violation  of 
the  statute  may  be  proved  either  by  witnesses  who  heard 
it,  or  who  produce  documentary  evidence  of  it,  or  by 
circumstances  from  which  it  may  be  inferred.^ 

And  in  a  case  in  Illinois  it  is  said:  ''It  makes  no  differ- 
ence that  the  agreement  for  the  illegal  combination  is 
not  a  formal  written  agreement.  It  may  be  a  verbal 
agreement  or  understanding,  or  a  scheme  not  embodied 
in  writing,  but  evidenced  by  the  action  of  the  parties." 
The  court  then  continued  as  to  the  case  before  it  and 
said:  ''In  the  present  case  each  of  six  corporations  en- 
gaged in  the  manufacture  of  glucose,  made  a  contract 
to  sell  its  plant  to  a  new  corporation  to  be  organized, 

2  Citing  State  ex  rel.  Walker  v.  Talbot,  123  Mo.  69,  27  S.  W.  366;  State 
ex  rel.  Crow  v.  Bland,  144  Mo.  534,  46  S.  W.  440. 

3  State  V.  Firemen's  Fund  Ins.  Co.,  152  Mo.  1,  52  S.  W.  595,  45  L.  R.  A. 
363,  per  Marshall,  J. 

« San  Antonio  Gas  Co.  v.  State,  22  Tex.  Civ.  App.  118,  54  S.  W.  289. 
*  International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  352. 

528 


STATE   STATUTES — EVIDENCE  §  483 

and  agreed  not  to  engage  in  such  manufacture  for  a  term 
of  years,  and  then  conveyed  all  its  property  to  the  new 
corporation  organized  to  conduct  the  same  kind  of  busi- 
ness," and  it  did  all  this  with  the  knowledge  and  under- 
standing, that  each  of  five  other  competing  corporations 
was  making  the  same  kind  of  contract,  and  executing 
the  same  kind  of  conveyance  in  respect  to  their  own 
respective  properties,  all  to  be  consummated  and  deliv- 
ered at  the  same  time,  and  under  the  direction  and 
management  of  agents  or  promoters  employed  by  all  the 
corporations.  If  the  transactions  referred  to  in  the  bill 
in  this  case  did  not  amount  to  an  absolute  agreement 
made  in  advance  between  the  six  corporations,  they  at 
least  constituted  a  scheme  understood  by  all  the  cor- 
porations, and  participated  in  by  them  all."  ^ 

So  it  is  the  right  of  corporations  to  apply  to  legislative 
bodies  for  legislation  in  their  behalf  and  it  is  also  the  right 
of  the  State  to  prove  that  such  legislation  was  sought 
and  obtained  in  the  furtherance  of  an  unlawful  design 
to  restrain  trade  and  stifle  competition  in  violation  of 
the  statute.  This  is  a  circumstance  to  be  proved  like  any 
other  to  establish  a  violation." 

§  483.  Evidence  as  to  Intent. 

Where  the  offense  consists  in  doing  a  certain  thing 
prohibited  by  statute,  the  only  intent  necessary  to  be 
shown,  in  order  to  convict,  is  the  intent  to  do  the  pro- 
hibited thing.'* 

Under  a  constitutional  provision  prohibiting  combina- 
tions or  contracts  ''for  the  purpose"  of  ''fixing  the  price 
or  regulating  the  production  of  any  article  of  trade  or 
commerce,  or  of  the  product  of  the  soil,  for  consumption 
by  the  people"  it  has  been  decided  that  to  subject  offend- 

6  Harding  v.  American  Glucose  Co.,  182  111.  551,  55  N.  E.  577,  74  Am. 
St.  Rep.  189,  64  L.  R.  A.  738,  per  Mr.  Justice  Magruder. 

^  San  Antonio  Gas  Co.  v.  Texas,  22  Tex.  Civ.  App.  118,  54  S.  W.  289. 

« Knight  &  Jillson  Co.  v.  Miller,  172  Ind.  27,  87  N.  E.  823,  citing  8  Am. 
&  Eng.  Encyc.  of  Law  (2d  cd.),  pp.  290,  291;  Standard  Oil  Co.  v.  State, 
117  Tenn.  618,  100  S.  W.  705,  10  L.  R.  A.  (N.  S.)  1015;  State  v.  Missouri, 
Kansas  &  Texas  Ry.  Co.,  99  Tex.  516,  91  S.  W.  214. 

34  529 


§  484  STATE    STATUTES — EVIDENCE 

ers  to  penalties  for  a  violation  thereof  there  must  be 
shown  a  specific  intent  to  do  the  prohibited  act  or  that 
the  association  or  combination  necessarily  tends  to  ac- 
complish the  same  result.^ 

Under  a  statute  which  forbids  entering  into  any  pool, 
trust,  agreement,  combination  or  understanding  whatso- 
ever in  restraint  of  trade  ^°  an  intent  of  parties  to  form 
such  a  combination  is  shown  by  evidence  that  the  cor- 
poration subsequently  carried  on  the  business  in  the  name 
of  the  old  concerns  which  transferred  their  property  to 
it,  and  placed  traveling  agents  in  the  field  who  pretended 
to  compete  with  each  other,  but  in  fact  secretly  agreed 
upon  prices.  ^^ 

When  the  unlawful  intent  to  form  a  combination  in 
restraint  of  trade  in  violation  of  a  statute  is  established, 
the  character  and  extent  of  the  former  competition 
between  the  parties  to  such  combination  is  immaterial.  ^^ 

§  484.  Same  Subject — Positive  Evidence  Not  Re- 
quired. 

In  a  prosecution  for  violation  of  an  anti-trust  act 
prohibiting  any  combination  to  fix,  regulate  or  control 
prices  it  is  not  necessary  to  sustain  a  conviction  that 
there  should  be  positive  evidence  that  a  combination  or 
conspiracy  was  formed  and  that  the  purpose  of  it  was 
to  fix,  regulate  or  control  prices.  So  in  a  prosecution  of 
manufacturers  of  harvesting  machinery  it  was  said  in 
this  connection:  "A  rule  of  evidence  like  this  would  in 
almost  every  case  operate  to  defeat  the  execution  of  the 
law  as  it  would  be  difficult,  if  not  impossible,  in  many 
cases  to  introduce  witnesses  who  could  testify  that  such 
a  combination  was  formed  and  that  its  purpose  was  to 
fix  or  control  prices.  It  will  be  sufficient  to  show,  as 
was  done  in  this  case,  that  two  or  more  separate  and 
independent  concerns  were  selling  the  same  line  of  ma- 

^  MacGinnis  v.  Boston  &  Montana  Consolidated  Copper  &  S.  M.  Co., 
29  Mont.  428,  75  Pac.  89. 

10  Section  5168,  Minn.  R.  L.,  1905. 

"  State  V.  Creamery  Package  Mfg.  Co.,  110  Minn.  415,  126  N.  W.  623. 

Instate  V.  Creamery  Package  Mfg.  Co.,  110  Minn.  415,  12G  N.  W.  623. 

530 


STATE  STATUTES — EVIDENCE         §  485 

chinery  or  the  same  article  in  competition  with  each 
other,  and  that  it  was  being  sold  at  a  price  fixed  by 
each,  whether  the  price  was  the  same  or  different,  and 
to  further  show  by  circumstances  that  the  several  con- 
cerns so  engaged  formed  a  combination,  pool,  or  trust 
for  the  purpose  of  selling  the  product  of  their  respective 
factories  or  establishments,  and  thereafter  the  machinery 
or  article  was  sold  by  a  central  agency  or  corporation 
owning  or  representing  the  various  plants  at  a  price 
fixed  by  it,  or  by  its  constituent  parts.  When  the  forma- 
tion of  the  trust  or  combination  is  thus  shown,  it  will 
be  presumed  to  have  been  organized  for  the  purpose  of 
fixing,  controUing  and  regulating  prices.  There  are  many 
cases  in  which  the  intention  to  violate  the  law  is  a  neces- 
sary ingredient  in  the  offense,  but  the  commonwealth 
is  not  required  to  show  by  direct  evidence  the  existence 
of  the  intent.  A  rule  of  evidence  like  this  would  defeat 
in  a  majority  of  cases  the  ends  of  justice,  as  it  is  not 
often  that  persons  who  contemplate  violating  the  law 
make  known  in  advance  their  purpose  in  such  a  way 
as  that  it  can  be  proven  against  them,  and  so,  to  meet 
conditions  like  this,  the  law  presumes  that  persons  of 
accountable  years  intended  to  do  that  which  they  did  do 
and  will  infer  from  the  act  that  the  intention  to  commit 
existed."  ^' 

§  485.  Letters  as  Evidence  of  Conspiracy — Statements 
of  Parties. 

In  a  prosecution  for  conspiracy  to  create  a  monopoly 
in  the  sale  of  a  certain  article,  letters  written  by  one  of 
the  parties  to  the  agreement  a  few  days  thereafter,  show- 
ing on  their  face  that  they  were  written  in  furtherance 
of  the  conspiracy,  are  admissible  against  a  defendant  who 
was  absent  when  they  were  written.  ^^ 

And  in  a  prosecution  for  violation  of  an  anti-trust  act 
prohibiting  combinations  to  restrain  trade,  to  increase, 

"International  Harvester  Co.  v.  Commonwealth  (Ky.  C.  A.,  1911), 
138  S.  W.  248. 

"  State  V.  Erickson,  54  Wash.  472,  103  Pac.  796. 

531 


§  486  STATE   STATUTES — EVIDENCE 

reduce,  control,  or  establish  prices  for  commodities  or  to 
prevent  competition,  evidence  has  been  held  admissible 
of  statements  made  by  the  president  of  the  defendant 
corporation  in  an  address  made  to  a  meeting  composed 
of  local  agents  and  dealers  in  the  commodity. ^^ 

Thus  in  such  a  case  it  was  held  no  error  to  permit  a 
witness  to  testify  that  at  such  a  meeting  he  heard  the 
president  of  the  defendant  corporation  state  in  an  address 
that  the  combination  of  which  the  defendant  was  a  mem- 
ber had  obtained  control  of  ninety-five  per  cent  of  the 
capital  used  in  the  manufacture  of  harvesting  machinery; 
that  a  majority  of  the  companies  heretofore  engaged  in 
that  business  were  already  in  the  combination  and  they 
hoped  to  get  the  remainder  and  that  the  company  expected 
to  make  prices  uniform  and  so  manage  the  business  that 
both  the  companies  and  their  agents  would  make  more 
money  than  they  had  done.^^ 

§  486.  Combination  to  Raise  Prices— Evidence  to 
Show  Reason  for  Increase — Rebuttal  of. 

Where  it  is  shown  that  the  price  of  an  article  con- 
trolled by  an  alleged  pooling  combination  to  raise  prices 
has  increased  to  a  certain  per  cent  since  the  formation 
of  the  combination,  the  defendant  may  introduce  evi- 
dence to  show  that  the  price  of  materials  and  labor 
entering  into  the  production  of  such  article  have,  during 
the  same  period,  increased  to  an  equal  or  greater  extent. 
So  in  a  prosecution  under  the  Kentucky  statute  against 
pooling  conspiracies  to  raise  prices  where  there  was  an 
alleged  combination  for  the  purpose  of  enhancing  the 
price  of  harvesting  machinery  and  there  was  evidence 
to  show  that  the  price  for  such  machinery  had  increased 
five  per  cent  since  the  formation  of  the  alleged  combina- 
tion, it  was  held  that  defendant  might  show  that  the  price 
of  materials  and  labor  had  increased  more  than  five  per 
cent  during  the  same  period.  ^'^ 

"  State  V.  International  Harvester  Co.,  79  Kan.  371,  99  Pac.  603. 
"  State  V.  International  Harvester  Co.,  79  Kan.  371,  99  Pac.  603. 
"  International  Harvester  Co.  v.  Commonwealth,   137  Ky.  668,   126 

532 


STATE   STATUTES — EVIDENCE         §§  487,  488 

But  where  the  inference  of  guilt  as  to  increasing  the 
price  of  an  article  has  been  rebutted  by  evidence  of 
an  advance  in  the  price  of  labor  and  material  entering 
into  the  manufacture  of  the  article  the  State  may  also 
be  permitted  to  show  in  rebuttal  that  such  advance  in 
labor  and  material  was  not  sufficient  to  justify  the  ad- 
vance in  the  price  or  to  show  in  other  ways  by  pertinent 
facts  and  circumstances  that  the  advance  was  not  attrib- 
utable to  market  conditions  or  the  increased  cost  of  labor 
and  material.^* 

§  487.  By-Laws  of  Association  or  Corporation  as  Evi- 
dence. 

In  a  prosecution  against  a  corporation  composed  of 
several  firms  or  corporations  for  conspiracy  its  by-laws 
are  properly  admissible  in  evidence  in  behalf  of  the  people 
not  only  for  the  purpose  of  disclosing  the  identity  of  the 
members  of  the  corporation  but  also  to  show  its  nature 
and  purposes.  If  the  by-laws  tend  in  any  manner  to  dis- 
close the  criminal  conspiracy  charged  they  are  held  to  be 
competent  evidence  for  that  purpose.  And  in  a  case 
where  such  by-laws  were  admitted  in  evidence  it  was 
declared  that  even  if  they  failed  to  show,  or  contained 
nothing  to  disclose  the  conspiracy  charged,  then  they 
were  clearly  harmless  as  evidence  and  their  admission 
into  the  record  could  have  had  no  prejudicial  effect  upon 
the  rights  of  the  defendant.  ^^ 

§  488.  Presumption  as  to  Innocence. 

While  it  may  not  be  a  technically  correct  legal  prop- 
osition that  in  a  civil  action  there  cannot  be  a  presump- 
tion in  favor  of  the  innocence  of  parties  who  are  proved 
to  have  been  guilty  of  illegal  acts  for  a  number  of  years 
and  up  to  a  very  short  time  before  the  commencement 
of  an  action,  yet  it  is  declared  that  it  may  to  a  certain 

S.  W.  352,  decided  under  Act  of  May  20,  1890  (Acts,  1889-1890,  chap. 
1621;  Ky.  Stat.,  §3915). 

>8  International  Harvester  Co.  v.  Commonwealth  (Ky.  C.  A.,  1911), 
138  S.  W.  248. 

•'People  V.  Sacramento  Butchers'  Assn.,  12  Cal.  App.  471,  107  Pac. 
712. 

533 


§  489  STATE   STATUTES — EVmENCE 

extent  be  correct  as  applied  to  a  particular  case.  Thus 
in  a  case  in  Nebraska  it  appeared  that  for  several  years 
prior  to  the  taking  effect  of  an  act,  the  defendants  had 
been  engaged,  through  the  means  of  an  association  which 
they  had  formed  for  that  purpose,  in  a  systematic  course 
of  conduct  made  unlawful  by  that  act.  In  forming  that 
association  and  becoming  members  thereof,  they  had 
agreed  to  continue  to  promote  its  objects  until  they 
severed  their  relations  with  it.  In  this  case  the  court 
decided  that  in  the  absence  of  evidence  showing  affirma- 
tively that  they  had  taken  the  necessary  steps  to  sever 
their  connection  with  the  association  before  or  at  the 
time  the  act  took  effect,  the  presumption  would  obtain 
against  them  that  the  action,  brought  soon  after  the  act 
took  effect,  to  enjoin  a  continuation  of  the  association 
and  restrain  the  defendants  from  carrying  out  its  pur- 
poses, was  necessary  and  proper  for  the  enforcement  of 
the  act.  20 

§  489.  Burden  of  Proof —Illegality  of  Contract— Part- 
nership Accounting. 

Under  a  statute  providing  that  any  partnership  or 
individual  creating  any  trust,  pool  or  combination  with 
any  other  corporation,  partnership,  association,  or  in- 
dividual to  regulate  or  fix  the  price  of  any  article  of 
merchandise  or  conmnodity,  shall  be  guilty  of  a  conspiracy, 
it  is  decided  that  where  in  a  suit  for  a  partnership  ac- 
counting, defendants  claim  the  contract  of  partnership 
illegal  under  the  statute,  but  it  is  not  so  on  its  face,  the 
burden  is  on  the  defendants  to  show  the  alleged  illegality.  ^^ 

^0  state  V.  Omaha  Elevator  Co.,  75  Neb.  637,  654,  110  N.  W.  874.  The 
court  said:  "By  the  terms  of  their  agreement  in  forming  this  association 
they  were  to  continue  as  its  members  and  assist  in  those  methods  until 
certain  things  specified  in  their  agreement  were  done  by  them  to  terminate 
their  connection  with  the  association.  Under  these  circumstances,  it  de- 
volved upon  them  to  affirmatively  show  that  they  had  done  those  things 
necessary  to  terminate  their  connection  with  the  association,  and  that 
there  was  no  necessity  for  the  interposition  of  the  court,  in  the  method 
pointed  out  by  the  act  itself,  to  prevent  a  continuance  of  those  things 
which  the  act  made  unlawful."    Per  Sedgwick,  C.  J. 

21  Willson  v.  Morse,  117  Iowa,  581,  91  N.  W.  823. 

534 


STATE   STATUTES — EVIDENCE  §§490,401 

§490.  Suflficiency  of  Evidence  Proof  of  Conspiracy 
to  Raise  Prices. 

In  a  prosecution  for  an  alleged  violation  of  a  statute 
against  pooling  conspiracies  to  raise  prices  it  is  not  suffi- 
cient merely  to  prove  such  a  combination  and  an  increase 
in  price  but  it  is  also  necessary  to  show  that  the  general 
conditions  affecting  the  market  of  that  conunodity  were 
normal  and  that  but  for  the  combination  complained 
of  the  competition  would  have  been  fair,  that  is,  natural 
and  usual.  Upon  proof  of  such  facts  the  burden  then  shifts 
to  the  defense  to  show  such  exceptional  conditions  affecting 
such  commodity  as  naturally  tended  to  produce  the  in- 
crease in  market  price  which  the  prosecution  has  proven.  ^- 

In  a  prosecution  for  an  alleged  violation  of  a  statute 
against  pooling  conspiracies  to  raise  prices  it  has  been 
decided  that  a  prima  facie  case  is  established  where  it 
is  shown  that  there  has  been  a  combination  among  all 
or  any  of  the  producers  of  a  commodity  of  merchandise 
by  which  its  output  is  restricted  or  controlled  alone  by 
the  confederates  in  the  scheme;  that  the  market  price 
of  the  article  was  then  materially  enhanced;  that  the 
conditions  affecting  commerce  in  general  are  normal; 
and  that  the  competition  otherwise  than  for  the  com- 
bination complained  of  would  be  fair.-^ 

§  491.  SuflSiciency  of  Evidence — Time  of  Entering  Into 
Conspiracy. 

Under  the  Kentucky  statute  prohibiting  combinations 
to  fix,  regulate  or  control  prices  it  is  not  necessary  that 
the  commonwealth  should  prove  that  the  combination 
was  entered  into  within  a  year  before  the  finding  of  the 
indictment,  it  being  sufficient  to  show  that  it  was  entered 
into  previous  to  the  indictment  and  was  in  existence 
one  year  before   the  indictment  was  returned.-^     The 

"  International  Harvester  Co.  v.  Commonwealth,  137  Ky.  668,  126  S. 
W.  352. 

*'  International  Harvester  Co.  v.  Commonwealth,  137  Kj'.  66S,  126  S. 
W.  352. 

"International  Harvester  Co.  v.  Commonwealth  (Ky.  C.  A.,  1911), 
138  S.  W.  248. 

535 


§  492         STATE  STATUTES — EVIDENCE 

court  said  in  this  case:  "When  the  formation  of  a  pool, 
trust,  or  combination  is  estabUshed  to  fix,  regulate,  or 
control  prices,  or  to  limit  the  production  of  an  article, 
its  existence  is  a  continuing  offense,  and  it  is  a  violation 
of  law  in  every  place  in  this  State  in  which  it  attempts 
to  do  or  carry  on  business."  ^^ 

§  492.  Damages — Conspiracy— Erroneous  Exclusion 
of  Evidence  as  to  Intent  to  Injure. 

Where  the  parties  to  a  combination  act  in  the  honest 
belief  that  a  third  party  is  to  join  in  the  agreement,  such 
fact  tends  to  disprove  any  intent  to  injure  him  whatever 
may  be  said  of  the  agreement  as  to  others.  So  where 
upon  the  trial  of  an  action  brought  by  the  owners  and 
operators  of  a  grain  elevator  against  an  association  of 
elevator  owners  and  a  number  of  railroad  companies  to 
recover  damages  alleged  to  have  been  caused  by  an  al- 
leged conspiracy  between  the  defendants  to  prevent  the 
plaintiffs  from  competing  with  other  owners  of  grain 
elevators  in  the  business  of  elevating  grain  at  the  same 
port,  the  trial  court  excluded  evidence,  offered  by  the 
railroad  companies,  that  the  contracts  between  the  asso- 
ciation and  the  companies  were  executed  by  the  officers 
of  the  companies  in  the  belief  that  the  plaintiffs  would 
come  into  the  association  and  take  their  share  of  the 
business,  and,  therefore,  would  not  be  prejudiced  by  the 
contracts,  it  was  decided  that  the  exclusion  of  such 
evidence  was  erroneous,  since  there  could  have  been  no 
conspiracy  to  injure  the  plaintiffs  if  the  officers  of  the 
railroad  companies,  when  they  entered  into  the  contracts, 
acted  under  the  belief  that  the  plaintiffs  themselves 
would  be  members  of  the  elevator  owners'  association 
and  evidence  of  such  belief  was  relevant  and  material 
upon  the  issue  of  a  conspiracy.  ^^ 

25  Per  Carroll,  J.,  citing  International  Harvester  Co.  v.  Commonwealth, 
124  Ky.  543,  99  S.  W.  637,  30  Ky.  Law  Rep.  716.     ' 

26  Kellogg  V.  Sowerby,  190  N.  Y.  370,  83  N.  E.  47,  rev^'g  114  App.  Div. 
916,  100  N.  Y.  Supp.  1123. 

536 


STATE   STATUTES — EVIDENCE         §§  493,  494 

§  493.  Evidence  of  Disloyalty  as  Tending  to  Prove  Non- 
Existence  of  Trust. 

The  fact  that  partie.s  to  a  trust  are  treacherous  to  each 
other  and  in  the  desire  for  business  violate  the  trust 
agreement  and  transact  business  at  a  less  figure  than  that 
agreed  upon  for  the  particular  article,  commodity  or 
service  does  not  in  any  way  tend  to  disprove  the  existence 
of  the  trust  since  it  is  said  that  it  is  the  experience  of  all 
lawful  as  well  as  unlawful  associations  that  some  of  the 
members  will  violate  the  common  agreement  for  a  selfish 
purpose.  ^^ 

§  494.  Requiring  Production  of  Books  and  Documents. 

A  statute  providing  that  in  a  proceeding  against  cor- 
porations charged  with  a  violation  of  the  anti-trust  laws 
of  the  State  the  court  may  require  the  defendants  to 
produce  certain  books  and  papers  and  that  if  in  pursu- 
ance of  an  order  to  that  effect  they  are  not  produced 
then  it  shall  be  the  duty  of  the  court  upon  proper  motion 
to  strike  out  the  pleadings  of  such  defendants  as  are 
in  default  and  proceed  to  render  judgment  against  them 
is  not  unconstitutional  as  being  a  denial  of  due  process 
of  law.  In  the  case  in  which  this  conclusion  is  reached 
the  defendants  produced  the  books  and  papers  ordered 
but  assailed  the  constitutionality  of  the  statute  both  at 
the  time  the  order  was  made  and  also  on  appeal.  The 
court  said:  "Counsel  for  respondents  have  not  pointed 
out  nor  suggested  in  what  manner,  nor  have  we  been 
able  to  see  how,  a  threatened  judgment  of  ouster  could 
or  did  in  any  conceivable  way  deprive  any  of  the  re- 
spondents of  their  property  without  due  process  of  law. 
either  within  or  without  the  meaning  of  the  State  and 
Federal  Constitutions.  They  were  clearly  served,  and 
were  in  court,  appeared  and  resisted  the  right  and  author- 
ity of  the  court  to  make  the  order.  This  was  a  'hearing  ' 
and  due  process  of  law  within  those  constitutional  pro- 
visions.    And   if,   after  such   hearing   respondents   had 

"  State  V.  Firemen's  Fund  Ins.  Co.,  152  Mo.  1,  52  S.  W.  595,  45  L.  R.  A. 
363. 

537 


§  495  STATE   STATUTES — EVmENCE 

seen  proper  to  disobey  the  order  and  thereby  have  suf- 
fered judgment  by  default  to  have  been  rendered  against 
them,  that  would  have  been  their  privilege  and  fault 
and  not  the  fault  of  the  law;  and  if  upon  the  other  hand 
they  should  obey  the  order,  as  they  did  in  this  case, 
then  the  trial  would  proceed  in  due  course  to  final  judg- 
ment upon  the  merits,  as  was  done  here."  ^^ 

A  State  statute  requiring  corporations  to  produce 
books  and  papers,  and  creating  a  presumption  of  fact 
as  to  bad  faith  and  untruth  of  a  defense  by  reason  of 
suppression  of  material  evidence  does  not  deny  due 
process  of  law;  nor  does  an  order  of  the  court  based  on 
such  a  statute  striking  out  the  answer  of  a  defendant 
corporation  which  has  refused  to  produce  material  evi- 
dence deny  due  process  and  condemn  him  unheard. '^^ 

An  order  made  pursuant  to  a  statute  in  a  suit  for 
penalties  for  violations  of  a  State  anti-trust  law  requir- 
ing a  corporation  to  produce  books  and  papers  does  not 
deny  due  process  of  law  because  thereunder  the  State 
may  eUcit  proof  not  only  as  to  the  liability  of  the  cor- 
poration but  also  proof  in  its  possession  relevant  to  its 
defense.  ^° 

§  495.  Compelling  Witnesses  to  Testify— Immunity 
Statute. 

A  statute  which  provides  that  in  a  proceeding  by  the 
State  against  a  corporation  for  violation  of  the  anti- 
trust acts  witnesses  may  be  compelled  to  testify  and 
the  defendants  required  to  produce  books  and  papers 
against  themselves  is  not  violative  of  the  Fifth  Amend- 
ment to  the  United  States  Constitution  where  the  statute 
in  such  cases  grants  the  witness  immunity  from  prosecu- 
tion.^^ 

»>  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902, 
per  Woodson,  J. 

»  Hammond  Packing  Co.  v.  State  of  Arkansas,  212  U.  S.  322,  29  Sup. 
Ct.  370,  53  L.  ed.  530,  aff'g  81  Ark.  519,  100  S.  W.  407,  1199. 

»» Hammond  Packing  Co.  v.  State  of  Arkansas,  212  U.  S.  322,  29  Sup. 
Ct.  370,  53  L.  ed.  530,  aff'g  81  Ark.  519,  100  S.  W.  407,  1199. 

"  State  ex  rel.  Hadley  v.  Standard  Oil  Co.,  218  Mo.  1,  116  S.  W.  902. 

538 


STATE   STATUTES — EVmENCE  §  495 

The  constitutional  privilege  that  a  person  shall  not 
be  required  to  give  evidence  or  to  be  a  witness  against 
himself  is  one  of  great  value  to  the  citizens.  The  author- 
ities, however,  both  State  and  national,  recognize  the 
rule  that  when  the  testimony  sought  cannot  be  used  as 
a  basis  for  or  in  aid  of  a  prosecution  which  might  be 
followed  by  fine  or  imprisonment  or  involve  a  penalty 
or  forfeiture,  by  reason  of  an  immunity  statute,  the 
reason  of  the  rule  ceases  and  the  privilege  cannot  be 
claimed.  Immunity  statutes  must  be  given  a  reasonable 
construction  and  not  a  strained  and  artificial  one,  and 
when  the  court  can  clearly  see  that  a  person  is  fully 
protected  from  the  effect  of  his  testimony  he  should  be 
required  to  give  evidence,  even  though  it  may  show  him 
to  have  been  guilty  of  criminal  offense.  In  order,  how- 
ever, that  a  statute  requiring  a  person  to  give  evidence 
which  might  tend  to  incriminate  him  may  be  held  valid, 
the  immunity  afforded  must  be  broad  enough  to  protect 
him  against  future  punishment  for  the  offense  to  which 
the  evidence  relates. ^- 

But  a  State  cannot  by  statute  grant  immunity  to  a 
witness  from  prosecution  by  the  United  States  for  a  vio- 
lation of  a  Federal  statute,  or  prevent  the  testimony 
given  by  him  under  compulsion  of  the  statute  from 
being  used  against  him  in  a  prosecution  by  the  United 
States.  And  the  absence  of  such  inamunity  from  prosecu- 
tion by  the  United  States,  does  not  necessarily  invalidate 
a  State  statute  under  the  Fourteenth  Amendment.  So 
it  was  decided  that  provisions  in  a  Kansas  anti-trust 
law,  as  construed  by  the  highest  court  of  that  State, 
compelling  witnesses  to  testify  as  to  violations  of  the 
act,  and  granting  immunity  from  prosecution  for  viola- 
tions testified  to,  were  not  void  under  the  Fourteenth 
Amendment,  because  immunity  from  Federal  prosecu- 
tion was  not  granted. ^^ 

"  People  V.  Butler  Street  Foundrj-,  201  111.  236,  66  N.  E.  349,  per  Mr. 
Justice  Hand. 

"  Jack  V.  Kansas,  199  U.  S.  372,  26  Sup.  Ct.  73,  50  L.  ed.  234,  aff'g  State 
V.  Jack,  69  Kan.  387,  76  Pac.  911,  which  was  followed  in  In  re  Bell,  69 
Kan.  855,  76  Pac.  1129. 

539 


§  49G         STATE  STATUTES — EVIDENCE 

In  a  statute  granting  immunity  from  criminal  prosecu- 
tion by  reason  of  anything  ''truthfully  disclosed"  either 
in  the  affidavit  required  by  the  act  or  in  any  testunony, 
the  words  ''truthfully  disclosed"  are  not  to  be  construed 
as  a  condition  upon  which  immunity  is  to  be  granted. ^^ 

§  496.  Taking  of  Testimony  Before  Trial — Examina- 
tion of  Witnesses — Constitutionality  of  Statute. 

The  State  when  a  litigant,  not  to  establish  a  mere 
right  of  property,  but  a  cause  of  public  justice,  is  not 
limited  by  the  Constitution  to  the  procedure  that  ordi- 
narily prevails  in  controversies  between  individuals,  but 
has  the  power  through  the  legislature  to  authorize  testi- 
mony to  be  taken  in  order  to  aid  its  attorney  general  in 
attempting  to  enforce  its  policy  as  a  political  community 
and  to  promote  the  general  welfare  by  proceedings  in 
the  courts  of  justice. ^^ 

And  the  court  further  determined  that  such  statute 
did  not  infringe  upon  personal  liberty  without  due  proc- 
ess of  law  and  did  not  come  within  the  express  or  im- 
plied prohibition  of  the  State  or  Federal  Constitutions, 
it  being  declared  that  the  application  could  only  be  made 
by  the  attorney-general  in  behalf  of  the  State,  represent- 
ing all  citizens,  as  a  party  to  an  action  to  be  prosecuted 
for  the  common  welfare,  that  there  was  reasonable  pro- 
tection against  danger  of  abuse,  that  no  vested  right  was 
interfered  with,  that  due  process  of  law  does  not  require 

'"  People  V.  Butler  Street  Foundry  Co.,  201  111.  236,  66  N.  E.  349.  The 
court  said  that  the  words  amounted  to  no  more  than  this:  "that  if,  in 
making  the  affidavit,  in  order  to  state  the  truth  it  becomes  necessary  to 
disclose  a  violation  of  the  statute,  there  shall  be  no  prosecution  against 
the  party  making  the  affidavit,  or  the  corporation  on  whose  behalf  it  is 
made  by  reason  of  such  disclosure.  In  other  words,  the  statute  requires 
the  answer  to  the  letter  of  inquiry  of  the  Secretary  of  State  to  be  made 
under  oath,  which  answer  the  statute  assumes,  when  made,  will  be  truth- 
ful, and  it  then  declares,  if  in  making  such  affidavit  it  is  disclosed  that  the 
statute  has  been  violated,  the  person  making  the  affidavit,  and  the  cor- 
poration on  whose  behalf  it  is  made  shall  be  protected  from  punishment 
by  reason  of  the  disclosures  contained  therein."    Per  Mr.  Justice  Hand. 

35  Matter  of  Davies,  168  N.  Y.  89,  61  N.  E.  118,  56  L.  R.  A.  855,  rev'g 
55  App.  Div.  245,  67  N.  Y.  Supp.  492. 

540 


STATE  STATUTES — EVIDENCE         §  496 

that  testimony  cannot  be  taken  by  a  judge  unless  it  is 
to  be  read  in  court  provided  that  the  sovereign  power 
needs  it  in  order  to  enforce  its  own  laws  through  judicial 
proceedings,  and  that  means  of  testing  the  rights  of  a 
witness  under  the  statute  were  afforded  by  the  laws 
of  the  State  and  that  the  courts  are  open  and  a  motion 
may  be  made  to  protect  any  of  his  substantial  rights.  ^^ 

And  the  proceeding  authorized  by  the  Anti-]\Ionopoly 
Act  of  1897  in  New  York  ^^  for  the  examination  of  wit- 
nesses before  the  commencement  of  the  action  was  also 
decided  not  to  be  a  special  proceeding  within  the  meaning 
of  the  provisions  of  the  Code  of  Civil  Procedure. ^^ 

The  Anti-Monopoly  Act  of  New  York  State  ^^  requir- 
ing any  justice  of  the  Supreme  Court  upon  application 
by  the  attorney  general  to  grant  an  order  for  the  exami- 
nation before  the  justice  or  a  referee  appointed  by  him 
of  a  person  whose  testimony  is  by  the  attorney  general 
deemed  material  and  necessary  to  prepare  his  complaint 
or  prepare  for  trial  of  an  action  about  to  be  instituted 
by  him  under  the  act  was  construed  by  the  Court  of 
Appeals  as  not  imposing  non-judicial  duties  upon  judicial 
officers  and  it  was  determined  that  its  constitutionality 
could  not  be  successfully  assailed  upon  that  ground. 
It  was  declared  that  the  duties  so  imposed  are  judicial  in 
character  because  incidental  to  a  judicial  proceeding; 
that  they  are  judicial  in  form,  because,  although  the 
language  used  is  mandatory  on  its  face,  a  justice  is  not 
required  to  grant  the  order  as  a  matter  of  course,  but 
may  exercise  the  judicial  function  of  deciding  whether 
the  application  makes  out  a  case  pursuant  to  the  statute 
and  authorizes  the  order  according  to  its  provisions ;  that 
they  are  judicial  in  substance,  because  the  object  of  the 
act  is  to  "secure  testimony"  in  relation  to  violations 

'•  Matter  of  Davics,  168  N.  Y.  89,  61  N.  E.  118,  56  L.  R.  A.  855,  rev'g 
55  App.  Div.  245,  67  N.  Y.  Supp.  492. 

"  Laws,  1897,  chap.  383. 

»«  Matter  of  Attorney  General,  155  N.  Y.  441,  50  N.  E.  57,  dismissing 
Matter  of  Attorney  General's  Appeal,  22  App.  Div.  285,  47  N.  Y.  Supp. 
883. 

»» Laws,  1899,  chap.  690. 

541 


§  496         STATE  STATUTES — EVIDENCE 

thereof  and  while  the  testimony  can  only  be  used  by 
the  attorney  general  to  prepare  his  complaint  or  prepare 
for  trial,  either  use  is  a  judicial  purpose  incidental  to  a 
judicial  proceeding  about  to  be  instituted  thereunder 
and  within  the  power  of  the  legislature  to  intrust  to  the 
Supreme  Court  or  its  judges/^ 

A  statute  providing  that  in  proceedings  thereunder  for 
violation  of  its  provisions  as  to  combinations,  monop- 
olies and  trusts,  the  court  shall,  upon  the  filing  of  a 
statement  by  the  attorney  general  in  writing  setting 
forth  the  name  or  names  of  any  officer,  director  or  em- 
ployee without  the  jurisdiction  of  the  State  courts,  whose 
testimony  he  desires  to  take,  issue  a  notice  in  writing 
directed  to  the  attorney  or  attorneys  of  record  in  said 
cause  requiring  such  attorney  or  attorneys  to  have  such 
person  or  persons  at  the  place  named  in  the  application, 
at  the  time  fixed  then  and  there  to  testify  has  been 
construed  as  providing  in  legal  effect  that  notice  to  an  at- 
torney of  record  should  be  notice  to  the  client  in  the 
particular  matter  in  hand  and  to  in  no  way  infringe  upon 
the  rights  of  an  attorney  nor  to  be  out  of  line  with  the  un- 
derlying theory  that  an  enrolled  attorney  is  an  officer  of 
the  court  and  may  have  duties  assigned  to  him  as  such 
officer. ^^  The  court  declared:  ''An  attorney  at  law  is 
first  of  all  an  officer  of  the  court.  As  such  officer  and  not 
otherwise,  he  moves  and  lives  and  has  his  being.  His 
very  authority  to  pursue  his  historic  and  honorable 
profession  springs  from  an  act  of  the  law  and  of  the 
court,  and  may  be  terminated  by  the  same  authority 
and  his  duties  are  circumscribed  and  prescribed  by  law. 
In  the  due  and  orderly  administration  of  justice  through 
the  courts  it  is  the  duty  of  an  attorney  at  law  to  assist 
the  court.  If  rectus  in  curia  he  is  by  the  same  token 
amicus  curiae."  ^^ 

«>  Matter  of  Davies,  168  N.  Y.  89,  61  N.  E.  118,  56  L.  R.  A.  855,  rev'g 
55  App.  Div.  245,  67  N.  Y.  Supp.  492. 

«  State  ex  inf.  Hadley  v.  Standard  Oil  Co.,  194  Mo.  124,  91  S.  W.  1062. 
«  Per  Lawren,  J.,  construing  Mo.  Rev.  Stats.,  1899,  §§  8983,  8984. 


542 


LABOR   OB   TRADE    UNIONS 


CHAPTER  XXX 


LABOR  OR  TRADE   UNIONS 


497.  Right    of    Workingmen    to 

Organize. 

498.  Right    of    Workingmen    to 

Organize  —  Expression  of 
Courts. 

499.  Labor   Union — F^resumption 

as  to  Being  Law-Abiding 
Body. 

500.  Right  to  Organize  Extends 

to  Labor  Whether  Physi- 
cal or  Intellectual. 
601.  Right    of    Workingmen    to 
Strike. 

502.  Right  to  Strike — Limitations 

on. 

503.  Picketing  ^  Legality    of  — 

General  Rule. 

504.  Picketing — Decisions    Hold- 

ing Unlawful. 

505.  Picketing — When  Unlawful. 

506.  Picketing— WTiether  Lawful 

Depends  on  Facts  and 
Circumstances  —  Rule  aa 
Supported   by   Authority. 

507.  Picketing — No  Injunction  to 

Protect. 

608.  Picketing — Ordinances  as  to 

Valid. 

609.  Right  to  Strike — Refusal  to 

Work  with  Non-Union 
Man  —  Massachusetts 
Rule. 

510.  Right  to  Strike— Refusal  to 

Work  with  Non-Union 
Man — Pennsylvania  Rule. 

511.  Right  to  Strike— Refusal  to 

Work  with  Non-Union 
Man — New    York    Deci- 


§  512.  Right  to  Strike— Refusal  to 
Work  with  Non-Union 
Man — Other  Decisions, 

513.  Right  to  Strike — Refusal  to 

Work     with      Non-Union 
Man — Conclusion. 

514.  Use      of      Persuasion      by 

Strikers. 

515.  Use  of  Persuasion  —  Em- 

ployees Under  Contract. 

516.  Use  of  Violence,  Threats  or 

Intimidation   by  Strikers. 

517.  Threats  —  Intimidation  — 

What  Constitute. 

518.  Boycotts  Generally. 

519.  Boycott    Circulars  —  When 

Held  Legal. 

520.  Boycott    Circulars  —  When 

Held  Illegal. 

521.  Boycott    Circulars — Consti- 

tutional   Provision    as    to 
Freedom  of  Speech. 

522.  Contracts      Between      Em- 

ployer and  Employee. 

523.  Contracts      Between      Em- 

ployer and  Employee  Con- 
tinued. 

524.  Officers — Power     of     Trade 

Union's  Board  of  Directors 
or  Committee  to  Contract. 
'  525.  Injunction  —  Sufficiency  of 
Complaint  for  Threatened 
Injury  to  Persons  and 
Property  —  New  York 
Code. 

526.  Parties  —  Process  —  Service 

— Injunction. 

527.  Injunction — Right  to  in  New 

York. 

543 


§497 


LABOR   OR  TRADE   UNIONS 


628.  Injunction  to  Restrain  Pay- 
ment of  Strike  Benefits — 
Specific  Performance. 

529.  Injunction — Evidence  of  Un- 

la^^iul  Acts  of  Members 
During  Strike. 

530.  Injunction  —  No     Defense 

That  Act  a  Crime. 

531.  Injunction    —    Question    of 

Law  and  Fact. 

532.  Preliminary    Injunction    — 

^^^len  Vacated  as  to  Union 
but  Permitted  to  Stand  as 
to  Individual  Members 
but  Not  so  as  to  Prevent 
Peaceful  Picketing. 

533.  Injimction  —  Contempt  — 

Nature  of  Proceeding. 

534.  Constitutional  Law  —  Con- 

gress no  Power  to  Make 
It  a  Criminal  Offense  for 
Carrier  to  Discharge  Em- 
ployee Because  Member  of 


Labor  Union  —  Fifth 
Amendment  —  Contract 
— Interstate  Commerce. 
§  535.  Statute  Prohibiting  Dis- 
charge of  Employee  Be- 
cause Member  of  Labor 
Union. 

536.  Statute     as     to     Becoming 

Member  of  Labor  Union 
— Condition  of  Employ- 
ment. 

537.  Statute   Prohibiting   Grant- 

ing of  Injunction  Against 
Union. 

538.  Statute  as  to  Suits  Against 

Unincorporated  Associa- 
tions. 

539.  Statute    as    to    Labels    and 

Stamps. 

540.  Legality    of    Union    as    Af- 

fected by  Constitution  of 
Union. 


§  497.  Right  of  Workingmen  to  Organize. 

A  workingman  has  the  right  to  fix  a  price  upon  his 
labor,  and  to  refuse  to  work  at  a  less  price.  He  may- 
refuse  to  work  for  a  certain  individual  or  firm  or  he 
may  prescribe  the  terms  upon  which  he  will  work.  The 
courts  have  generally  recognized  this  right  in  the  in- 
dividual and  have  declared  that  what  he  may  do  in  this 
respect  several  individuals  may  combine  to  do.  And 
the  doctrine  is  now  generally  accepted  as  settled  that 
workingmen  may  lawfully  combine  for  the  purpose  of 
fixing  and  maintaining  a  rate  of  wages  and  for  the  better- 
ment of  their  condition  generally.^ 

1  United  States:  National  Fireproofing  Co.  v.  Mason  Builders'  Assn.,  169 
Fed.  259,  94  C.  C.  A.  535;  Wabash  R.  Co.  v.  Hannahan  (U.  S.  C.  C),  121 
Fed.  563. 

California:  Parkinson  Co.  v.  Building  Trades  Council,  154  Cal.  581,  98 
Pac.  1027. 

Connecticut:  State  v.  Stockford,  77  Conn.  227,  58  Atl.  769,  107  Am.  St. 
Rep.  28. 

Illinois:  Wilson  v.  Hey,  232  111.  389,  83  N.  E.  928. 

Massachusetts:  Pickett  v.  Walsh,  192  Mass.  572,  580,  78  N.  E.  753,  6  L. 
R.  A.  (N.  S.)  1067. 

544 


LABOR   OR   TRADE    UNIONS  §  498 

§  498.  Right  of  Workingmen  to  Organize — Expres- 
sions of  Courts. 

In  a  case  in  New  York  it  is  said  that  the  organization 
of  workingmen  is  not  against  any  public  pohcy  but  must 
be  regarded  as  having  the  sanction  of  the  law  when  it 
is  for  such  legitimate  purposes  as  that  of  obtaining  an 
advance  in  the  rate  of  wages  or  compensation  or  of  main- 
taining such  rate.  An  organization  for  such  purposes 
is  in  this  case  spoken  of  as  proper  and  praiseworthy  and 
perhaps  to  fall  within  that  general  view  of  human  society 
which  perceives  an  underlying  law  that  men  should  unite 
to  achieve  that  which  each  by  himself  cannot  achieve, 
or  can  achieve  less  readil3\- 

And  it  was  said  by  Judge  Taft:  "It  is  of  benefit  to 
them  and  the  public  that  laborers  should  unite.  They 
have  labor  to  sell.  If  they  stand  together  they  are  often 
able,  all  of  them,  to  command  better  prices  for  their 
labor,  than  when  dealing  singly  with  rich  employers, 
because  the  necessities  of  the  single  employee,  may  compel 
him  to  accept  any  terms  offered."  ^ 

And  in  one  of  the  earlier  cases  it  was  also  said:  "Every 
man  has  a  right  to  determine  what  branch  of  business 
he  will  pursue,  and  to  make  his  own  contracts  with  whom 
he  pleases  and  on  the  best  terms  he  can.  He  may  change 
from  one  occupation  to  another,  and  pursue  as  many 

Michigan:  Beck  v.  Railway  Teamsters'  Protective  Union,  118  Mich. 
497,  77  N.  W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

Minnesota:  State  v.  Duluth  Board  of  Trade,  107  Minn.  506,  121  N.  W. 
395;  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  VV.  663,  103 
Am.  St.  Rep.  28. 

Missouri:  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  114  S.  W.  997. 

New  Jersey:  Martin  v.  McFall,  65  N.  J.  Eq.  91,  55  Atl.  465. 

New  York:  Jacobs  v.  Cohen,  183  N.  Y.  207,  76  N.  E.  5,  2  L.  R.  A.  (N.  S.) 
292,  111  Am.  St.  Rep.  730;  National  Protective  Assoc,  of  Steam  Fitters 
&  Helpers  v.  Cumming,  170  N.  Y.  315,  63  N.  E.  369;  Schlang  v.  Ladies' 
Waist  Makers'  Union,  124  N.  Y.  Supp.  289,  67  Misc.  R.  221. 

Extent  of  right  to  combine  against  receiver:  United  States  v.  Weber  (U.  S. 
C.  C),  114  Fed.  950. 

2  Curran  v.  Galen,  152  N.  Y.  33,  46  N.  E.  297,  37  L.  R.  A.  802,  57  Am. 
St.  Rep.  496,  aff'g  Curran  v.  Galen,  77  Hun,  610,  28  N.  Y.  Supp.  1134. 

'  Thomas  v.  Cincinnati,  N.  O.  &  T.  Ry.  Co.  (U.  S.  C.  C),  62  Fed.  803, 
817. 

35  545 


§  498  LABOR  OR  TRADE  UNIONS 

different  occupations  as  lie  pleases,  and  competition  in 
business  is  lawful.  He  may  refuse  to  deal  with  any  man 
or  class  of  men.  And  it  is  not  a  crime  for  any  number 
of  persons,  with  a  lawful  object  in  view,  to  associate 
themselves  together  and  agree  that  they  will  not  work 
for,  or  deal  with  a  certain  man  or  classes  of  men,  or 
work  under  a  certain  price  or  with  certain  conditions."  * 

And  in  a  leading  case  decided  in  Michigan,''  it  is  said: 
' '  Laborers  have  the  right  to  fix  a  price  upon  their  labor, 
and  to  refuse  to  work  unless  that  price  is  obtained.  Singly, 
or  in  combination,  they  have  this  right.  They  may  or- 
ganize in  order  to  improve  their  condition  and  secure 
better  wages.  They  may  use  persuasion  to  induce  men 
to  join  their  organization,  or  to  refuse  to  work  except 
for  an  established  wage.  They  may  present  their  cause 
to  the  public  in  newspapers  or  circulars,  in  a  peaceable 
way,  and  with  no  attempt  at  coercion.  If  the  effect  in 
such  case  is  ruin  to  the  employer,  it  is  damnum  absque 
injuria,  for  they  have  only  exercised  their  legal  rights."  ^ 

So  in  a  recent  case  it  is  said  that  workingmen  have, 
in  the  absence  of  a  contract,  the  absolute  right,  no  public 
duty  forbidding,  to  prescribe  the  terms  upon  which  they 
will  work  for  anyone.  They  have  the  right  to  refuse 
to  work  unless  these  terms  are  accepted  and  contractual 
relations  thereby  created.  And  they  may  do  this  severally 
or  in  combination,  in  a  union  or  out  of  it.  So  long  as 
they  either  individually  or  collectively  through  their 
labor  unions,  direct  their  efforts  solely  to  the  control  of 
their  own  labor  and  to  formulating  plans  for  bettering 
its  condition  and  to  prescribing  the  terms  upon  which 
it  may  be  had  that  will  not  interfere  illegally  with  the 
rights  of  others  they  are  within  the  bounds  of  the  law. 
The  right  of  every  man  in  this  country  to  dispose  of  his 
own  labor  as  he  chooses,  so  long  as  he  does  not  contra- 
vene any  duty  to  the  public  nor  interfere  with  the  legal 

*  Carew  v.  Rutherford,  106  Mass.  1,  8  Am.  Rep.  287,  per  Chapman,  C.  J. 
^  Beck  V.  Railway  Teamsters'  Protective  Union,  118  Mich.  497,  77  N. 
W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 
«  Per  Grant,  C.  J. 

546 


LABOR   OR   TRADE    UNIONS  §  498 

rights  of  others,  is  both  fundamental  and  axiomatic. 
And  what  they  can  lawfully  do  acting  singly  they  can 
lawfully  do  conjointly,  each  and  all  having  a  like  interest 
to  conserve  and  promote.' 

And  in  another  case  it  is  said  that  the  right  of  work- 
ingmen  to  unite  for  their  own  protection  is  undoubted, 
and  so  is  their  right  to  strike  peaceably  because  of  griev- 
ances.^ 

And  again,  in  Missouri  the  court  says:  "The  authorities 
seem  to  be  uniform  in  holding  that  individuals  have  a 
perfect  legal  right  to  form  labor  organizations  for  the 
protection  and  promotion  of  the  interest  of  the  laboring 
classes,  and  deny  the  power  to  enjoin  members  of  such 
organizations  from  peaceably  withdrawing  from  the  serv- 
ice of  the  employer."  ^ 

And  again  in  another  case  it  is  declared:  ''The  right 
of  labor  to  organize  for  its  mutual  benefit  and  protec- 
tion is  as  well  settled  and  determined  by  law  as  the  right 
of  capital  to  organize  for  the  same  purpose.  That  one 
may  resort  to  the  voluntary  association  of  individuals 
without  incorporation  and  the  other  to  articles  of  incor- 
poration is  wholly  immaterial,  provided  the  voluntary  as- 
sociation be  one  for  lawful  purposes  and  be  conducted  in 
lawful  manner.  That  such  associations  may  be  secret 
in  character,  may  have  and  enforce  by-laws,  and  act 
through  officers  and  agents  cannot  longer  be  disputed. 
Their  members  may  stand  together,  may  accumulate 
funds  for  the  support  of  those  of  their  number  not  em- 
ployed, may  unite  with  other  unions,  may  advise  with 
their  officers  and  others  as  to  their  interests  and  employ- 
ment, may  expel  those  who  refuse  obedience  to  the  au- 
thority of  the  association's  laws  and  may  individually  or 
collectively  peaceably  leave  their  employer's  service  when 
the  terms  thereof  become  unsatisfactory  to  them."  ^° 

»  Meier  v.  Speer  (Ark.,  1910),  132  S.  VV.  988,  per  Wood,  J. 
« Irving  V.  Joint  District  Council  (U.  S.  C.  C),  ISO  Fed.  896. 
»  Lohse  Patent  Door  Co.  v.  Fuelle,  215  xMo.  421,  444.  114  S.  W.  997.  1002. 
«>Hitchman  Coal  &  Coke  Co.  v.  Mitchell  (U.  S.  C.  C),  172  Fed.  963, 
per  Dayton,  J.,  citing  Thomas  v.  C,  N.  O.  &  T.  P.  Ry.  Co.  (U.  S.  C.  C), 

547 


§§  499,  500  LABOR   OR   TRADE    UNIONS 

§  499.  Labor  Union — Presumption  as  to  Being  Law- 
Abiding  Body. 

A  labor  union  has  the  same  right  as  an  individual  to 
threaten  to  do  that  which  it  may  lawfully  do,  and,  until 
as  an  association  it  is  presumptively  shown  to  have  acted 
unlawfully,  it  is  entitled  to  be  regarded  as  a  law-abiding 
body.^i 

§  500.  Right  to  Organize  Extends  to  Labor  Whether 
Physical  or  Intellectual. 

In  the  application  of  the  doctrine  that  laboring  men 
may  combine  for  the  purpose  of  regulating  their  wages 
it  has  been  decided  that  such  combinations  are  legal 
whether  the  labor  is  physical  or  intellectual,  and  that 
an  agreement  or  combination  for  the  purpose  of  fixing 
and  determining  the  value  of  wages  or  other  charges  for 
personal  services  is  not  within  the  terms  of  a  statute 
prohibiting  any  ''combination  and  conspiracy  in  restraint 
of  trade."  So  it  is  decided  that  a  rule  of  a  board  of  trade 
which  provides  that  all  members  of  the  board  shall 
charge  a  uniform  and  determined  rate  of  commission 
for  selling  grain  for  non  members,  and  providing  penalties 
for  the  violation  of  such  rule  does  not  violate  such  a 
statute.  ^^ 

So  in  Iowa  it  is  decided  that  a  statute  of  that  State 
is  aimed  at  unlawful  combinations  in  restraint  of  trade 
and  does  not  prohibit  physicians  from  associating  them- 
selves together  for  the  purpose  of  agreeing  upon  a 
schedule  of  prices  to  be  charged  for  their  professional 
services.^' 

62  Fed.  803;  Hopkins  v.  Oxley  Stave  Co.,  83  Fed.  912,  28  C.  C.  A.  99;  Ar- 
thur  V.  Oakes,  63  Fed.  310,  11  C.  C.  A.  209,  25  L.  R.  A.  414. 

11  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union,  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  96,  case  of  motion  to  continue  a  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff's business. 

12  State  V.  Duluth  Board  of  Trade,  107  Minn.  506,  121  N.  W.  395,  de- 
cided under  chap.  359,  p.  487,  Laws,  1899;  R.  L.,  1095,  §  5168. 

"Rohlf  V.  Kasemeier,  140  Iowa,  182,  118  N.  W.  276,  decided  under 
Iowa  Code,  §  5060. 

548 


LABOR  OR  TRADE  .UNIONS  §  501 

§  501.  Right  of  Workingmen  to  Strike. 

In  the  application  of  the  doctrine  that  workingmen 
may  organize  for  the  purpose  of  fixing  and  maintaining 
a  rate  of  wages  it  has  also  been  generally  held  that  in 
order  to  make  effective  the  purpose  of  their  organization, 
they  are  within  the  lawful  exercise  of  their  rights  in  com- 
bining to  leave  the  service  of  their  eniploj^er  and  may 
so  leave  and  refuse  to  return  to  work  until  their  demands 
are  complied  with.  And  their  action  in  initiating  the 
strike  being  lawful  it  does  not  become  unlawful  by  its 
continuance  unless  accompanied  by  acts  of  violence  or 
intimidation.^^ 

So  whore  a  manufacturing  corporation  required  its 
employees,  members  of  a  labor  union,  to  increase  the 
amount  of  their  work,  without  any  increase  in  their 
compensation,  by  doing  work  for  another  manufacturer 
of  like  goods  whose  employees,  belonging  to  the  same 
union,  had  stopped  work  in  consequence  of  a  strike  or 
lockout  in  their  factory,  the  former  employees,  by  declin- 
ing to  do  the  additional  work  and  quitting  work  them- 
selves when  required  to  do  it  by  their  employers,  were 


»*  United  Slates:  Iron  IVIoulders'  Union  v.  Allis-Chalmers  Co.,  166  Fed. 
45,  91  C.  C.  A.  631,  20  L.  R.  A.  (N.  S.)  315.  Goldfield  Consol.  Mines  Co. 
V.  Goldfield  Miners'  Union  (U.  S.  C.  C),  159  Fed.  500;  Delaware,  L.  &  W. 
R.  Co.  V.  Switchmen's  Union  of  North  America  (U.  S.  C.  C),  158  Fed.  541. 
See  Wabash  R.  Co.  v.  Hannahan  (U.  S.  C.  C),  121  Fed.  563. 

California:  Pierce  v.  Stablemen's  Union,  156  Cal.  70,  103  Pac.  324; 
Parkinson  Co.  v.  Building  Trades  Council  of  Santa  Clara  County,  154  Cal. 
581,  98  Pac.  1027. 

Connecticut:  State  v.  Stockford,  77  Conn.  227,  58  Atl.  769,  107  Am.  St. 
Rep.  28. 

Indiana:  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local 
Union,  165  Ind.  421,  75  N.  E.  877,  2  L.  R.  A.  (N.  S.)  788. 

Massachiisetls:  Pickett  v.  Walsh,  192  Mass.  572,  580,  78  N.  E.  753,  6 
L.  R.  A.  (N.  S.)  1067. 

Minnesota:  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W. 
663,  103  Am.  St.  Rep.  477. 

Missouri:  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  114  S. 
W.  997. 

New  Jersey:  Connett  v.  United  Hatters  of  North  America,  76  N.  J.  Eq. 
202,  74  Atl.  188;  Jersey  City  Printing  Co.  v.  Cassidy,  63  N.  J.  Eq.  759,  53 
Atl.  230. 

549 


§  502  LABOR  OR  TRADE  UNIONS 

seeking  to  aid  their  fellow  members  of  the  union  in  a 
peaceable  way  which  was  justifiable  and  permissible.^^ 

And  an  employer  has  no  right  to  demand  reasons  for 
employees  quitting  work  and  this  rule  applies  to  a  body 
of  men,  organized  for  purposes  beneficial  to  themselves, 
who  refuse  to  work.  "The  reason  may  no  more  be 
demanded,  as  a  right,  of  the  organization  than  of  an 
individual,  but  if  they  elect  to  state  the  reason  their 
right  to  stop  work  is  not  cut  off  because  the  reason  seems 
inadequate  or  selfish  to  the  employer  or  to  organized 
society. 


"   16 


§  502.  Right  to  Strike — Limitations  on. 

Organized  labor's  right  of  coercion  and  compulsion  is 
limited  to  strikes  against  persons  with  whom  the  organi- 
zation has  a  trade  dispute.  In  other  words,  a  strike  against 
A,  with  whom  the  strikers  have  no  trade  dispute,  to  com- 
pel A  to  force  B  to  yield  to  the  striker's  demands,  is  an 
unjustifiable  interference  with  the  right  of  A  to  pursue 
his  calling  as  he  thinks  best.^^    Workingmen  have  a  right 

"  Searle  Manufacturing  Co.  v.  Terry,  56  Misc.  265,  106  N.  Y.  Supp.  438. 

^^  Id.,  321,  per  Parker,  Ch.  J.;  National  Protective  Assoc,  of  Steam 
Fitters  &  Helpers  v.  Gumming,  170  N.  Y.  315,  321,  63  N.  E.  369,  afT'g  53 
App.  Div.  227. 

"  Pickett  V.  Walsh,  192  Mass.  572,  78  N.  E.  753,  6  L.  R.  A.  (N.  S.)  1067. 
See  as  supporting  the  proposition  the  following  cases: 

United  States:  Loewe  v.  California  State  Confederation  (U.  S.  C.  C), 
139  Fed.  71;  Hopkins  v.  Oxley  Stave  Co.,  83  Fed.  912,  28  C.  C.  A,  99; 
Toledo,  Ann  Arbor  &  North  Michigan  Ry.  Co.  v.  Pennsylvania  Rd.,  54 
Fed.  730,  19  L.  R  A.  387;  Casey  v.  Cincinnati  Typographical  Union  (U. 
S.  C.  C),  45  Fed.  135,  12  L.  R.  A.  193. 

Connecticut:  State  v.  Ghdden,  55  Conn.  46,  8  Atl.  890,  3  Am.  St.  Rep. 
23. 

Illinois:  Purington  v.  Hinchff,  219  111.  159,  76  N.  E.  47,  2  L.  R.  A.  (N.  S.) 
824. 

Maryland:  My  Maryland  Lodge  v.  Adt,  100  Md.  238,  59  Atl.  721,  68 
L.  R.  A.  752. 

Michigan:  Beck  v.  Railway  Teamsters'  Protective  Union,  118  Mich. 
497,  77  N.  W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

Minnesota:  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W. 
663,  63  L.  R.  A.  753,  103  Am.  St.  Rep.  477,  overuling  Bohn  Manufacturing 
Co.  V.  Hollis,  54  Minn.  233,  55  N.  W.  1119, 21  L.  R.  A.  337,  40  Am.  St.  Rep. 
319. 

New  Jersey:  Ban  v.  Essex  Trades  Council,  53  N.  J.  Eq.  101,  30  Atl.  881. 

550 


LABOR  OR  TRADE  UNIONS  §  503 

to  refuse  to  work  and  to  strike  where  their  purpose  is 
to  secure  better  terms  of  employment  to  themselves  or  to 
have  a  grievance  redressed  provided  the  object  is  not 
to  inflict  injury  upon  others  or  to  gratify  maUce.  A 
peaceable  and  orderly  strike  not  to  harm  others,  but  to 
improve  their  own  condition,  is  not  in  violation  of  law."^ 

Some  strikes  by  labor  unions  are  held  illegal  as  where  one 
was  set  on  foot  to  force  the  employer  to  pay  a  fine,  im- 
posed upon  him  by  the  union  of  which  he  was  not  a  mem- 
ber, for  not  giving  the  union  all  his  work.^^ 

And  in  a  case  in  Massachusetts  it  is  decided  that 
where  a  labor  union  combines  to  enforce  a  rule  that 
grievances  between  an  individual  member  of  the  union 
and  his  employer,  which  grievances  are  not  common  to 
the  members  as  a  class,  shall  be  decided  by  the  employees 
and  that  decision  enforced  by  a  strike  on  the  part  of 
all,  is  illegal  and  that  the  employer  is  entitled  to  an 
injunction  restraining  the  defendants  from  combining 
together  to  further  such  a  strike  and  from  doing  any  acts 
whatever,  peaceful  or  otherwise,  in  furtherance  thereof, 
including  the  payment  of  strike  benefits  and  putting  the 
employer  on  an  unfair  list.'° 

§  503.  Picketing— Legality  of— General  Rule. 

It  may  be  stated  generally  that  picketing  in  reasonable 
numbers  and  in  a  peaceful  manner  for  purposes  of  ob- 
servation only  of  the  employer's  premises  from  the  high- 

Pennsylvania:  Purvis  v.  Local  No.  500,  United  Brotherhood  of  Carpen- 
ters, 214  Pa.  St.  348,  63  Atl.  585. 

Virginia:  Crump  v.  Commonwealth,  84  Va.  927,  6  S.  E.  620,  10  Am.  St. 
Rep.  895. 

Wisconsin:  Gatzow  v.  Buening,  106  Wis.  1,  81  N.  W.  1003,  49  L.  R.  A. 
475,  80  Am.  St.  Rep.  1. 

England:  Temperton  v.  Russell  [1S03],  12  B.  715. 

Contra,  Marx  &  Haas  Joan.s  Clothing  Co.  v.  Watson,  168  Mo.  133,  67 
S.  W.  391,  56  L.  R.  A.  951,  90  Am.  St.  Rep.  440.  See  also  54  Minn.  233. 
above  noted. 

"  National  Protective  Assoc,  of  Steam  Fitters  &  Helpers  v.  Cumming, 
170  N.  J.  315,  321,  63  N.  E.  369,  aff'g  53  App.  Div.  227. 

'9  Carew  v.  Rutherford,  106  Mass.  1,  8  Am.  Rep.  287. 

M  Revnolds  v.  Davis,  198  Mas.^.  294,  84  N.  E.  457. 

551 


§  503  LABOR   OR  TRADE   XTNIONS 

ways  or  streets  in  its  vicinity  and  endeavoring  by  agree- 
ment, persuasion  or  appeal  only  to  prevent  other  per- 
sons from  becoming  employees  of  the  plaintiff  employer 
will  be  permitted  by  the  courts.-^ 

So  in  a  case  in  the  Circuit  Court  of  Appeals,  in  which 
an  injunction  had  been  granted  against  labor  unions 
restraining  the  use  by  them  of  persuasion  and  picketing 
it  was  said  by  the  court  that  it  thought  that  the  decree 
as  to  picketing  and  persuasion  went  beyond  the  line. 
And  in  this  connection  it  was  said:  ''The  right  to  per- 
suade new  men  to  quit  or  decline  employment  is  of  little 
worth  unless  the  strikers  may  ascertain  who  are  the  men 
that  their  late  employer  has  persuaded  or  is  attempting 
to  persuade  to  accept  employment.  Under  the  name  of 
persuasion,  duress  may  be  used;  but  it  is  duress,  not 
persuasion,  that  should  be  restrained  and  punished. 
In  the  guise  of  picketing,  strikers  may  obstruct  and  annoy 
the  new  men,  and  by  insult  and  menacing  attitude  in- 
timidate them  as  effectually  as  by  physical  assault.  But 
from  the  evidence  it  can  always  be  determined  whether 
the  efforts  of  the  pickets  are  limited  to  getting  into  com- 
munication with  the  new  men  for  the  purpose  of  present- 
ing arguments  and  appeals  to  their  free  judgments. 
Prohibitions  of  persuasion  and  picketing  as  such  should 
not  be  included  in  the  decree."  ^^ 

And  in  another  case  it  was  decided  that  acts  of  sym- 
pathizers with  labor  unions,  consisting  in  picketing  a 
store  declared  "  unfair  "  by  the  unions,  circulating  near  it 
printed  cards  asking  union  men  to  keep  away  from  it, 
and  endeavoring  to  keep  them  and  the  public  away  by 

2'  Searle  Manufacturing  Co.  v.  Terry,  56  Misc.  265,  106  N.  Y.  Supp. 
438.  See  also  as  supporting  the  text:  Pope  Motor  Car  Co.  v.  Keegan  (U. 
S.  C.  C),  1.50  Fed.  148;  Union  Pac.  R.  Co.  v.  Ruef  (U.  S.  C.  C),  120  Fed. 
102;  State  v.  Stockford,  77  Conn.  227,  58  Atl.  769,  107  Am.  St.  Rep.  28; 
Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local  Union,  165 
Ind.  421,  75  N.  E.  877,  2  L.  R.  A.  (N.  S.)  788;  Foster  v.  Retail  Clerks'  Pro- 
tective Assn.,  78  N.  Y.  Supp.  860,  39  Misc.  R.  (N.  Y.)  48;  Mills  v.  United 
States  Printing  Co.,  91  N.  Y.  Supp.  185,  99  App.  Div.  (N.  Y.)  605. 

22  Iron  Moulders'  Union  v.  AUis-Chalraers  Co.,  116  Fed.  45,  91  C.  C.  A. 
631,  20  L.  R.  A.  (N.  S.)  315,  per  Baker,  J. 

552 


LABOR  OR  TRADE    UNIONS  §  504 

persuasion  and  peaceable  means  only  are  not  illegal 
and  that  the  further  commission  of  such  acts  would  not 
be  enjoined  at  the  suit  of  the  proprietors  of  the  store. 
And  it  was  held  in  this  case  that  the  motive  with  which 
such  acts  were  done  was  immaterial.-^ 

§  504.  Picketing — Decisions  Holding  Unlawful. 

While  as  we  have  stated  in  the  preceding  section  the 
weight  of  authority  supports  the  doctrine  that  picketing 
is  lawful  when  simply  confined  to  a  patrolling  in  reason- 
able numbers  for  purposes  of  observation  and  the  use 
merely  of  persuasion  and  appeal  to  induce  other  work- 
men not  to  enter  the  service  of  such  employer  yet  there 
are  some  cases  which  seem  to  regard  picketing,  in  any 
way,  as  unlawful. 

So  in  a  case  in  California  it  is  said:  "The  public's  rights 
are  invaded  the  moment  the  means  employed  are  such 
as  are  calculated  to  and  naturally  do,  incite  to  crowds, 
riots  and  disturbances  of  the  peace.  A  picket,  in  its 
very  nature,  tends  to  accomplish,  and  is  designed  to  ac- 
complish, these  very  things.  It  tends  to,  and  is  designed 
by  physical  intimidation  to,  deter  other  men  from  seek- 
ing employment  in  the  places  vacated  by  the  strikers. 
It  tends,  and  is  designed,  to  drive  business  away  from  the 
boycotted  place,  not  by  the  legitimate  methods  of  per- 
suasion, but  by  the  illegitimate  means  of  physical  intimi- 
dation and  fear.  Crowds  naturally  collect;  disturbances 
of  the  peace  are  always  imminent  and  of  frequent  occur- 
rence. Many  peaceful  citizens,  men  and  women,  are 
always  deterred  by  physical  trepidation  from  entering 
places  of  business  so  under  a  boycott  patrol.  It  is  idle 
to  split  hairs  upon  so  plain  a  proposition,  and  to  say 
that  the  picket  may  consist  of  nothing  more  than  a  single 
individual,  peacefully  endeavoring  by  persuasion  to  pre- 
vent customers  from  entering  the  boycotted  place.  The 
plain  facts  are  always  at  variance  with  such  refinements 
of  reason.     Says  Chief  Justice  Shaw  in  Commonwealth 

»  Foster  v.  Retail  Clerks'  Protective  Assn.,  78  N.  Y.  Supp.  860,  39  Misc. 
R.  (N.  Y.)  48. 

553 


§  506  LABOR  OR  TRADE  UNIONS 

V.  Hunt,^''  'The  law  is  not  to  be  hoodwinked  by  colorable 
pretenses;  it  looks  at  truth  and  reality  through  whatever 
disguise  it  may  assume.'  If  it  be  said  that  neither  threats 
nor  intimidations  are  used,  no  man  can  fail  to  see  that 
there  may  be  threats  and  there  may  be  intimidations 
and  there  may  be  molesting,  and  there  may  be  obstruct- 
ing, without  there  being  any  express  words  used  by  which 
a  man  should  show  violent  threats  toward  another,  or 
any  express  intimidation.  We  think  it  plain  that  the 
very  end  to  be  attained  by  picketing,  however  artful 
may  be  the  means  to  accomplish  that  end,  is  the  injury 
of  the  boycotted  business,  through  physical  molestation 
and  physical  fear,  caused  to  the  employer,  to  those  whom 
he  may  have  employed,  or  who  may  seek  employment 
from  him,  and  to  the  general  public."  -s  And  a  similar 
view  has  been  expressed  in  some  other  cases. -° 

§  505.  Picketing— When  Unlawful. 

While  the  courts  are  not  in  complete  harmony  as  to 
whether  picketing  for  the  purposes  expressed  in  the  two 
preceding  sections  are  lawful  yet  there  may  be  said  to 
be  no  conflict  of  opinion  as  to  the  proposition  that  picket- 
ing when  accompanied  by  acts  of  violence,  threats  or 
intimidation  is  unlawful  and  may  be  enjoined. ^^ 

"4  Mete.  (Mass.)  Ill,  38  Am.  Dec.  346. 

"  Pierce  v.  Stablemen's  Union,  156  Cal.  70, 103  Pac.  324,  per  Henshaw,  J. 

2«  Atchison,  T.  &  S.  F.  Ry.  Co.  v.  Gee  (U.  S.  C.  C),  139  Fed.  582;  Bamea 
V.  Chicago  Typographical  Union,  232  111.  424,  83  N.  E.  940,  14  L.  R.  A. 
(N.  S.)  1018;  Jonas  Glass  Co.  v.  Glass  Bottle  Blowers'  Assn.,  72  N.  J.  Eq. 
653,  66  Atl.  953. 

"  AUis-Chalmers  Co.  v.  Iron  Moulders'  Union  (U.  S.  C.  C),  150  Fed. 
155;  Goldfield  Consol.  Mines  Co.  v.  Goldfield  Miners'  Union  (U.  S.  C.  C), 
159  Fed.  500;  Southern  Ry.  Co.  v.  Machinists'  Local  Union  (U.  S.  C.  C), 
111  Fed.  49;  Beaton  v.  Tarrant,  102  111.  App.  124;  Jersey  City  Printing 
Co.  V.  Cassidy,  63  N.  J.  Eq.  759,  53  Atl.  230;  Butterick  Publishing  Co.  v. 
Typographical  Union,  100  N.  Y.  Supp.  292,  50  Misc.  R.  (N.  Y.)  1;  Mills 
V.  United  States  Printing  Co.,  91  N.  Y.  Supp.  185,  99  App.  Div.  (N.  Y.) 
605. 

Picketing;  when  unlawful;  when  will  he  enjoined. 

See  also  the  following  cases: 

United  States:  Debs,  In  re,  158  U.  S.  564,  15  Sup.  Ct.  900,  39  L.  ed.  1092; 
Union  Pacific  R.  Co.  v.  Rueff  (U.  S.  C.  C),  120  Fed.  102;  United  States 

554 


LABOR  OR  TRADE  UNIONS  §  505 

So  where  workmen  quit  the  service  of  their  employer, 
and,  as  a  means  of  inducing  him  to  accede  to  their  de- 
mands, estabhsh  pickets  at  or  near  the  approaches  of  his 
premises  for  the  purpose  of  inducing  others  from  remain- 
ing in  or  entering  into  his  employment,  they  and  their 
confederates  will  be  enjoined  from  the  keeping  of  patrols, 
when  such  patrols  resort  to  intimidation  or  any  manner 
of  coercion  to  prevent  others  from  entering  into  or  re- 

V.  Haggerty  (U.  S.  C.  C),  116  Fed.  510;  United  States  v.  Weber  (U.  S.  C. 
C),  114  Fed.  950;  Allis-Chalmers  Co.  v.  Reliable  Lodge  (U.  S.  C.  C),  111 
Fed.  264;  Southern  R.  Co.  v.  Machinists'  Ixjcal  Union,  No.  14  (U.  S.  C. 
C),  111  Fed.  49;  Otis  Steel  Co.  v.  Local  Union  No.  218  of  Cleveland,  etc. 
(U.  S.  C.  C),  110  Fed.  698;  Reese,  In  re,  107  Fed.  942,  47  C.  C.  A.  87; 
Reese,  In  re  (U.  S.  C.  C),  98  Fed.  984;  United  States  v.  Sweeney  (U.  S. 
C.  C),  95  Fed.  434;  American  Steel  &  Wire  Co.  v.  Wire  Drawers'  &  Die 
Makers'  Unions,  Nos.  1  and  3  (U.  S.  C.  C),  90  Fed.  608-614;  Hopkins  v. 
Oxley  Stave  Co.,  83  Fed.  912,  28  C.  C.  A.  99;  Maekall  v.  Ratchford  (U.  S. 
C.  C),  82  Fed.  41;  Wire  Company  v.  Murray  (U.  S.  C.  C),  80  Fed.  811; 
Elder  v.  Whitesides  (U.  S.  C.  C),  72  Fed.  724;  United  States  v.  Elliott 
(U.  S.  C.  C),  64  Fed.  27-31;  Arthur  v.  Oakcs,  63  Fed.  310,  11  C.  C.  A.  209, 
25  L.  R.  A.  414;  United  States  v.  Alger  (U.  S.  C.  C),  62  Fed.  824;  Farmers' 
Loan  &  Trust  Co.  v.  Northern  Pac.  R.  Co.  (U.  S.  C.  C),  60  Fed.  803; 
Hagan  v.  BlindeU,  56  Fed.  696,  6  C.  C.  A.  86;  United  States  v.  Working- 
men's  Amalgamated  Council  (U.  S.  C.  C),  54  Fed.  994,  26  L.  R.  A.  158; 
Toledo  A.  A.  &  N.  M.  Ry.  Co.  v.  Pennsylvania  Co.  (U.  S.  C.  C),  54  Fed. 
730,  19  L.  R.  A.  387,  5  Inters.  Com.  R.  522;  BUndell  v.  Hagan  (U.  S.  C.  C), 
54  Fed.  40;  Coeur  D'Alene  Consol.  &  Min.  Co.  v.  Miners'  Union  of  Ward- 
ner  (U.  S.  C.  C),  51  Fed.  260,  19  L.  R.  A.  382;  Casey  v.  Typographical 
Union  (U.  S.  C.  C),  45  Fed.  135,  12  L.  R.  A.  193;  United  States  v.  Kane 
(U.  S.  C.  C),  23  Fed.  748. 

Connecticut:  State  v.  Glidden,  55  Conn.  46,  8  Atl.  890,  3  Am.  St. 
Rep.  23. 

Massachusetts:  Vegelahn  v.  Guntner,  167  Mass.  92,  44  N.  E.  1077,  35 
L.  R.  A.  722,  57  Am.  St.  Rep.  443;  Sherry  v.  Perkins,  147  Mass.  212,  17 
N.  E.  307,  9  Am.  St.  Rep.  689. 

Michigan:  Beck  v.  Railway  Teamsters'  Protective  Union,  118  Mich. 
497,  77  N.  W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

Missouri:  Hamilton-Brown  Shoe  Co.  v.  Saxey,  131  Mo.  212,  32  S.  W. 
1106. 

New  Jersey:  Barr  v.  Essex  Trades  Council,  53  N.  J.  Eq.  101-111,  30 
Atl.  881,  884. 

Pennsylvania:  Murdock  v.  Walker,  152  Pa.  St.  595,  25  Atl.  492,  34  Am. 
St.  Rep.  678. 

Vermont:  State  v.  Dyer,  67  Vt.  690,  32  Atl.  814;  State  v.  Stewart,  59 
Vt.  273,  9  Atl.  559,  59  Am.  Rep.  710. 

Virginia:  Crump's  Case,  In  re,  84  Va.  927,  6  S.  E.  620,  10  Am.  St.  Rep. 
895. 

555 


§  506  LABOR  OR  TRADE  UNIONS 

maining  in  the  service  of  their  late  employer,  to  the  ir- 
reparable damage  of  his  business.  ^^ 

And  where,  for  six  months  after  a  strike  of  plaintiff's 
employees,  it  appeared  that  the  picketing  of  his  factory 
was  constantly  unlawful,  by  reason  of  the  use  of  abusive, 
offensive  and  even  indecent  epithets  by  the  pickets  to 
the  actual  or  the  prospective  employees,  who  at  the 
same  time  were  frequently  jostled  and  crowded  by  the 
pickets  on  and  along  the  public  walk  leading  to  plain- 
tiff's factory,  and  sometimes  subjected  to  more  serious 
violence,  it  was  held  that  the  plaintiff  was  entitled  to 
an  injunction  against  such  of  the  defendants  as  per- 
sonally participated  in  such  overt  and  unlawful  acts  and 
to  recover  damages.-^ 

§  506.  Picketing— Whether  Lawful  Depends  on  Facts 
and  Circumstances— Rule  as  Supported  by  Authority. 

Whether  picketing  is  lawful  or  unlawful,  depends  in 
each  particular  case  upon  the  conduct  of  the  pickets 
themselves.  The  fact  that  they  are  serving  under  ap- 
pointment and  instructions  from  their  union  adds  nothing 
to  their  rights  and  privileges  as  affecting  third  persons. 
Under  no  circumstances  have  pickets  the  right  to  employ 
force,  menaces,  or  intimidation  of  any  kind  in  their 
efforts  to  induce  nonstriking  workmen  to  quit,  or  to  pre- 
vent those  about  to  take  the  strikers'  places  to  refrain 
from  doing  so;  neither  have  they  the  right,  as  pickets 
or  otherwise,  to  assemble  about  the  place  in  such  num- 
bers or  in  such  manner  as  to  impress  workmen  employed, 
or  contemplating  employment,  with  fear  and  intimida- 
tion, ^o 

»  Jones  V.  Van  Winkle  Gin  &  Machine  Work,  131  Ga.  336,  62  S.  E.  236, 
17  L.  R.  A.  (N.  S.)  848. 

29  Jones  V.  Mahcr,  116  N.  Y.  Supp.  180,  62  Misc.  R.  (N.  Y.)  388,  aff'd 
125  N.  Y.  Supp.  126,  holding  that  he  was  entitled  to  recover  damages  for 
the  amount  paid  by  him  for  counsel  fees  and  the  amount  paid  for  guards 
about  his  factory  and  for  maintaining  there  a  commissariat  for  feeding  and 
caring  for  his  employees  to  protect  them  from  the  unlawful  efforts  of  the 
pickets. 

^  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local  Union, 

556 


LABOR   OR   TRADE    UNIONS  §§  507,  508 

And  in  another  case  it  is  said  that  employees  who  tliink 
they  have  a  grievance  against  their  employer  for  a  dis- 
charge of  a  fellow  employee  may  not  only  leave  his  em- 
ployment themselves  but  by  picketing  may  peaceably 
attempt  to  persuade  other  workmen  not  to  enter  his 
employment  and  even  to  persuade  their  fellow  workmen 
still  remaining  in  the  service  to  leave  and  join  in  the 
strike;  but  their  efforts  to  attain  such  result  must  be 
confined  to  acts  of  peaceable  persuasion  and  if  they  extend 
to  violence,  threats  or  even  verbal  abuse,  they  thereby 
become  unlawful." 

§  507.  Picketing— No  Injunction  to  Protect. 

The  right  of  a  voluntary  association,  engaged  in  sup- 
porting a  strike,  to  freedom  in  the  labor  market,  so  that 
the  association  can  readily  employ  pickets  and  other 
agents  in  carrying  on  its  industrial  warfare,  is  held  not 
to  be  a  proper  subject  of  protection  b}^  injunction.  This 
conclusion  was  reached  on  an  application  for  an  injunc- 
tion by  striking  machinists,  the  bill  alleging  that  they 
had  maintained  a  quiet  system  of  picketing  in  the  streets 
near  the  machine  shops  of  the  defendants  and  that  de- 
fendants, in  combination,  were  interfering  by  intimida- 
tion, threats,  violence  and  arrests  with  the  pickets  of  the 
complainants.^- 

§  508.  Picketing— Ordinances  as  to  Valid. 

It  is  a  vahd  exercise  of  the  police  power  vested  in  a 
municipality  to  provide  by  ordinance  that  it  shall  be  a 
misdemeanor  for  a  person  to  be  guilty  of  "picketing"  for 
the  purpose  of  intimidating,  threatening  and  coercing 
the  employees  of  another. ^^ 

165  Ind.  421,  7o  N.  E.  877,  2  L.  R.  A.  (N.  S.)  788,  per  Hadloy,  J.,  citing 
Beaton  v.  Tarrant,  102  111.  App.  124;  Vegelahn  v.  Guntner,  167  Mass.  92, 
44  N.  E.  1077,  35  L.  R.  A.  722,  57  Am.  St.  Rep.  443;  Murdock,  Kerr  & 
Co.  V.  Walker,  152  Pa.  St.  595,  25  Atl.  492,  34  Am.  St.  Rep.  678. 

»i  Jones  V.  Mahcr,  116  N.  Y.  Supp.  180,  62  Misc.  R.  (N.  Y.)  388,  aff'd 
in  125  N.  Y.  Supp.  1126. 

"  Atkins  V.  Fletcher  Co.,  65  N.  J.  Eq.  658,  55  Atl.  1074. 

"  Williams,  In  re,  158  Cal.  550,  111  Pac.  1035. 

557 


§§  509,  510     LABOR  OR  TRADE  UNIONS 

§  509.  Right  to  Strike— Refusal  to  Work  with  Non- 
Union  Man—  Massachusetts  Rule. 

It  is  settled  in  Massachusetts  that  a  defendant  is  hable 
for  an  intentional  and  unjustifiable  interference  with  the 
pursuit  on  the  part  of  the  plaintiff  of  his  calling,  whether 
it  be  of  labor  or  of  business.  ^^ 

The  members  of  a  labor  union  cannot  by  a  strike 
refuse  to  work  with  another  workman  for  an  arbitrary 
cause,  since  the  general  proposition  that  what  is  lawful 
for  an  individual  is  not  necessarily  lawful  for  a  com- 
bination of  individuals  applies.^^ 

So  a  labor  union  cannot  force  other  workmen  to  join 
it  by  refusing  to  work  if  workmen  are  employed  who  are 
not  members  of  such  union.  ^^ 

And  it  is  established  in  Massachusetts  that  it  is  not 
legal  for  an  employer,  even  where  he  wishes  to  do  so,  to 
agree  with  a  union  to  discharge  a  non-union  workman 
for  an  arbitrary  cause  at  the  request  of  the  union." 

§  510.  Right  to  Strike— Refusal  to  Work  with  Non- 
Union  Man — Pennsylvania  Rule. 

In  Pennsylvania  also  it  is  decided  that  an  agreement 
by  a  number  of  persons  that  they  will  by  threats  and 
strikes  deprive  a  mechanic  of  the  right  to  work  for  others, 
merely  because  he  does  not  choose  to  join  a  particular 
union,  is  a  conspiracy  to  commit  an  unlawful  act,  which 
conspiracy  may  be  restrained.  Under  the  Declaration 
of  Rights  of  the  Constitution  of  Pennsylvania,  the  right 

"  Pickett  V.  Walsh,  192  Maes.  572,  78  N.  E.  753,  6  L.  R.  A.  (N.  S.)  1067, 
citing  Martell  v.  White,  185  Mass.  255,  69  N.  E.  1085,  64  L.  R.  A.  260, 
102  Am.  St.  Rep.  341;  Plant  v.  Woods,  176  Mass.  492,  57  N.  E.  1011,  51 
L.  R.  A.  339,  79  Am.  St.  Rep.  330;  Vegelahn  v.  Guntner,  167  Mass.  92, 
44  N.  E.  1077,  35  L.  R.  A.  722,  57  Am.  St.  Rep.  443;  Carew  v.  Rutherford, 
106  Mass.  1,  8  Am.  Rep.  287;  Walker  v.  Cronin,  107  Mass.  555. 

"  Pickett  V.  Walsh,  192  Mass.  572,  582,  78  N.  E.  753,  6  L.  R.  A.  (N.  S.) 
1067. 

'«  Plant  V.  Woods,  176  Mass.  492,  57  N.  E.  1011,  79  Am.  St.  Rep.  330, 
61  L.  R.  A.  349. 

"  Pickett  V.  Walsh,  192  Mass.  572,  582,  78  N.  E.  753,  6  L.  R.  A.  (N.  S.) 
1067. 

558 


LABOR  OR  TRADE  UNIONS  §  510 

of  a  workman  to  the  free  use  of  his  hands  is  a  right  which 
neither  the  legislature  or  a  trade  union  can  take  from 
him,  and  one  which  it  is  the  duty  of  courts  to  protect. 
In  the  case  holding  as  above  stated  members  of  an  incor- 
porated trade  union,  members  of  an  unincorporated  trade 
union,  and  non-union  men  w^ere  all  working  on  a  large 
and  expensive  building.  After  the  building  had  progressed 
to  a  critical  stage  in  its  construction,  a  strike  was  ordered 
by  the  unincorporated  union  and  two-thirds  of  the  men 
quit  work.  The  managers  of  the  unincorporated  union 
called  upon  the  contractors  and  an  arrangement  was 
entered  into  that  if  the  incorporated  union  men  were 
discharged  the  strike  would  be  called  off.  This  arrange- 
ment was  carried  out  and  work  was  resumed,  non-union 
men  being  continued  on.  Subsequently  the  unincorpo- 
rated union  men  amiounced  that  they  would  pursue  the 
same  course  in  future  and  drive  every  member  of  the 
incorporated  union  into  the  unincorporated  union.  It 
was  held  that  a  court  of  equity  "W'ould  interfere  by  in- 
junction to  protect  the  members  of  the  incorporated 
union. ^^  It  was  said  in  this  case:  ''Trade  unions  may 
cease  to  w^ork  for  reasons  satisfactory  to  their  members, 
but  if  they  combine  to  prevent  others  from  obtaining 
work  by  threats  of  a  strike  or  combine  to  prevent  an 
employer  from  employing  others  by  threats  of  a  strike, 
they  combine  to  accomplish  an  unlawful  purpose,  a  pur- 
pose as  unlawful  now  as  it  ever  was,  though  not  punish- 
able by  indictment.  Such  combination  is  a  despotic  and 
tyrannical  violation  of  the  indefeasible  right  of  labor  to 
acquire  property  which  courts  are  bound  to  restrain.  It 
is  utterly  subversive  of  the  letter  and  spirit  of  the  Decla- 
ration of  Rights.  If  such  combination  be  in  accord  with 
the  law  of  the  trades  union,  then  the  law  and  the  organic 
law  of  the  people  of  a  free  commonwealth  cannot  stand 
together;  one  or  the  other  must  go  down."  ^^ 

"  Erdman  v.  Mitchell,  207  Pa.  St.  79,  56  Atl.  327,  63  L.  R.  A.  534,  99 
Am.  St.  Rep.  783. 

"  Per  Dean,  J. 
..See  also  People  v.  McFarlin,  43  Misc.  591,  89  N.  Y.  Supp.  527. 

559 


§511  LABOR   OR  TRADE   UNIONS 

§  511.  Right  to  Strike— Refusal  to  Work  with  Non- 
Union  Man  -  New  York  Decisions. 

In  New  York  it  is  difficult  to  harmonize  the  decisions 
upon  this  question  not  only  between  the  higher  and  lower 
courts  but  even  the  expressions  of  opinion  in  the  two 
leading  cases  decided  in  the  Court  of  Appeals.  Thus  in 
a  case  decided  in  the  Appellate  Division  it  is  held  that  a 
distinction  is  made  between  a  combination  of  workmen 
to  secure  the  exclusive  emplo3Tnent  of  its  members  by  a 
i-efusal  to  work  with  none  other  and  a  combination  whose 
primary  object  is  to  procure  the  discharge  of  an  outsider 
and  his  deprivation  of  all  employment.  In  the  first  case 
the  action  of  the  combination  is  primarily  for  the  better- 
ment of  its  fellow  members.  In  the  second  case  such 
action  is  primarily  to  impoverish  and  crush  another  by 
making  it  impossible  for  him  to  work  there  or,  so  far  as 
may  be  possible,  anywhere.  The  difference  is  between 
combination  for  welfare  of  self  and  that  for  the  persecu- 
tion of  another.  The  primary  purpose  of  one  may  neces- 
sarily but  incidentally  be  a  discharge  of  an  outsider;  the 
primary  purpose  of  the  other  is  such  discharge  and,  so 
far  as  possible,  an  exclusion  from  all  labor  in  his  calling. 
Self-protection  may  cause  incidental  injury  to  another. 
Self-protection  does  not  aim  at  malevolent  injury  to 
another.  The  law  views  an  injury  arising  from  competi- 
tion differently  from  an  injury  done  in  persecution.^" 

So  the  continued  expression,  by  the  members  of  a 
laborers'  union  of  their  refusal  to  work  with  the  members 
of  another  union,  occurring  under  circumstances  which 
would  naturally  result  in  causing  the  common  employer 
to  dismiss  the  latter,  does  not  amount  to  a  conspiracy  to 
prevent  employment  under  all  circumstances  nor  to  an 
unlawful  coercion  and  hence  it  was  decided  that  a  pre- 
liminary injunction  obtained  by  members  of  the  latter 
union  against  the  former  should  be  vacated.'*^ 

«  Milla  V.  United  States  Printing  Co.,  91  N.  Y.  Supp.  185,  99  App.  Div. 
(N.  Y.)  605,  per  Jenks,  .J. 

*i  Reform  Club  of  Masons  &  Plasterers  L.  A.  706  v.  Laborers'  Union 
Protective  Society,  29  Misc.  R.  (N.  Y.)  247,  60  N.  Y.  Supp.  388. 

560 


LABOR  OR  TRADE  UNIONS  §  511 

And  in  the  Court  of  Appeals  it  is  decided  that  a  labor 
union  may  refuse  to  permit  its  members  to  work  with 
fellow  servants  who  are  members  of  a  rival  organization, 
may  notify  the  employer  to  that  effect  and  that  a  strike 
will  be  ordered  unless  such  servants  are  discharged,  where 
its  action  is  based  upon  a  proper  motive  such  as  a  pur- 
pose to  secure  only  the  employment  of  efficient  and  ap- 
proved workmen,  or  to  secure  an  exclusive  preference  of 
employment  to  its  members  on  their  own  terms  and  con- 
ditions, pro\'ided  that  no  force  is  employed  and  no  un- 
lawful act  is  committed. ^- 

In  this  connection,  however,  it  is  said  in  an  earher  case 
decided  by  the  New  York  Court  of  Appeals:  "Public 
policy  and  the  interests  of  society  favor  the  utmost  free- 
dom in  the  citizen  to  pursue  his  lawful  trade  or  calling, 
and  if  the  purpose  of  an  organization  or  combination  of 
workingmen  be  to  hamper,  or  to  restrict,  that  freedom, 
and,  through  contracts  or  arrangements  with  employers, 
to  coerce  other  workingmen  to  become  members  of  the 
organization  and  to  come  under  its  rules  and  conditions, 
under  the  penalty  of  the  loss  of  their  position,  and  of 
deprivation  of  employment,  then  that  purpose  seems 
clearly  unlawful  and  militates  against  the  spirit  of  our 
government  and  the  nature  of  our  institutions.  The 
effectuation  of  such  a  purpose  would  conflict  with  that 
principle  of  public  policy  which  prohibits  monopolies  and 
exclusive  privileges.  It  would  tend  to  deprive  the  public 
of  the  services  of  men  in  useful  employments  and  capaci- 
ties. It  would  in  the  language  of  Mr.  Justice  Barrett  " 
'  impoverish  and  crush  a  citizen  for  no  reason  connected 
in  the  slightest  degree  with  the  advancement  of  wages, 
or  the  maintenance  of  the  rate.'  "  ** 

"  National  Protective  Assoc,  of  Steam  Fitters  &  Helpers  v.  Gumming, 
170  N.  Y.  315,  63  N.  E.  369,  aCf'g  53  App.  Div.  227. 

See  Wunch  v.  Shankland,  69  N.  Y.  Supp.  349,  59  App.  Div.  4S2;  Reform 
Club  of  Masons  &  Plasterers  L.  A.  706,  Knights  of  Labor  of  City  of  New 
York  V.  Laborers'  Union  Protective  Soc,  60  N.  Y.  Supp.  388,  29  Misc.  247; 
Tallman  v.  Gaillard,  57  N.  Y.  Supp.  419,  27  Misc.  R.  114. 

"  In  People  ex  rel.  GHl  v.  Smith,  5  X.  Y.  Cr.  Rep.  513. 

**  Curran  v.  Galen,  152  N.  Y.  33,  46  N.  E.  297,  37  L.  R.  A.  802,  57  Am. 
St.  Rep.  496,  aff'g  Curran  v.  Galen,  77  Hun,  610,  28  N.  Y.  Supp.  1134. 

36  561 


§  511  LABOR  OR  TRADE  UNIONS 

And  in  another  case  the  Appellate  Division  has  decided 
that  no  individual  or  association  of  individuals  has  any 
right,  wantonly,  so  to  interfere  with  a  man  in  the  exer- 
cise of  his  craft,  business  or  profession,  and  where  it  ap- 
pears that  the  only  motive  inducing  such  interference  is 
to  prevent  a  particular  individual  frdm  making  his  liv- 
ing, irrespective  of  other  considerations,  a  court  of  equity 
will  entertain  jurisdiction  of  the  matter,  where  no  ad- 
equate remedy  exists  at  law.^^ 

And  in  another  case  in  this  State  it  is  declared  that 
where  the  main  purpose  of  the  strikers  was  to  obtain  a 
closed  shop  that  such  purpose  was  not  to  better  the  con- 
dition of  the  workmen  but  to  deprive  other  men  of  the 
opportunity  to  exercise  their  right  to  work  and  to  drive 
them  from  an  industry  in  which,  by  labor,  they  had  ac- 
quired skill  and  which  they  had  a  right  to  pursue  to  gain 
a  livelihood  without  being  subjected  to  the  doing  of  things 
which  might  be  disagreeable  or  repugnant.  And  it  was 
decided  that  such  purpose  was  unlawful  and  the  court 
granted  a  temporary  injunction  restraining  all  acts  of 
violence  and  threats  of  bodily  injury  and  also  all  picket- 
ing and  patrolling  which  it  was  declared,  though  lawful 
when  not  accompanied  by  violence  and  intimidation,  be- 
came unlawful  where  in  aid  of  an  unlawful  object."^ 

Again,  where  a  labor  union  ordered  a  strike  against  a 
company,  not  upon  any  question  of  wages,  but  merely 
because  the  company  had  refused  to  agree  to  employ  only 
union  men  and  had  declined  to  abandon  a  piecework  or 
premium  system  which  it  had  adopted,  the  court  refused 
to  vacate  a  preliminary  injunction  restraining  the  union 
and  its  members  from  interfering  with  the  business  and 
using  threats  and  force  inducing  employees  to  leave  the 
service  of  the  company,  preventing  others  from  taking 
service  with  it  and  also  keeping  away  customers.''^ 

«  Davis  V.  United  Portable  Hoisting  Engineers,  51  N.  Y.  Supp.  180,  28 
App.  Div.  (N.  Y.)  396. 

♦«  Schwarcz  v.  International  Ladies'  G.  W.  Union,  124  N.  Y.  Supp.  918, 
68  Misc.  R.  (N.  Y.)  528. 

«  Davis  Machine  Co.  v.  Robinson,  84  N.  Y.  Supp.  837,  41  Misc.  R.  (N. 
Y.)  329. 

562 


LABOR    OR   TRADE   UNIONS  §§  512,  513 

§  512.  Right  to  Strike  -Refusal  to  Work  with  Non- 
Union  Man — Other  Decisions. 

In  a  case  in  New  Jersey  where  the  members  of  a  labor 
union  threatened  their  employers  that  unless  they  dis- 
charged a  certain  man  they  would  leave  their  services 
thus  leaving  them  without  the  means  of  executing  their 
contracts  and  such  person  was  discharged  by  two  em- 
ployers after  receipt  of  such  threat  and  there  was  testi- 
mony that  he  was  pursued  from  one  employer  to  another 
with  the  determination  to  force  him  to  join  the  union 
and  that  by  this  means  it  was  hoped  to  strip  him  of  his 
means  of  livelihood  unless  he  did  so  it  was  decided  that 
in  an  action  by  him  against  the  union  a  judgment  in  his 
favor  was  justified."'^ 

And  in  another  case  in  Missouri  where  it  appeared  that 
as  soon  as  the  agents  of  a  trades  union  learned  that  a 
certain  man  had  obtained  work  they  would  notify  his 
employer  to  discharge  him  on  pain  of  a  strike  and  would 
extort  from  the  employer  a  heavy  fine  for  having  hired 
him  and  that  if  the  contractor  refused  to  discharge  him 
or  to  pay  the  fine  then  a  strike  would  be  ordered  prevent- 
ing him  from  completing  his  contracts,  it  was  declared 
that  a  sort  of  duress  was  thus  employed  and  that  pro- 
curing the  employee's  dismissal  from  various  employ- 
ments and  preventing  him  from  following  his  trade  were 
illegal  and  it  was  decided  that  the  members  of  such 
union  were  liable  in  damages  to  the  employee.^' 

§  513.  Right  to  Strike— Refusal  to  Work  with  Non- 
Union  Man — Conclusion. 

It  will  be  seen  from  the  decisions  referred  to  in  the 
four  preceding  sections  that  the  courts  are  not  in  har- 
mony upon  this  question.  WTiile  it  would  seem  that 
the  weight  of  authority  is  against  the  proposition  that  a 

**  Ruddy  V.  United  Association  of  Journeymen  Plumbers  (N.  J,  L.,  1910), 
75  Atl.  742. 

See  State  v.  Donaldson,  32  N.  J.  L.  151,  90  Am.  Dec.  649. 

Compare  Jersey  City  Printing  Co.  v.  Cassidy,  63  N.  J.  Eq.  759,  53  Atl. 
230. 

«  Carter  v.  Oster,  134  Mo.  App.  146,  112  S.  W.  995. 

563 


§  514  LABOR   OR   TRADE    UNIONS 

strike  is  legal  when  the  purpose  is  to  persuade  an  employer 
to  discharge  an  employee  because  he  is  a  non-union  man 
yet  the  better  view  seems  to  be  that  expressed  in  the 
National  Protective  Association  v.  Cummings/°  and  in 
Mills  V.  United  States  Printing  Co.,^^  in  which  the  doc- 
trine is  favored  that  a  combination  of  members  of  a 
labor  union  to  secure  the  exclusive  employment  of  its 
members  by  a  refusal  to  work  with  none  others  is  pri- 
marily for  the  betterment  of  the  fellow  members  of  the 
union  and  is  lawful. 

§  514.  Use  of  Persuasion  by  Strikers. 

The  current  of  authority  is  that  a  court  of  equity  will 
not  enjoin  employees  who  have  quit  the  service  of  their 
employer  from  attempting  to  persuade,  by  proper  argu- 
ment, others  from  taking  their  places,  so  long  as  they  do 
not  resort  to  intimidation  or  obstruct  the  pubUc  thorough- 
fares. ^^ 

The  law,  having  granted  workmen  the  right  to  strike 
to  secure  better  conditions  from  their  employers,  grants 
them  also  the  use  of  those  means  and  agencies,  not  in- 
consistent with  the  rights  of  others,  that  are  necessary 
to  make  the  strike  effective.  This  embraces  the  right  to 
support  their  contest  by  argument,  persuasion,  and  such 
favors  and  accommodations  as  they  have  within  their 
control.  The  law  will  not  deprive  endeavor  and  energy 
of  their  just  reward,  when  exercised  for  a  legitimate  pur- 
pose and  in  a  legitimate  manner.  So,  in  a  contest  between 
employees  and  employers  on  the  one  hand  to  secure  higher 
wages,  and  on  the  other  to  resist  it,  arguments  and  per- 
suasion to  win  support  and  co-operation  from  others  are 
proper  to  either  side,  provided  they  are  of  a  character 

«>  170  N.  Y.  315,  63  N.  E.  369,  aff'g  53  App.  Div.  227,  65  N.  Y.  Supp. 
946. 

"  91  N.  Y.  Supp.  185,  99  App.  Div.  (N.  Y.)  605. 

"  Jones  V.  Van  Winkle  Gin  &  Machine  Works,  131  Ga.  336,  62  S.  E.  236, 
17  L.  R.  A.  (N.  S.)  848;  Karges  Furniture  Co.  v.  Amalgamated  Wood- 
workers' Local  Union,  165  Ind.  421,  75  N.  E.  877,  2  L.  R.  A.  (N.  S.)  788; 
Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W.  663,  103  Am. 
St.  Rep.  477. 

564 


LABOR   OR  TRADE    UNIONS  §  515 

to  leave  the  persons  solicited  feeling  at  liberty  to  comply 
or  not,  as  thoy  please." 

But  it  is  said  in  a  case  in  New  Jersey  that  although 
employees  have  the  right  whenever  they  choose  to  leave 
their  employment  yet  that  when  they  do  they  have  no 
right  to  interfere  in  the  slightest  degree  with  the  efforts 
of  the  employer  to  fill  their  places.^'' 

§  515.  Use  of  Persuasion— Employees  Under  Con- 
tract. 

The  right  of  strikers  to  use  persuasion  to  induce  others  to 
leave  the  employ  of  their  employer  is  held  to  cease  in  those 
cases  where  the  persons  upon  whom  such  persuasion  is  used 
are  under  contract  to  serve  such  employer  for  a  definite 
length  of  time.  Under  such  circumstances,  since  each  party 
to  such  a  contract  has  a  property  right  in  it  if  either  breaks 
it  he  does  a  wrong  for  which  the  other  is  entitled  to  a  rem- 
edy, and  it  is  decided  that  strikers  seeking  to  procure  the 
breaking  of  such  a  contract  may  be  enjoined. ^^ 

*'  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local  Union, 
165  Ind.  421,  75  N.  E.  877,  2  L.  R.  A.  {N.  S.)  788,  per  Hadley,  J.,  who 
further  said:  "The  decided  cases  are  not  in  harmony  with  respect  to  the 
right  to  persuade,  but  the  clear  weight  of  authority  is  to  the  effect  that  so 
long  as  a  moving  party  does  not  exceed  his  absolute  legal  rights,  and  so 
does  not  invade  the  absolute  rights  of  another,  he  may  do  as  he  pleases, 
and  may  persuade  others  to  do  like  him." 

"  Connett  v.  United  Hatters  of  North  America,  76  N.  J.  Eq.  202,  74 
Atl.  188. 

"  Iron  Moulders'  Union  v.  Allis-Chalmers  Co.,  116  Fed.  45,  91  C.  C.  A. 
631,  20  L.  R.  A.  (N.  S.)  315. 

Injunction  lies  to  restrain  a  mahcious  violation  of  contracts  bj'  ordering 
a  strike  because  of  refusal  to  recognize  the  union  or  its  walking  delegate. 
Beattie  v.  Callanan,  81  N.  Y.  Supp.  413,  82  App.  Div.  7. 

While  contracts  or  combinations  between  employers  or  workmen  to  fix 
and  abide  by  certain  prices  for  labor  or  services  maj'  be  valid  in  their  incep- 
tion, still  thoy  may  become  illegal  restraints  of  trade  whenever  the  associa- 
tions formed  under  them  interfere  with  the  freedom  of  those  who  are  not 
members  to  refuse  to  abide  by  their  prices,  or  to  employ  or  be  employed  at 
other  rates,  or  whenever  such  associations  undertake  to  prevent  non- 
members  from  using  their  property  or  their  labor  as  they  see  fit.  The 
main  purpose  of  contracts  of  these  classes  that  are  thus  held  illegal  is  to 
suppress,  not  simply  to  regulate,  competition;  and  if  suppression  is  not 
effected,  it  is  because  the  contracts  fail  to  accomplish  their  purpose.  It  is 
evident  that  there  is  a  wide  difference  between  such  contracts  and  those 

5(35 


§  510  LABOR  OR  TRADE  UNIONS 

So  where  non-union  men  are  employed  under  a  con- 
tract not  to  join  any  union  the  court  will  restrain  inter- 
ference with  the  employer's  business  by  which  it  is  sought 
to  induce  his  employees  to  join  a  union,  where  such  acts 
operate  to  injure  his  business  and  unless  restrained  may 
result  in  his  ruin.^® 

And  in  case  of  persons  under  a  contract  to  work  it  is 
decided  that  a  strike  or  combination  not  to  work,  in  vio- 
lation of  that  contract,  to  secure  something  not  due  to 
them  under  that  contract,  would  be  a  combination  in- 
terfering without  justification  with  the  employer's  busi- 
ness." 

In  an  action  by  a  master  to  enjoin  the  wrongful  preven- 
tion of  his  servants  from  carrying  out  their  contracts  of 
employment,  it  is  held  that  the  complaint  should  be  de- 
tailed, certain  and  specific,  giving  facts  and  circumstances, 
including  time  and  place  of  each  alleged  act  of  •coercion, 
the  name  of  the  person  coerced  if  known,  the  manner  in 
which  he  was  coerced  and  the  manner  in  which  and  the 
extent  to  which  it  affected  or  impeded  the  master's  right 
to  conduct  his  business  in  a  lawful  way.^^ 

§  516.  Use  of  Violence,  Threats  and  Intimidation  by 
Strikers. 

Though  workingmen  may  combine  for  the  purpose  of 
leaving  the  service  of  their  employer  and  may  refuse  to 
return  to  work  until  their  demands  are  complied  with 

the  purpose  of  which  is  to  so  regulate  competition  that  it  may  be  fair, 
open,  and  healthy,  and  whose  restriction  upon  it  is  slight,  and  only  that 
which  is  necessary  to  accomplish  this  purpose.  It  does  not  necessarily 
follow  that  contracts  of  the  latter  class  constitute  illegal  contracts  in  re- 
straint of  trade  because  those  of  the  former  classes  do.  United  States  v. 
Trans-Missouri  Freight  Assoc,  58  Fed.  58,  69,  7  C.  C.  A.  15,  24  L.  R.  A. 
73,  case  reversed  in  166  U.  S.  290,  41  L.  ed.  1007,  17  Sup.  Ct.  540,  per 
Sanborn,  Cir.  J.,  a  case,  under  the  Act  of  July  2,  1890,  26  Stat.  209, 
chap.  647,  Rev.  Stat.  Supp.  762,  of  restrauit  of  interstate  commerce,  con- 
struction of  the  statute  and  monopoly. 

^  Flaccus  V.  Smith,  199  Pa.  St.  128,  48  Atl.  894. 

"Reynolds  v.  Davis,  198  Mass.  294,  84  N.  E.  457,  citing  Aberthaw 
Construction  Co.  v.  Cameron,  194  Mass.  208,  80  N.  E.  478. 

'8  Badger  Brass  Mfg.  Co.  v.  Daly,  137  Wis.  601,  119  N.  W.  328. 

566 


LABOR  OR  TRADE  UNIONS  §  51G 

yet  in  the  conduct  and  maintenance  of  a  strike  they  must 
conduct  themselves  in  a  peaceable  and  orderly  manner, 
having  a  due  and  proper  regard  for  the  right  of  the 
employer,  of  other  workingmen  and  of  the  j^ublic  in  gen- 
eral. They  must  refrain  from  acts  of  violence  towards 
others  such  as  assaulting  workingmen  who  have  taken  or 
are  contemplating  the  taking  of  their  places.  Not  onl}- 
this  but  also  they  must  not  resort  to  threats  and  intimi- 
dation; and  they  should  not  collect  in  such  crowds  in 
the  streets  as  to  seriously  interfere  with  travel  upon 
the  streets  or  to  prevent  access  to  and  egress  from  the 
employer's  premises.  If  strikers  commit  any  of  these 
acts  then  the  protection  of  a  court  of  equity  by  way  of 
injunction  may  be  invoked. ^^ 

Labor  unions  may  refuse  to  work  for  any  particular 
employer  and  may  obtain  employment  for  their  members 
by  solicitation  and  promises  of  support  in  trade  and  other- 
wise, but  in  the  accomplishment  of  their  purpose  they 
must  proceed  only  by  lawful  and  peaceable  means  and 
they  have  no  right  to  make  war  on  other  persons.^" 

So  acts  of  intimidation  or  threatened  injury  by  union 
men  to  induce  men  to  leave  emplojmient  accompanied 
with  acts  of  assault  upon  non-union  men  who  refuse  to 
join  the  union  and  establishing  camps  of  armed  men 
near  the  employer's  works  is  such  an  unlawful  invasion 
of  the  employer's  rights  as  well  as  of  the  rights  of  the 
non-union  employees  as  to  constitute  an  irreparable  in- 
jury justifying  an  injunction  against  such  acts.®^ 

M  United  Slates:  Knudsen  v.  Benn  (U.  S.  C.  C),  123  Fed.  636;  United 
States  V.  Weber  (U.  S.  C.  C),  114  Fed.  950. 

Indiana:  Karges  Furniture  Co.  v.  Amalgamated  Woodworkers'  Local 
Union,  165  Ind.  421,  75  N.  E.  877,  2  L.  R.  A.  (N.  S.)  788. 

Minnesota:  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W. 
663,  103  Am.  St.  Rep.  477. 

New  Jersey:  Connett  v.  United  Hatters  of  North  America,  76  N.  J.  Eq, 
202,  74  Atl.  188. 

New  York:  Beattie  v.  Callanan,  73  N.  Y.  Supp.  518,  67  App.  Div.  14; 
Master  Horseshocrs'  Protective  Assn.  v.  Quinlivan,  82  N.  Y.  Supp.  288, 
83  App.  Div.  459. 

•0  Wilson  V.  Hey,  232  111.  389.  S3  N.  E.  928. 

••  Reinecke  Coal  Min.  Co.  v.  Wood  (U.  S.  C.  C),  112  Fed.  477. 

567 


§  516  LABOR  OR  TRADE  UNIONS 

And  in  a  case  in  New  York  it  is  decided  that  where 
the  members  of  labor  unions  conspire  for  an  unlawful 
purpose  and  for  its  accomplishment  make  use  of  violence 
and  threats  of  bodily  injury,  they  should  be  restrained  by 
the  order  of  the  court  during  the  pendency  of  an  action 
for  a  permanent  injunction,  not  only  from  acts  of  vio- 
lence but  from  all  picketing  and  patrolling  which,  though 
not  unlawful  in  themselves,  become  unlawful  when  re- 
sorted to  in  aid  of  an  unlawful  object.^^ 

So  members  of  labor  unions  and  sympathizers  with 
such  unions  were  enjoined  from  entering  a  store,  declared 
to  be  "  unfair,"  for  the  purpose  of  interfering  with  trade 
or  customers;  from  interfering,  from  obstructing  access 
to  it  by  any  physical  means;  from  so  acting  as  to  collect 
in  front  of  or  adjacent  to  it  crowds  calculated  to  obstruct 
travel  upon  the  streets  or  sidewalks  near  it,  and  from 
using  threats,  violence  or  intimidation  with  the  intent  of 
preventing  travelers  or  intending  customers  from  enter- 
ing the  store  and  trading  there.^^ 

And  it  is  decided  that  every  attempt  by  force,  threat  or 
intimidation  to  deter  or  control  an  employer  in  the  de- 
termination of  whom  he  will  employ,  or  what  wages  he 
will  pay  is  an  act  of  wrong  and  oppression  and  any  and 
every  combination  for  such  a  purpose  is  an  unlawful 
conspiracy.  The  law  will  protect  the  victim  and  punish 
the  movers  of  any  such  combination.^^ 

In  a  recent  case  in  Massachusetts  it  is  decided  that 
in  case  of  a  strike  by  members  of  a  labor  union  they  may 
be  enjoined  from  inducing  others,  who  did  not  strike  and 
who  are  members  of  such  union,  to  leave  their  work  by 
threats  of  imposing  fines  upon  them  in  accordance  with 
a  by-law  of  such  union. ^-^ 

"  Schwarcz  v.  International  Ladies  G.  W.  Union,  68  Misc.  R.  (N.  Y.) 
528,  124  N.  Y.  Supp.  968. 

"  Foster  v.  Retail  Clerks'  Protective  Assn.,  78  N.  Y.  Supp.  860,  39  Misc. 
R.  (N.  Y.)  48. 

"Crump  V.  Commonwealth,  84  Va.  927,  6  S.  E.  620,  10  Am.  St.  Rep. 
895. 

^MVillicut  &  Sons  Co.  v.  Driscoll,  200  Mass.  110,  85  N.  E.  397.  Two 
judgna,  however,  dissented  from  the  above  conclusion  sajang  that  they 

568 


LABOR  OR  TRADE  UNIONS  §  517 

Where,  in  an  action  against  unincorporated  labor 
unions  for  threatened  injury  to  the  person  and  property 
of  plaintiff,  the  proof  showed  that  acts  of  violence  and 
intimidation  were  committed  upon  plaintiff's  employees 
by  members  of  one  or  the  other  of  the  defendant  labor 
unions,  but  no  conspiracy  was  established  nor  any  ratifi- 
cation by  either  of  the  defendant  unions  of  the  acts  com- 
plained of,  it  was  held  that  an  injunction  should  only  be 
continued  against  such  of  the  members  of  each  of  the  de- 
fendant unions  who  could  be  named  and  identified  as 
having  committed  said  acts  of  violence  and  intimida- 
tion.^^ 

§  517.  Threats— Intimidation— What  Constitute. 

The  language  or  conduct  which  will  constitute  the  un- 
lawful threats  or  means  to  intimidate,  need  not  be  such 
as  induce  a  fear  of  personal  injury.  Any  words  or  acts 
which  are  calculated  and  intended  to  cause  an  ordinary 
person  to  fear  an  injury  to  his  person,  business  or  prop- 
erty, are  equivalent  to  threats." 

To  constitute  intimidation  it  is  not  necessary  that 
there  should  be  any  direct  threat,  still  less  any  actual  act 
of  violence.  It  is  enough  if  the  mere  attitude  assumed  by 
the  strikers  is  intimidating.  And  this  may  be  shown  by 
all  the  circumstances  of  the  case,  by  the  methods  of  the 

could  not  convince  themselves  that  the  defendants  should  be  enjoined 
from  imposing  or  threatening  to  impose  fines  upon  those  members  of  their 
organization,  who,  by  continuing  to  work  for  the  plaintiflF,  had  under  the 
rules  to  which  they  had  themselves  assented,  become  liable  to  such  im- 
position. 

'« Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  97  (case  of  motion  to  continue  a  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damages  to  plain- 
tiff's business;  injunction  continued  as  to  part  of  defendants  and  other- 
wise denied).  See  Reform  Club  of  Masons  &  Plasterers'  L.  A.  706,  Knighta 
of  Labor  of  City  of  N.  Y.  v.  Laborers'  Union  Protective  Soc,  60  N.  Y. 
Supp.  388,  29  Misc.  247. 

"  State  V.  Stockford,  77  Conn.  227,  58  Atl.  709,  107  Am.  St.  Rep.  28, 
per  Hall,  J.,  citing  State  v.  Donaldson,  32  N.  J.  L.  151;  Barr  v.  Essex 
Trades  Council,  53  N.  J.  Eq.  101,  30  Atl.  881;  Crump  v.  Commonwealth, 
84  Va.  927,  6  S.  E.  620,  10  Am.  S(.  Rop.  S9ry,  Rogers  v.  Everts,  17  N.  Y. 
Supp.  264;  O'Neil  v.  Bohanna,  182  Pa.  St.  236,  37  Atl.  843. 

569 


§  518  LABOR  OR  TRADE  UNIONS 

strikers,  their  numbers,  and  their  devices  such  as  the 
nature  of  circulars  issued  by  them.^^ 

§  518.  Boycotts— Generally. 

It  may  be  stated  generally  that  the  boycotting  of  one 
who  refuses  to  accede  to  the  dcmaiids  of  a  labor  union 
is  held  to  be  unlawful  where  the  means  used  to  prevent 
persons  from  dealing  with  the  person  boycotted  are 
threatening  in  their  nature,  and  tend  naturally  to  over- 
come, by  fear  of  loss  of  property,  the  will  of  others,  and 
compel  them  to  do  what  they  would  not  otherwise  do, 
though  unaccompanied  by  actual  violence  or  threats  of 
violence.^^ 

And  the  circumstances  of  each  particular  case  must  be 
resorted  to  in  order  to  determine  what  amounts  to  intim- 
idation, threatened  injury  or  coercion  which  constitute 
the  essential  elements  of  a  boycott. ^° 

Injunction  will  lie  to  restrain  a  combination  of  persons 
from  attempting  to  ruin  a  person's  business  by  bringing 
to  bear  upon  his  customers  and  employees  intimidating 
and  coercive  means.^^ 

As  to  injunctions  in  boycott  cases  it  is  said  in  a  case  in 

6«  Foster  v.  Retail  Clerks'  Protective  Assn.,  78  N.  Y.  Supp.  860,  39 
Misc.  R.  (N.  Y.)  48. 

«^  Beck  V.  Railway  Teamsters'  Protective  Union,  118  Mich.  497,  77  N. 
W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

That  boycott  is  unlawful  when  force,  threats,  or  intimidation  is  used  see  the 
following  cases: 

United  States:  Loewe  v.  California  State  Federation  of  Labor  (U.  S.  C. 
C),  139  Fed.  71. 

Minnesota :  Gray  v.  Building  Trades  Council,  91  Min.  171,  97  N. 
W.  663,  63  L.  R.  A.  753. 

Missouri:  Lohse  Patent  Door  Co.  v.  Fuelle,  215  Mo.  421,  114  S.  W. 
997. 

New  Jersey:  Martin  v.  McFall,  65  N.  J.  Eq.  91,  55  Atl.  465. 

New  York:  Cohen  v.  United  Workers  of  America,  72  N.  Y.  Supp.  341, 
35  Misc.  R.  748. 

England:  See  Quinn  v.  Leathem  (1901),  App.  Cas.  495,  70  L.  J.  P.  C. 
76,  85  Law  T.  289,  50  Wkly.  Rep.  139,  65  J.  P.  708. 

™  Gray  v.  Building  Trades  Coimcil,  91  Minn.  171,  97  N.  W.  663,  63  L. 
R.  A.  753. 

'1  Beck  v.  Railway  Team.sters'  Protective  Union,  118  Mich.  497,  77  N. 
W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

570 


LABOR   OR  TRADE   UNIONS  §  518 

Minnesota:  ''In  restraining  boycotts,  the  authorities  pro- 
ceed on  the  theory  that  they  are  unlawful  interferences 
with  property  rights.  The  Constitution  of  our  State  guar- 
antees liberty  to  every  citizen,  and  a  certain  remedy  in 
the  laws  for  all  injuries  or  wrongs  which  he  may  receive 
in  his  person,  property,  or  character;  and  the  rights  so 
guaranteed  are  fundamental,  and  can  be  taken  away 
only  by  the  law  of  the  land,  or  interfered  with,  or  the 
enjoyment  thereof  modified,  only  by  lawful  regulations 
adopted  as  necessary  for  the  general  pubhc  welfare."  ^^ 

As  bearing  upon  this  question  it  has  been  held  in  New 
York  that  threats  against  manufacturers  to  withdraw  all 
union  men  and  end  all  business  relations,  unless  the  de- 
mands of  the  union  are  complied  with,  constitute  no 
crime,  but  where  the  manufacturers  are  threatened  with 
business  annihilation  by  the  malicious  use  of  the  boycott, 
compelling  would  be  customers  to  desist  from  purchasing 
through  fear,  induced  by  threats,  that  if  they  do  purchase 
the  full  power  of  the  union  will  be  used  against  them  to 
their  destruction,  then  the  action  of  the  members  of  the 
union  co-operating  therein  is  held  to  be  illegal."^ 

And  in  another  case  in  New  York  it  is  decided  that  a 
trade  union  has  no  right  to  call  a  strike  in  the  shops  of 
other  employers  of  labor  for  no  other  reason  than  because 
they  deal  with  certain  persons,  and  such  persons  when  so 
boycotted  may  have  an  injunction  to  restrain  the  members 
of  such  union  from  causing  other  manufacturers  by  threats 
of  strikes  to  cease  manufacturing  goods  for  them.'^'' 

In  New  Jersey  it  is  declared  that  a  boycott  in  whatever 
form  it  assumes  is  unlawful  and  that  therefore  attempts 
by  members  of  a  labor  union  to  compel  an  employer  to 
accede  to  the  demands  of  the  union  as  to  the  mode  of 
doing  his  business  by  persuading  or  inducing  others  not 
to  deal  with  him  is  unlawful  and  will  be  enjoined."^ 

"  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W.  663,  103 
Am.  St.  Rep.  477,  per  Brown,  J. 

"  People  V.  McFarlin,  89  N.  Y.  Supp.  527,  43  Misc.  R.  (N.  Y.)  591. 

7<Schlang  v.  Ladies  Waist  Makers'  Union,  124  N.  Y.  Supp.  289,  67 
Misc.  R.  (N.  Y.)  221. 

"  Martin  v.  McFall,  65  N.  J.  Eq.  91,  55  Atl.  465. 

571 


§  518  LABOR  OR  TRADE  UNIONS 

In  another  case  in  New  Jersey  it  has  been  held  that 
equity  does  not  undertake  to  grant  injunction  in  strike 
or  boycott  cases  unless  complainant  has  shown  substantial 
pecuniary  loss  in  respect  to  his  property  and  business  for 
which  an  action  at  law  is  an  inadequate  remedy,  or 
where  he  has  shown  that  he  has  been  deprived  of  his 
right  to  make  a  Hving  and  that  the  mere  fact  that  defend- 
ants in  combination,  by  means  of  intimidation  or  crim- 
inal violence,  interfere  with  the  free  flow  of  labor  to  an 
employer,  does  not  give  the  employer  the  right  to  equi- 
table relief,  in  the  absence  of  his  showing  that  his  remedy 
at  law  was  inadequateJ^ 

Under  the  definition  given  to  a  ''boycott"  in  the  Cali- 
fornia Supreme  Court  as  being  an  organized  effort  to 
persuade  or  coerce  which  may  be  legal  or  illegal,  accord- 
ing to  the  means  employed,  the  issuance  of  an  injunction 
in  that  State  is  dependent  upon  the  circumstance  whether 
the  means  employed,  or  threatened  to  be  employed,  are 
legal  or  illegal." 

In  a  case  in  Pennsylvania  it  is  said  that  an  employer 
of  workmen  has  the  right  to  invoke,  for  the  protection 
of  his  property,  the  bill  of  rights  against  a  labor  union 
which  seeks  to  coerce  him  in  such  a  way  that  he  would 
be  compelled  to  employ  only  \mion  workmen,  to  submit 
himself  to  the  control  of  the  union,  and  to  put  himself 
within  its  power  to  dictate  to  him  the  number  of  hours 
to  constitute  a  day's  work  in  his  mill,  the  compensation 
to  be  paid  therefor,  the  time  of  payment  thereof,  and  the 
selection  of  his  employees.  And  the  coercive  acts  which 
the  courts  will  enjoin  may  be  without  threats  or  com- 
mission of  violence  or  personal  injury.  And  in  this  case 
it  was  decided  that  declarations  by  officers  of  the  union 
that  they  intended  to  drive  the  employer  out  of  business 
unless  he  unionized  his  mill,  followed  by  notices  to  cus- 
tomers of  the  employer  not  to  use  the  latter's  material 
under  threats  of  strikes  in  the  customers'  own  estab- 

"  Atkins  V.  Fletcher  Co.,  65  N.  J.  Eq.  658,  55  Atl.  1074. 

"  Pierce  v.  Stablemen's  Union  (Cal.  S.  C,  1909),  103  Pac.  324. 

572 


LABOR   OR   TRADE   UNIONS  §  519 

lishments  constituted   such   coercion   as   would   be   en- 
joined.^* 

§  519.  Boycott  Circulars— When  Held  Legal. 

In  a  recent  case  in  California  it  was  decided  that  it 
was  not  unlawful  to  send  written  notices  to  contractors 
employing  union  labor  that  plaintiff  had  been  declared 
unfair  and  that  union  men  could  not  work  for  it  or  handle 
material  supplied  by  it  until  further  notice."  It  was 
said  in  this  case:  "There  are  authorities  on  both  sides  of 
this  question,  but  I  think  that  those  which  would  answer 
it  in  the  negative  have  the  better  reason.  The  contractors 
were  working  in  harmony  with  the  unions  (as  indeed  the 
plaintiff  had  previously  done)  and  fair  dealing  required 
that  the  council,  representing  and  acting  for  the  unions, 
should  protect  such  contractors  from  any  loss  they  might 
incur  if  left  in  ignorance  of  the  action  it  had  taken.  If 
they  had  not  sent  the  notices  some  of  those  contractors 
who  felt  constrained  to  stop  dealing  with  plaintiff  when 
informed  that  it  had  been  declared  unfair  might  have 
purchased  material  which  they  would  not  have  used,  and 
it  is  only  upon  the  assumption  that  such  purchases  would 
have  been  made,  that  the  plaintiff  can  base  a  claim  that 
it  was  damaged  by  the  notices.  But  can  plaintiff  make 
such  a  claim  as  a  ground  for  equitable  relief?  It  seems 
very  clear  that  it  cannot;  for  with  full  knowledge  that  it 
had  been  declared  unfair  and  of  all  the  consequences 
flowing  from  that  declaration,  it  would  not  have  been 
justified  in  selling  material  to  a  contractor  employing 
union  men  without  disclosing  a  fact  so  essential  to  his 
freedom  of  contract.  And  if  good  faith  and  fair  deahng 
imposed  an  equal  obligation  upon  the  plaintiff  and  the 
council  to  inform  the  contractors  of  what  the  plaintiff 
knew,  it  is  difficult  to  see  what  right  of  plaintiff  was  in- 
fringed by  the  sending  of  the  notices.    Their  only  effect 

™  Purvis  V.  United  Brotherhood,  214  Pa.  St.  348,  63  Atl.  385,  112  Am. 
St.  Rep.  757. 

"Parkinson  Co.  v.  Building  Trades  Council,  154  Cal.  581,  98  Pac. 
1027. 

573 


§  519  LABOR  OR  TRADE  UNIONS 

was  to  enable  the  contractors  and  plaintiff  to  conduct 
their  future  deahngs  on  equal  terms."  ^° 

In  one  of  the  leading  cases  decided  in  Minnesota  where 
an  injunction  had  been  granted  restraining  the  defendants 
"from  notifying  such  customers  or  prospective  customers 
that  plaintiffs  are  unfair,"  it  was  decided  on  appeal  that 
the  court  below  was  not  justified  in  making  such  an  order 
and  it  was  said:  "If  a  notification  to  such  customers, 
actual  or  prospective,  that  plaintiffs  are  '  unfair  '  portends 
injury  to  them  or  plaintiffs,  and  such  as  to  bring  the  case 
within  the  rule  against  boycotting,  it  was  properly  made 
a  part  of  the  temporary  injunction.^^  Whether  such  a 
notification  would  in  any  case  amount  to  a  threat  or 
intimidation  must  be  determined  from  all  the  facts  and 
circumstances  of  each  particular  case.  Such  notice  might 
have  special  significance  in  a  particular  case,  and  have 
no  meaning  in  another.  But  the  complaints  before  us, 
by  which  we  are  controlled  in  determining  the  case,  there 
being  no  finding  other  than  in  effect  that  their  allegations 
are  true,  contain  no  allegations  that  the  mere  notification 
of  customers  that  plaintiffs  are  '  unfair '  has  any  special 
significance,  that  it  portended  injury,  or  was  intended  as 
a  threat  or  intimidation,  and  for  this  reason  we  hold  that 
the  court  below  was  not  justified  in  making  this  an  ele- 
ment of  the  injunctional  order."  ^^ 

In  a  case  in  New  York  it  is  decided  that  merchants 
will  not  be  permitted  to  restrain  garment  workers  from 
sending  circulars  to  the  customers  of  the  merchants, 
alleged  to  have  seriously  affected  their  business  and  likely 
to  cause  them  irreparable  damage,  where  the  circulars 
are  not  shown  to  contain  any  threats  or  intimidation.^^ 

And  the  employees  of  a  publishing  company  on  strike 

soPer  Beatty,  C.  J. 

^'  Citing  Beck  v.  Railway  Teamsters'  Protective  Union,  118  Mich.  497, 
77  N.  W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

»2  Gray  v.  Building  Trades  Council,  91  Minn.  171,  97  N.  W.  663,  103 
Am.  St.  Rep.  477,  per  Brown,  J. 

"  Cohen  v.  United  Garment  Workers,  72  N.  Y.  Supp.  341,  35  Misc.  R. 
(N.  Y.)  748.  See  also  Sinsheimer  v.  United  Garment  Workers,  28  N.  Y. 
Supp.  321,  77  Hun  (N.  Y.),  217. 

574 


LABOR   OR   TRADE   UNIONS  §  520 

and  the  local  labor  unions  of  which  they  were  members 
were  held  to  be  within  their  legal  rights  in  pubhshing  cir- 
culars setting  forth  the  circumstances  of  the  strike  and 
recjuesting  their  friends  to  withhold  their  patronage  from 
the  company.  And  in  this  case  it  was  decided  that  an 
injunction  would  only  be  granted  against  resorting  to 
threats,  intimidation,  force  or  fraud  in  their  relations  with 
the  customers  of  the  publishing  company  and  that  the 
publication  of  the  circulars  would  not  be  restrained  upon 
the  gi-ound  that  they  contained  innuendoes  of  a  hbelous 
character.^"* 

But  where  one  of  defendants  at  a  meeting  of  a  labor 
union  said:  ''We  must  ruin  the  business  of"  complainant 
and  moved  the  appointment  of  a  committee  and  the  other 
defendant  seconded  the  motion  and  a  circular  was  dis- 
tributed reciting  certain  alleged  facts  by  way  of  induce- 
ment and  ending  "Therefore  we  appeal  to  every  member, 
to  every  religious  and  justly  thinking  person,  to  only 
buy  goods"  from  others  and  defendants  put  up  posters 
with  the  words:  "Scab  Labor!  Don't  Patronize  (the  com- 
plainant) !  Scab  Labor!  55G  Cortlandt  Avenue, "  it  was  held 
that  such  words  did  not  violate  the  provision  of  the  New 
York  Penal  Code  ^^  that  if  two  or  more  persons  conspire 
to  prevent  another  from  exercising  a  lawful  calling  by 
force,  threats  or  intimidation  each  is  guilty  of  a  mis- 
demeanor, since  no  force,  threat,  or  intimidation  was 
used  or  threatened  by  the  defendants.^^ 

§  520.  Boycott  Circulars  -When  Held  Illegal. 

Members  of  a  union  may  cease  patronizing  anyone 
when  they  regard  it  for  their  interest,  to  do  so,  but  they 
have  no  right  to  compel  others  to  break  off  business 
relations  with  one  from  whom  they  have  withdrawn  their 
patronage,  and  to  do  this  by  unlawful  means,  with  the 
motive  of  injuring  such  person;  and  notices  which  excite 
fear  or  reasonable  apprehension  of  others  that  their  busi- 

"  Butterick  Publishing  Co.  v.  Typographical  Union,  100  N.  Y.  Supp. 
292,  50  Misc.  R.  (N.  Y.)  1. 
"  Section  168,  subd.  5. 
»•  People  V.  Radt,  71  N.  Y.  Supp.  846. 

575 


^  521  LABOR  OR  TRADE  UNIONS 

ness  will  be  injured  unless  they  do  break  off  such  relations 
or  cease  patronizing  another  are  wrong  and  unlawful.^^ 

Where  it  appeared  that  after  certain  employees  had 
left  plaintiff's  service,  notices  were  circulated  and  pub- 
Ushed  by  defendants  as  follows:  ''Organized  Labor  and 
Friends:  Don't  drink  scab  beer!"  followed  by  a  desig- 
nation of  certain  named  beers  as  ''unfair"  and  also  other 
notices  were  published  stating  "Guard  Your  Health  by 
Refusing  to  Drink  Unfair  Beer;"  it  was  held  that  this 
amounted  to  what  would  be  termed  a  boycott,  and  that 
such  acts  tended  fairly  to  obstruct  the  business  of  the 
complainant  and  it  was  the  duty  of  the  court  to  restrain 
the  defendants  from  such  acts.^^ 

And  where  there  were  many  circulars  relative  to  the 
strike  of  plaintiff's  employees,  which  was  ordered  by  the 
defendant,  a  lodge  of  a  machinists'  union,  posted  and 
widely  distributed  and  these  circulars  bore  the  names  of 
defendant's  officers  and  were  obviously  designed  to  pre- 
vent other  workmen  from  entering  plaintiff's  employment 
it  was  held  that  the  jury  might  properly  infer  that  the 
defendant  promoted  the  distribution.^^ 

§  521.  Boycott  Circulars— Constitutional  Provision 
as  to  Freedom  of  Speech. 

Where  the  Constitution  of  a  State  provides  that  "every 
person  shall  be  free  to  speak,  write  or  pubhsh  whatever 
he  will  on  any  subject,  being  responsible  for  all  abuse  of 
that  liberty,"  it  has  been  decided  that  a  labor  union, 
even  though  the  persons  composing  it  are  insolvent,  will 
not  be  enjoined  from  issuing  a  circular  in  which  a  certain 
employer  is  characterized  as  "unfair"  and  which  calls 
upon  all  laboring  and  all  persons  in  sympathy  with  or- 
ganized labor  to  withdraw  their  patronage  from  such 
person.^"    The  court  said:  "The  language  here  employed 

87  Wilson  V.  Hey,  232  III.  389,  83  N.  E.  928. 

88  Seattle  Brewing  &  Malting  Co.  v.  Hansen  (U.  S.  C.  C),  144  Fed.  1011. 

89  Patch  Manufacturing  Co.  v.  Protection  Lodge,  77  Vt.  294,  60  Atl. 
74,  107  Am.  St.  Rep.  765. 

^  Lindsay  &  Co.  v.  Montana  Federation  of  Labor,  37  Mont.  264,  96 
Pac.  127. 

576 


LABOR  OR  TRADE  UNIONS  §  522 

seems  too  clear  to  admit  of  doubt  or  argument.  *  *  *  It 
is  impossible  to  conceive  the  idea  that  the  individual 
has  an  absolute  right  to  publish  what  he  pleases,  subject 
to  the  restriction  mentioned,  and  at  the  same  time  to 
entertain  the  idea  that  a  court  may  prevent  him  from 
doing  so.    The  two  ideas  cannot  possibly  co-exist."  ^' 

In  a  case  in  Michigan,  however,  it  was  decided  that, 
although  under  the  Constitution  every  person  is  entitled 
to  "freely  speak,  write  and  publish  his  sentiments  on  all 
subjects,  being  responsible  for  the  abuse  of  such  right 
and  that  the  publication  of  a  libel  would  not  be  enjoined, 
the  distribution  of  a  boycotting  circular  should  be  en- 
joined.^2  The  court  said:  "If  all  there  was  to  this  trans- 
action was  the  pubHcation  of  a  libelous  article,  the  posi- 
tion would  be  sound.  It  is  only  Ubelous  in  so  far  as  it 
is  false.  Its  purpose  was  not  alone  to  libel  complainants' 
business  but  to  use  it  for  the  purpose  of  intimidating  and 
preventing  the  public  from  trading  with  the  complain- 
ants. It  called  upon  them  to  boycott  them.  The  defend- 
ants, by  their  conduct,  gave  all  the  patrons  of  complain- 
ants, and  others  as  well,  the  meaning  they  attached  to 
the  word  '  boycott '  and  they  all  evidently  understood  it 
as  the  defendants  interpreted  it  by  their  conduct  and 
acts."  " 

§  522.  Contracts  Between  Employer  and  Employee. 

It  may  be  stated  as  a  general  rule  that  an  employer  and 
employee  may  lawfully  contract  in  reference  to  the  price 
to  be  paid  the  workmen  and  in  respect  to  the  tei-ms  of 
employment.  And  this  right  of  contract  is  generally 
recognized  as  between  an  employer  of  labor  and  a  labor 
union.  ^'* 

But  while  an  individual  employer  may  lawfully  agree 
with  a  labor  union  to  employ  its  members  only,  such  an 

»i  Per  Holloway,  J. 

•iiBeckv.  Railway  Teamsters'  Protective  Union,  118  Mich.  497,  77  N. 
W.  13,  42  L.  R.  A.  407,  74  Am.  St.  Rep.  421. 

»»  Per  Grant,  C.  J. 

«<  People  V.  Marcus,  97  N.  Y.  Supp.  322,  110  App.  Div.  (N.  Y.)  255, 
aff'd  185  N.  Y.  257,  77  N.  E.  1073. 

37  577 


§  523  LABOR  OR  TRADE  UNIONS 

agreement  when  participated  in  by  all  or  a  large  portion 
of  employees  in  any  community,  so  as  to  become  oppres- 
sive by  operating  generally  upon  the  craftsmen  in  the 
trade,  and  imposing  upon  them  a  penalty  for  refusing 
to  join  the  favored  union,  is  held  to  be  against  pubhc 
policy  and  void.^'^  So  in  this  case  it  was  so  held  in  respect 
to  an  order  issued  by  a  building  trades'  employers'  asso- 
ciation to  its  members  forbidding  the  employment  of 
artisans  who  did  not  at  once  become  members  of  a  par- 
ticular union,  it  appearing  that  such  association  was  made 
up  of  nearly  all  prominent  building  contractors  and  such 
order  practically  affected  the  whole  building  trade  in  the 
locality. 

Again,  an  employer  may  lawfully  contract  with  his 
employees  to  buy  their  labor  upon  terms  other  than  the 
union  ones  and  in  order  that  the  union  may  not  be  a  dis- 
turbing element  in  the  conduct  of  his  business  may  bind 
his  employees  not  to  become  members  of  the  union,  and 
w^here  the  members  of  such  union  are,  under  these  circum- 
stances, guilty  of  an  unlawful  conspiracy  in  seeking  to 
persuade  such  employees  to  break  the  contract  and  join 
the  union,  equity  may  intervene  to  enjoin  the  continuance 
of  such  conduct. ^^ 

§  523.  Contracts  Between  Employer  and  Employee 
Continued. 

A  contract  between  employers  and  a  labor  union 
whereby  the  former  agreed,  for  a  certain  period,  to  employ 
and  retain  only  members  of  the  union  in  good  standing, 
and  the  latter,  for  the  same  period,  bound  themselves  to 
furnish  the  services  of  its  members,  is  held  not  to  be 
violative  of  public  policy.  And  in  such  a  case  a  promis- 
sory note  given  by  the  employers  as  collateral  security, 
to  be  applied  as  liquidated  damages  for  the  violation  of 
such  contract,  is  a  valid  and  enforceable  instrument.^^ 

"sMcCord  V.  Thompson-Starrett  Co.,  113  N.  Y.  Supp.  385,  129  App. 
Div.  (N.  Y.)  130,  order  aff'd  198  N.  Y.  587,  92  N.  E.  1090. 

^  Hitchman  Coal  &  Coke  Co.  v.  Mitchell  (U.  S.  C.  C),  172  Fed.  963. 
9'  Jacobs  V.  Cohen,  183  N.  Y.  207,  76  N.  E.  5,  2  L.  R.  A.  (N.  S.)  292, 

578 


LABOR   OR   TRADE    UNIONS  §  523 

And  an  agreement  between  employers  to  have  no  further 
dealings  with  certain  labor  unions  or  organizations  and 
to  require  each  person  presenting  himself  to  any  party 
to  such  agreement  to  sign,  as  a  condition  of  his  employ- 
ment, an  agreement  that  he  is  not  and  during  the  period 
of  his  employment  will  not  becomo  a  member  of  such 
unions  does  not  constitute  an  unlawful  conspiracy  against 
such  unions.^^ 

Again,  an  agreement  between  a  mason  builders'  asso- 
ciation and  a  bricklayers'  union  providing  that  the  mem- 
bers of  the  mason  builders'  association  must  include  in 
their  contracts  for  building  all  cutting  of  masonry,  in- 
terior brickwork,  the  paving  of  brick  floors,  the  installing 
of  concrete  blocks,  the  brickwork  of  the  damp  proofing 
system  and  all  fireproofing  floor  arches,  slabs,  partitions, 
furring  and  roof  blocks,  and  that  they  shall  not  lump  or 
sublet  the  installation,  if  the  labor  in  connection  there- 
with is  bricklayers'  work  as  recognized  b}^  the  trade,  the 
men  employed  upon  the  construction  of  the  walls  to  be 
given  the  preference  and  also  providing  that  no  members 
of  these  bricklayers'  unions  shall  work  for  anyone  not 
complying  with  the  rules  and  regulations  herein  agreed 
to  has  been  held  not  to  be  within  a  statute  providing 
that  every  contract,  agreement  or  arrangement  whereby 
a  monopoly  in  the  manufacture,  production  or  sale  of  any 
article  or  commodity  is  or  may  be  created,  established  or 
maintained  is  illegal  and  void.^^ 

But  an  agreement  sought  to  be  exacted  from  carpenter 
contractors,  that  they  must  agree  to  purchase  materials 
only  from  factories  approved  by  the  union  is  held  to  be 
against  pubhc  policy  and  harmful  to  the  community  be- 
cause it  restrains  competition  and  freedom  of  trade  in 
articles  of  common  necessity.^ 

Ill  Am.  St.  Rep.  730,  rev'g  Jacobs  v.  Cohen,  90  N.  Y.  Supp.  854,  99  App. 
Div.  481. 

»« Goldfield  Consol.  Mines  Co.  v.  Goldfield  Miners'  Union  (U.  S.  C.  C), 
159  Fed.  500. 

"  National  Fireproofing  Co.  v.  Mason  Builders'  Assn.,  169  Fed.  259, 
94  C.  C.  A.  535,  decided  under  N.  Y.  Laws,  1800,  p.  1514,  chap.  690. 

1  People  V.  McFarlin,  89  N.  Y.  Supp.  527,  43  Misc.  R.  (N.  Y.)  591. 

579 


§  524  LABOR  OR  TRADE  UNIONS 

§  524.  Officers— Power  of  Trade  Union's  Board  of  Di- 
rectors or  Committees  to  Contract. 

The  1904  convention  of  the  International  Printing 
Pressman  and  Assistants'  Union  instructed  its  board  of 
directors  to  "negotiate"  with  the  Typothetae  for  an  eight- 
hour  workday.  The  convention  of  1905  instructed  the 
board  of  directors  to  secure  "if  possible"  a  workday  of 
eight  hours;  and  the  convention  of  1906  instructed  its 
board  of  directors  "to  secure  a  renewal  of  the  agree- 
ment" then  existing,  which  provided  for  a  nine-hour  day 
"with  the  declaration  as  to  whether  the  eight-hour  day 
would  be  agreed  to."  The  directors  under  this  authority 
executed  a  contract  with  the  Typothetae  renewing  the 
existing  contract,  and  providing  for  a  nine-hour  day 
.until  January  1,  1909,  and  an  eight-hour  day  thereafter 
during  the  life  of  the  contract.  The  convention  of  1907 
refused  to  ratify  this  contract  until  the  provision  for  an 
open  shop  was  stricken  out,  and  an  amendment  was  in- 
serted providing  for  nine  hours'  pay  for  the  eight-hour 
day,  to  which  the  Typothetae  refused  to  agree.  It  was 
held  that  the  board  of  directors  of  the  union  under  the 
instructions  given  them  by  the  convention  of  1906  had 
no  power  to  determine  within  what  time  after  the  expira- 
tion of  the  existing  contract  the  eight-hour  day  should 
be  inaugurated,  and  that  the  agreement  so  made  was  not 
binding  on  the  union  unless  ratified.^  In  this  case  a  suit 
was  brought  to  prevent  the  violation  of,  and  practically 
to  enforce,  the  specific  performance  of  an  alleged  agree- 
ment between  two  voluntary  associations,  namely,  the 
United  Typothetae  of  America  and  the  International 
Printing  Pressmen  and  Assistants'  Union  of  North  Amer- 
ica. The  complainants  were  members  of  the  Typothetae, 
and  brought  the  suit  on  behalf  of  themselves  and  as 
representatives  of  the  Typothetae,  and  the  defendants 
were  such  as  representatives  of  the  union;  the  purpose  of 
the  agreement  was  to  establish  "between  the  employing 
printers  of  the  United  States  and  their  pressmen  and 
feeders  uniform  shop  practices  and  fair  scales  of  wages, 

2  SyUabus  in  A.  R.  Barnes  &  Co.  v.  Berry  (U.  S.  C.  C),  157  Fed.  883. 

580 


LABOR  OR  TRADE   T^NIONS  §  524 

settlement  of  all  questions  arising  between  them,  and  the 
abolition  of  strikes,  sympathetic  or  otherwise,  lockouts 
and  boycotts  and  providing  also  as  to  the  numl^er  of 
hours  which  should  constitute  a  week's  work  during  the 
life  of  the  contract  and  other  provisions  as  to  arrange- 
ments as  to  half-holidays  and  overtime  "without  over- 
time cost  to  the  employer"  and  the  right  of  the  em- 
ployer to  "a  forty-eight  hour  week  fifty-two  weeks  in 
the  year,  except  where  legal  holidays  intervene."  Com- 
mittees of  the  two  associations  signed  the  contract  whic^i 
was  ratified  by  a  special  convention  of  the  Typothetae, 
but  this  was  subsequently  repudiated  by  an  annual  con- 
vention in  1907  which  action  was  approved  by  the  men 
of  the  union  upon  a  referendum  vote  directing  that  an 
"eight-hour  day"  be  inaugurated  by  the  union  on  a  cer- 
tain day  in  November,  1907.  The  complainants  claimed, 
and  the  defendants  denied,  that  the  committee  of  the 
union  was  authorized  by  the  convention  of  1906  to  make 
the  contract  without  ratification  by  a  convention  of  the 
union;  and  the  questions  in  controversy  were:  (1)  Had 
the  committee  of  the  union  full  and  final  authority  to 
make  the  contract?  (2)  If  so,  could  the  performance 
thereof  be  enforced  indirectly  by  enjoining  the  officers 
of  the  union  from  paying  strike  benefits,  and  from  doing 
anything  in  furtherance  of  strikes?  ^  Upon  appeal  to  the 
Circuit  Court  of  Appeals  the  case  below  was  affirmed 
and  it  was  held  that  the  so-called  contract  between  the 
International  Printing  Pressmen  and  Assistants'  Union 
and  the  United  Typothetse  of  America,  signed  by  the 
directors  of  each  of  such  associations  on  January  8,  1907, 
for  the  purpose  of  governing  the  relations  between  the 
members  of  the  two  as  employers  and  emploj-'ees,  was 
invalid  and  not  binding  for  want  of  authority  on  the  part 
of  the  directors  of  the  union  to  execute  the  same.  It 
was  designed  to  take  the  place  of  a  prior  agreement  be- 
tween the  parties  which  was  to.  expire  by  limitation 
May  1,  1907,  but  contained  certain  provisions  differing 
therefrom.   Such  prior  contract  had  been  similarly  negoti- 

'  As  to  second  point,  see  §  528,  herein. 

581 


§§  525,  526  LABOR   OR   TRADE    UNIONS 

ated,  subject  to  ratification  by  each  association,  and  had 
been  so  ratified.  The  new  agreement  was  also  ratified  by 
the  Typothctse,  but  tlie  directors  of  the  union  assumed  to 
have  authority  to  conclude  the  contract.  The  minutes 
of  the  last  preceding  convention  of  the  association  at 
which  their  authority  was  given  showed,  however,  that 
their  negotiations  as  to  some  of  the  matters  covered  by 
the  agreement  were  to  be  reported  to  the  next  annual 
convention  for  its  action,  and  such  convention,  which 
met  in  June  following,  voted  to  ratify  the  contract  only 
subject  to  certain  changes,  which  were  never  made.'* 

§  525.  Injunction— Sufficiency  of  Complaint  for 
Threatened  Injury  to  Persons  and  Property— New  York 
Code. 

A  complaint  sets  forth  a  cause  of  action  for  threatened 
injury  to  person  and  property,  where  after  alleging  that 
defendants,  certain  unincorporated  labor  unions,  had  en- 
tered into  an  unlawful  conspiracy  by  abuse,  intimidation, 
threats  and  violence  to  coerce  and  intimidate  the  other 
employees  of  the  plaintiff  and  to  induce  them  to  leave 
and  to  force  plaintiff  to  accede  to  the  demands  of  said 
union;  and  further  alleges  that,  with  intent  to  injure  and 
destroy  plaintiff's  business  and  property,  the  defendant 
unions  are  committing  and  intend  to  continue  to  commit 
acts  of  intimidation,  abuse  and  violence  against  plaintiff 
and  its  employees,  and  recites  alleged  acts  of  such  char- 
acter already  committed  at  the  instigation  of  defendant 
unions,  their  officers  and  members.'' 

§  526.  Parties — Process— ^Service — Injunction. 

In  an  action  against  unincorporated  labor  unions  for 
threatened  injury  to  the  person  and  property  of  plaintiff, 

*  A.  R.  Bames  &  Co.  v.  Berry,  169  Fed.  225,  94  C.  C.  A.  501  (the  last 
part  of  the  text  from  "the  case  below  was  affirmed  and  it  was  held"  is  the 
Byllabus  to  169  Fed.  225,  94  C.  C.  A.  501). 

^  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  96,  case  of  motion  to  continue  a  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff's business. 

582 


LABOR   OR  TRADE    UNIONS  §§  527,  52^ 

after  the  discharge  by  it  of  certain  members  of  such  labor 
unions  following  a  strike,  the  defendants  arc  properly 
made  parties  to  the  action,  under  the  New  York  Code  of 
Civil  Procedure,  by  service  upon  tlioir  officers.® 

§  527.  Injunction  -Right  to  in  New  York. 

In  New  York  the  only  mode  of  redress  open  to  parties 
generally,  for  injuries  occasioned  to  them  through  the 
voluntary  combination  of  others  engaged  in  similar  em- 
ployments with  a  view  of  influencing  and  controlling  the 
general  conduct  and  management  of  such  trade  or  em- 
ployment is  prosecution  under  the  Penal  Code;^  and 
unless  some  injury  has  been  inflicted  on  the  person  or 
some  right  of  property  has  been  invaded,  destroyed  or 
prejudiced,  an  injunction  will  not  lie.^ 

§  528.  Injunction  to  Restrain  Payment  of  Strike  Bene- 
fit— Specific  Performance. 

Where  a  contract  between  the  International  Printing 
Pressmen  and  Assistants'  Union  and  the  United  Typoth- 
etsc  of  America  attempted  to  regulate  the  length  of  the 

e  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107  N. 
Y.  Supp.  303,  57  Misc.  96,  case  of  motion  to  continue  a  preliminary  in- 
junction granted  in  an  action  against  labor  unions  for  damage  to  plaintiff's 
business. 

'Section  168. 

*  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  97  (case  of  motion  to  continue  a  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff's business;  "all  members  of  the  defendant  unions  who  can  be  named 
and  identified  as  having  committed  acts  of  violence  or  intimidati(;n  should 
be  enjoined.  In  other  respects  the  motion  to  continue  injunction  order 
denied.")  §  580  of  the  Penal  Law  of  New  York  (source  is  Penal  Code, 
§  168)  in  defining  and  providing  for  the  punishment  of  conspiracy 
provides  (in  subdivs.  5,  6)  as  follows:  "If  two  or  more  persons  con- 
spire ♦  *  *  5.  To  prevent  another  from  exercising  a  lawful  trade  or  calling, 
or  doing  any  other  lawful  act,  by  force,  threats,  intimidation,  or  by  inter- 
fering or  threatening  to  interfere  with  tools,  implements,  or  jiroperty  be- 
longing to  or  used  by  another,  or  with  the  use  or  employment  thereof;  or, 
6.  To  commit  any  act  injurious  to  the  public  health,  to  public  morals,  or 
to  trade  or  commerce,  or  for  the  perversion  or  obstruction  of  justice,  or 
of  the  due  administration  of  the  laws,  each  of  them  is  guilty  of  a  misde- 
meanor." Birdseye's  Gumming  &  Gilbert's  Consol.  Law  N.  Y.,  p.  3848, 
Laws,  1909,  chap.  S,  .\rt.  LIV. 

583 


§  529  LABOR  OR  TRADE  UNIONS 

workday,  but  did  not  fix  the  term  of  service  nor  prevent 
the  members  of  the  union  from  withdrawing  from  the 
ser\'ice  of  the  Typotheta?  at  any  time  whether  with  or 
without  cause,  the  contract  having  been  repudiated  by 
the  union,  the  courts  had  no  power  by  injunction  to  re- 
strain the  officers  of  the  union  from  paying  strike  benefits 
to  members  from  a  fund  raised  for  that  purpose  in  order 
indirectly  to  compel  enforcement  of  the  contract,  and 
prevent  the  success  of  strikes  inaugurated  to  compel  the 
granting  immediately  of  an  eight-hour  day.^  ''The  strike 
benefit  fund  is  created  by  moneys  deposited  by  the  men 
with  general  officers  for  the  support  of  themselves  and 
families  in  times  of  strikes,  and  the  court  has  no  more 
control  of  it  than  it  would  have  over  deposits  made  by 
them  in  the  banks,  and  the  attempt  to  enforce  specific 
performance  of  the  agreement  by  enjoining  the  officers 
from  performing  their  functions  cannot  be  entertained. 
The  court  will  not  by  indirect  methods  compel  the  men 
to  continue  in  the  service  of  the  Typothetse  and  work 
nine  hours  a  day.  The  agreement  only  requires  that,  if 
they  work  at  all,  they  shall  work  nine  hours  a  day.  There 
is  no  agreement  that  they  shall  continue  in  the  service 
of  the  Typotheta."  ^° 

§  529.  Injunction  —  Evidence  of  Unlawful  Acts  of 
Members  During  Strike. 

The  unlawful  acts  of  one  or  more  members  of  a  labor 
union  during  a  strike  do  not  ipso  facto  bind  the  union; 
conclusive  proof  should  appear  upon  which  to  base  the 
charge  that  the  defendant  associations,  as  such,  promoted 
or  ratified  the  acts  complained  of;  and,  while  such  proof 
may  be  circumstantial  where  a  conspiracy  is  alleged,  the 
circumstances  should  be  those  that  amount  to  direct 
proof.  ^^ 

9  Syllabus  in  A.  R.  Barnes  &  Co.  v.  Berry  (U.  S.  C.  C),  157  Fed.  883, 
aff'd  169  Fed.  225,  94  C.  C.  A.  501,  for  statement  of  this  case  see  §  524, 
herein. 

1"  Id.,  889,  per  Thompson,  Dist.  J. 

"  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  96;  case  of  motion  to  continue  a  preliminary 

584 


LABOR   OP.  TRADE   UNIONS  §§  530-532 

§  530.  Injunction     No  Defense  That  Act  a  Crime. 

In  a  proceeding  for  an  injunction  against  a  labor  union, 
the  fact  that  certain  of  the  acts  charged  amount  to 
crimes,  or  threatened  crimes,  is  not  a  reason  why  equity 
will  refuse  to  restrain  them;  while  equity  will  not  attempt 
to  restrain  the  commission  of  a  crime  as  such,  the  fact 
that  an  act  threatening  irreparable  injury  to  property 
rights  is  of  itself  cruninal  does  not  deprive  a  court  of 
equity  of  its  right  and  power  to  enjoin  its  commission. 
And  likewise  in  such  a  case  while  equity  will  not  generally 
enjoin  against  a  trespass  as  such  yet  when  the  acts  com- 
mitted and  threatened  are  in  the  nature  of  a  continuing 
trespass,  working  irreparable  injury,  they  may  be  en- 
joined.^- 

§  531.  Injunction— Question  of  Law  and  Fact. 

In  an  action  against  unincorporated  labor  unions  for 
threatened  injury  to  the  person  and  property  of  plaintiff, 
the  question  whether  acts  of  violence  and  intimidation 
committed  upon  employees  of  plaintiff  by  members  of 
the  defendant  unions,  were  committed  in  the  interest 
and  for  the  benefit  of  said  unions  is  one  of  law  and  not 
of  fact.  13 

§  532.  Preliminary  Injunction— When  Vacated  as  to 
Union  but  Permitted  to  Stand  as  to  Individual  Members 
but  Not  so  as  to  Prevent  Peaceful  Picketing. 

Where  an  employer,  alleging  unlawful  coercion,  intim- 
idation and  threats  by  its  employees,  brings  an  action 
against  the  officers  and  members  of  the  union,  seeking 
an  injunction  restraining  them  from  acts  of  interference 
and  assault,  and  a  preliminary  injunction  is  granted,  and 
on  a  motion  to  vacate  such  injunction,  the  alleged  unlaw- 

injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff's business. 

"  Pierce  v.  Stablemen's  Union,  156  Cal.  70,  103  Pac.  324. 

"  Russell  &  Sons  v.  Stampers  <k  Gold  Leaf  Local  Union  No.  22.  107 
N.  Y.  Supp.  303,  57  Misc.  9();  case  of  motion  to  continue  a  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff's business. 

585 


§  533  LABOR  OR  TRADE  UNIONS 

ful  acts  are  denied  and  there  is  a  great  conflict  in  the 
affidavits  upon  the  subject  and  the  charges  consist  of 
statements  that  must  from  their  nature  have  been  made 
on  information  and  belief,  or  statements  claimed  to  have 
been  made  by  members  of  the  union  which  they  emphatic- 
ally deny,  the  preliminary  injunction  will  be  vacated  as 
to  the  union  but  permitted  to  stand  as  to  the  individual 
defendants,  modified,  however,  so  as  not  to  prevent  them 
from  peacefully  picketing  in  reasonable  numbers,  for  the 
purpose  of  observation  only,  the  plaintiff's  premises  from 
t-he  highways  or  streets  in  its  vicinity  and  endeavoring  by 
agreement,  persuasion  or  appeal  only,  to  prevent  other 
persons  from  becoming  employees  of  plaintiff,  nor  from 
peaceably  assembling  at  any  place  or  places  in  their  city 
and  with  permission  for  future  application  by  plaintiff  to 
reinstate  the  injunction  upon  future  change  of  circum- 
stances.^'' 

But  an  injunction  granted,  in  an  action  against  an 
unincorporated  labor  union  for  threatened  injury  to  the 
person  and  property  of  plaintiff,  against  the  officers  and 
members  of  the  defendant  labor  unions  is  binding  upon 
each  and  every  member  though  service  thereof  was  made 
only  upon  the  officers.  ^^ 

§  533.  Injunction — Contempt — Nature  of  Proceeding. 

In  the  case  of  officers  of  a  labor  union  it  has  been  de- 
cided that  if  they  countenance  acts  of  intimidation  and 
refrain  from  using  the  means  which  they  possess  for 
preventing  these  acts  they  will  be  regarded  as  violating 
an  injunction  against  such  acts.  And  where  the  officers 
of  such  a  union  caused  an  injunction  order  to  be  read  at 
a  meeting  of  members  on  two  or  three  occasions  but  it 
appeared  from  the  proof  that  these  meetings  could  not 
be  attended  by  all  the  members  and  that  no  such  notice 

"  Searle  Manufacturing  Co.  v.  Terry,  56  Misc.  265,  106  N.  Y.  Supp.  438. 

»5  Russell  &  Sons  v.  Stampers  &  Gold  Leaf  Local  Union  No.  22,  107 
N.  Y.  Supp.  303,  57  Misc.  96;  case  of  motion  to  continue  preliminary 
injunction  granted  in  an  action  against  labor  unions  for  damage  to  plain- 
tiff'.s  business. 

580 


LABOR   OR  TRADE   UNIONS  §  533 

was  given  of  the  pui-pose  of  the  meetings  as  would  apprise 
members  of  the  fact  that  any  matter  of  special  impor- 
tance was  to  be  considered  or  brought  to  their  attention 
it  was  decided  that  the  mere  fact  of  the  reading  of  the 
order  was  not  of  itself  the  measure  of  the  duty  of  the 
officers  in  the  matter  of  obeying  the  order  of  the  court.  ^^ 

In  the  United  States  Circuit  Court  it  has  been  decided 
that  a  proceeding  to  punish  members  of  certain  labor 
unions  for  conspiracy  to  violate  injunction  orders  is  to 
bo  regarded  as  a  criminal  proceeding  within  the  meaning 
of  the  provision  of  the  Revised  Statutes  ''  that  "no  plead- 
ing of  a  party  nor  any  discovery  or  evidence  obtained 
from  a  party  or  witness  by  means  of  a  judicial  proceed- 
ing in  this  or  any  foreign  country  shall  be  given  in  evi- 
dence or  in  any  manner  used  against  him  or  his  property 
or  estate  in  any  court  of  the  United  States  in  any  criminal 
proceeding  or  for  the  enforcement  of  any  penalty  or 
forfeiture."  ^^  And  under  the  decision  in  this  case  the 
above  exemption  may  be  claimed  either  when  the  testi- 
mony is  given  or  at  the  time  when  the  evidence  thus 
obtained  is  first  sought  to  be  used,  contrary  to  the  statute. 

In  the  application  of  the  doctrine  that  the  primitive 
authority  of  the  court  in  cases  of  criminal  contempt  is 
not  for  the  purpose  of  vindicating  the  criminal  law  but  to 
enable  the  court  to  enforce  obedience  to  its  commands 
and  that  the  authority  to  punish  for  such  a  contempt 
resides  exclusively  with  the  court  offended  it  was  decided 
in  a  case  in  New  York  that  where  respondents,  with 
others,  as  officers  of  a  labor  union,  so  acted  as  to  further 
the  conamission  of  acts  of  violence  and  intimidation  upon 
the  part  of  members  of  the  union  during  the  course  of  a 
labor  dispute,  which  acts  it  was  the  duty  of  such  officers 
to  endeavor  to  prevent  according  to  the  court's  mandate, 
and,  after  successive  appeals  to  the  Appellate  Di\dsion 

"In  re  McCormick;  Tj'pothetae  v.  Typographical  Union,  117  N.  Y. 
Supp.  70,  132  App.  Div.  (N.  Y.)  921,  aff'd  19G  N.  Y.  571,  90  N.  E.  1161. 

"Section  860,  Rev.  Stat.  U.  S.  (U.  S.  Comp.  Stat.,  1901,  p.  661). 

'*  Hammon  Lumber  Co.  v.  Sailors'  Union  of  the  Pacific  (U.  S.  C.  C), 
167  Fed.  809. 

587 


§  534  LABOR  OR  TRADE  UNIONS 

and  the  Court  of  Appeals,  resulting  in  affirmance  in  each 
instance  of  an  order  adjudging  defendants  guilty  of  crim- 
inal contempt,  the  court  was  asked  to  direct  the  execu- 
tion of  its  sentence  of  fine  and  imprisonment,  it  might, 
upon  the  petition  for  clemency  of  the  respondents  di- 
rected to  be  imprisoned  and  upon  payment  of  the  fines 
imposed,  stay  the  issuance  of  process  for  the  imprison- 
ment of  the  petitioners.^^ 

A  proceeding  to  punish  a  labor  union  and  certain  of 
its  officers  and  members  for  contempt  in  the  willful  vio- 
lation of  an  injunction  order  granted  in  the  action  need 
not  be  entitled,  under  the  New  York  practice,  in  the  name 
of  the  people  but  may  be  entitled  in  the  cause  in  which 
the  order  violated  was  made.^° 

§  534.  Constitutional  Law— Congress  no  Power  to 
Make  It  Criminal  Ofifense  for  Carrier  to  Discharge  Em- 
ployee Because  Member  of  Labor  Union — Fifth  Amend- 
ment —  Contract  —Interstate  Commerce . 

It  is  held  in  a  comparatively  recent  case  in  the  Fed- 
eral Supreme  Court  that  (a)  it  is  not  within  the  power  of 
Congress  to  make  it  a  criminal  offense  against  the  United 
States  for  a  carrier  engaged  in  interstate  commerce,  or 
an  agent  or  officer  thereof,  to  discharge  an  employee 
simply  because  of  his  membership  in  a  labor  organiza- 
tion; and  a  provision  to  that  effect  in  the  United  States 
statutes  -^  concerning  interstate  carriers,  is  an  invasion 

"Typothette  v.  Typographical  Union  No.  6,  126  N.  Y.  Supp.  967,  66 
Misc.  R.  (N.  Y.)  484,  order  aff'd  122  N.  Y.  Supp.  975,  138  App.  Div.  293. 

^'Typothetae  v.  Typographical  Union,  117  N.  Y.  Supp.  144. 

21  Act  of  June  1,  1898,  30  Stat.  424,  §  10,  chap.  370;  U.  S.  Comp.  Stat., 
1901,  p.  3205,  Id.,  Suppl.,  1909,  p.  1213.  The  tenth  section  upon  which 
the  prosecution  in  this  case  was  based  was  in  the  following  words:  "That 
any  employer  subject  to  the  provisions  of  this  Act  and  any  officer,  agent, 
or  receiver  of  such  employer  who  shall  require  any  employee,  or  any  per- 
son seeking  employment,  as  a  condition  of  such  employment,  to  enter 
into  an  agreement,  either  written  or  verbal,  not  to  become  or  remain  a 
member  of  any  labor  corporation,  association,  or  organization,  or  shall 
threaten  any  employee  with  loss  of  employment,  or  shall  unjustly  dis- 
criminate against  any  employee  because  of  his  membership  in  such  a  labor 
corporation,  association,  or  organization,  or  who  shall  require  any  em- 
ployee or  any  person  seeking  employment,  as  a  condition  of  such  employ- 

58S 


LABOR   OK   TRADE   UNIONS  §  534 

of  personal  liberty,  as  well  as  of  the  right  of  property 
guaranteed  by  the  Fifth  Amendment  to  the  Constitution 
of  the  United  States,  and  is,  therefore,  unenforceable  as 
repugnant  to  the  declaration  of  that  .Vmendment  that  no 
person  shall  be  deprived  of  liberty  or  property  without 
due  process  of  law.  (b)  While  the  rights  of  liberty  and 
property  guaranteed  by  the  Constitution  against  depriva- 
tion without  due  process  of  law,  are  subject  to  such  reason- 
able restrictions  as  the  common  good  or  general  welfare 
may  require,  it  is  not  within  the  functions  of  government — 
at  least  in  the  absence  of  contract — to  compel  any  person 
in  the  course  of  his  business,  and  against  his  will,  either 
to  employ,  or  be  employed  by,  another.  An  employer 
has  the  same  right  to  prescribe  terms  on  which  he  will 
employ  one  to  labor  as  an  employee  has  to  prescribe  those 
on  which  he  will  sell  his  labor,  and  any  legislation  which 
disturbs  this  equality  is  an  arbitrary  and  unjustifiable 
interference  with  liberty  of  contract,  (c)  Quaere,  and  not 
decided  whether  it  is  within  the  power  of  Congress  to 
make  it  a  criminal  offense  against  the  United  States  for 
either  an  employer  engaged  in  interstate  commerce,  or 
his  employee  to  disregard,  without  sufficient  notice  or 
excuse,  the  terms  of  a  valid  labor  contract,  (d)  The 
power  to  regulate  interstate  commerce  is  the  power  to 
prescribe  rules  by  which  such  commerce  must  be  governed, 
but  the  rules  prescribed  must  have  a  real  and  substantial 
relation  to,  or  connection  with,  the  commerce  regulated, 
and  as  that  relation  does  not  exist  between  the  member- 

ment,  to  enter  into  a  contract  whcrcbj'  such  employee  or  applicant  for 
employment  shall  agree  to  contribute  to  any  fund  for  charitable,  social, 
or  beneficial  purposes;  to  release  such  employer  from  legal  liabihty  for  any 
personal  injury  by  reason  of  any  benefit  received  from  such  fund  beyond 
the  proportion  of  the  benefit  arising  from  the  employer's  contribution  to 
Buch  fund;  or  who  shall,  after  having  discharged  an  employee,  attempt  or 
conspire  to  prevent  such  employee  from  obtaining  employment,  or  who 
shall,  after  the  quitting  of  an  employee,  attempt  or  conspire  to  prevent 
such  employee  from  obtaining  employment,  is  hereby  declared  to  be  guilty 
of  a  misdemeanor,  and,  upon  conviction  thereof  in  any  court  of  the  United 
States  of  competent  jurisdiction  in  the  district  in  which  such  offense  was 
committed,  shall  be  punished  for  each  offense  by  a  fine  of  not  less  than 
one  hundred  dollars  and  not  more  than  one  thousand  dollars." 

589 


§§  535,  536     LABOR  OR  TRADE  UNIONS 

ship  of  an  employee  in  a  labor  organization  and  the  inter- 
state commerce  with  which  he  is  connected  the  provision 
of  the  Act  of  Congress  above  considered  cannot  be  sus- 
tained as  a  regulation  of  interstate  commerce  and  as 
such  within  the  competency  of  Congress,  (e)  The  power 
to  regulate  interstate  commerce  while  great  and  par- 
amount cannot  be  exerted  in  violation  of  any  fundamental 
right  secured  by  other  provisions  of  the  National  Con- 
stitution, (f)  The  provision  of  the  above  statute  is  sev- 
erable, and  its  unconstitutionality  may  not  affect  other 
provisions  of  the  act  or  provisions  of  that  section  thereof.  ^^ 

§  535.  Statute  Prohibiting  Discharge  of  Employee  Be- 
cause Member  of  Labor  Union. 

A  statute  is  unconstitutional  as  destroying  freedom  of 
contract  within  the  meaning  of  the  Federal  Constitution 
where  it  prohibits  the  discharge  of  an  employee  because 
he  is  a  member  of  a  labor  union.  ^^ 

§  536.  Statute  as  to  Becoming  Member  of  Labor  Union 
— Condition  of  Employment. 

A  statute  providing  that  ''It  shall  be  unlawful  for  any 
person,  firm  or  corporation  to  make  or  enter  into  any 

22  Adair  v.  United  States,  208  U.  S.  161,  52  L.  ed.  436,  28  Sup.  Ct.  277. 
Mr.  Justice  McKenna  and  Mr.  Justice  Holmes,  dissenting,  cited  in  Mc- 
Lean V.  Arkansas,  211  U.  S.  539,  545,  53  L.  ed. ,  29  Sup.  Ct.  206  (where 

Mr.  Justice  Day  says:  "That  the  Constitution  of  the  United  States,  in 
the  Fourteenth  Amendment  thereof,  protects  the  right  to  make  contracts 
for  the  sale  of  labor,  and  the  right  to  carry  on  trade  or  business  against 
hostile  State  legislation,  has  been  affirmed  in  decisions  of  this  court,  and 
we  have  no  disposition  to  question  those  cases  in  which  the  right  has  been 
upheld  and  maintained  against  such  legislation");  Berea  College  v,  Ken- 
tucky, 211  U.  S.  45,  68,  53  L.  ed.  81,  29  Sup.  Ct.  33,  in  dissenting  opinion 
of  Mr.  Justice  Harlan  (to  liberty  against  hostile  legislation);  Hitchman 
Coal  &  Coke  Co.  v.  Mitchell  (U.  S.  C.  C),  172  Fed.  963,  966  (contract  not 
to  become  members  of  labor  union  as  condition  precedent  to  employment) ; 
Watson  V.  St.  Louis,  I.  M.  &  S.  Ry.  Co.  (U.  S.  C.  C),  169  Fed.  942,  945 
(power  of  Congress  over  relation  of  master  and  servant;  carriers  in  inter- 
state commerce);  United  States  v.  Wells-Fargo  Express  Co.  (U.  S.  C.  C), 
161  Fed.  606,  612  (to  point  "d"  in  above  text);  Goldfield  Consol.  Mines 
Co.  v.  Goldfield  Miners'  Union  No.  220  (U.  S.  C.  C),  159  Fed.  500,  516 
(as  to  liberty  of  contract  as  to  employer  and  employee). 

2'  State  ex.  rel.  Zillmer  v.  Kreutzberg,  114  Wis.  530,  90  N.  W.  1098. 

590 


LABOR   OR   TRADE    UNIONS  §  536 

agreement,  either  oral  or  in  writing,  by  the  terms  of  which 
any  employee  of  such  person,  firm  or  corporation,  as  a 
condition  for  continuing  or  obtaining  such  employment, 
shall  promise  or  agree  not  to  become  a  member  of  a 
labor  organization,  or  shall  promise  or  agree  to  become 
or  continue  a  member  of  a  labor  organization"  -^  is  un- 
constitutional as  depriving  a  person  of  liis  "life,  liberty 
or  property  without  due  process  of  law."  "  The  court 
said:  "The  obvious  purpose  of  the  Nevada  statute  just 
quoted  is  to  invade  and  control  the  discretion  of  the 
employer  in  selecting  his  men.  *  *  *  The  term  '  life, 
liberty  and  property '  as  used  in  the  Federal  Constitu- 
tion embraces  every  right  which  the  law  protects.  They 
include  not  only  the  right  to  hold  and  enjoy,  but  also  the 
means  of  holding,  enjoying,  acquiring  and  disposing  of 
property.  The  right  to  labor  is  property.  It  is  one  of 
the  most  valuable  and  fundamental  of  rights.  The  right 
to  work  is  the  right  to  earn  one's  subsistence,  to  live  and 
to  support  wife  and  family.  The  right  of  master  and 
servant  to  enter  into  contracts  to  agree  upon  the  terms 
and  conditions  under  which  the  one  will  employ  and  the 
other  labor,  is  property.  The  master  has  the  right  to 
fix  the  terms  and  conditions  upon  which  he  is  willing  to 
give  empIo^Tnent;  the  servant  has  the  right  to  fix  the 
terms  and  conditions  upon  which  he  will  labor,  and  any 
statute  which  curtails  and  limits  that  right  deprives  the 
party  affected  of  his  property  and,  in  the  same  measure, 
of  his  Hberty."  ^e 

"  Nev.  Laws  of  1903,  p.  207,  chap.  111. 

"  Goldfield  Consol.  Mines  Co.  v.  Goldfield  Miners'  Union  (U.  S.  C.  C.) 
159  Fed.  500. 

2*  Per  Farrington,  J.,  citing,  in  this  connection :  Adair  v.  United  States, 
208  U.  S.  161,  28  Sup.  Ct.  277,  52  L.  ed.  436;  People  v.  Marcus,  185  N.  Y. 
257,  77  N.  E.  1073,  7  L.  R.  A.  (N.  S.)  282,  113  Am.  St.  Rep.  902;  State  ex 
rel.  Zillmer  v.  Kreutzberg,  114  Wis.  530,  90  N.  W.  1098,  50  L.  R.  A.  748,  19 
Am.  St.  Rep.  934;  Coffeyville  &  Co.  v.  Perry,  69  Kan.  297,  76  Pac.  848,  66 
L.  R.  A.  185;  State  v.  Julow,  129  Mo.  163,  31  S.  W.  781,  29  L.  R.  A.  257, 
50  Am.  St.  Rep.  443;  Gillespie  v.  People,  1S8  111.  176,  5S  X.  E.  1007,  52  L. 
R.  A.  283,  80  Am.  St.  Rep.  176;  State  v.  Goodwill,  33  W.  Va.  179,  10  S.  E. 
285,  6  L.  R.  A.  621,  25  Am.  St.  Rep.  803;  Railway  Co.  v.  Schafifer,  65  Ohio 
St.  414,  02  N.  E.  1036,  87  Am.  St.  Rep.  628. 

591 


§§  537,  538  LABOR   OR   TRADE    UNIONS 

A  statute  is  unconstitutional  where  it  restrains  liberty 
of  contract  by  prohibiting  an  intended  employee  from 
joining  a  labor  organization  as  a  condition  precedent  to 
employment.  2^ 

§  537.  Statute  Prohibiting  Granting  of  Injunction 
Against  Union. 

An  act  prohibiting  the  granting  of  restraining  orders 
against  a  combination  in  the  case  of  a  controversy  be- 
tween emploj^ers  and  employees  if  construed  to  prohibit 
the  court  from  granting  an  injunction  against  a  labor 
union  to  prevent  further  illegal  interference  with  the 
business  of  a  former  employer  is  void  not  only  as  violative 
of  one's  constitutional  right  to  acquire,  possess,  enjoy  and 
protect  property  but  is  also  obnoxious  to  constitutional 
provisions  against  special  or  class  legislation.  ^^ 

§  538.  Statute  as  to  Suits  Against  Unincorporated  As- 
sociations. 

A  statute  authorizing  the  maintenance  of  suits  by  or 
against  unincorporated  voluntary  associations,  clubs  or 
societies  ^^  has  been  held  in  Michigan  to  be  a  legitimate 
exercise  of  the  legislative  power  and  not  to  be  void  as 
affording  a  double  remedy  because  the  right  to  proceed 
against  individual  members  of  the  association  is  pre- 
served, nor  void  as  class  legislation  directed  against  or- 
ganized labor,  its  scope  not  being  limited  in  such  man- 
ner. And  under  this  statute  it  was  decided  that  a  bill 
in  equity  would  lie  in  a  proper  case  to  enjoin  an  unincor- 
porated labor  organization  from  interfering  with  or  intimi- 
dating complainant's  employees.  ^° 

='  People  V.  Marcus,  97  N.  Y.  Supp.  322,  110  App.  Div.  255,  afif'd  in  185 
N.  Y.  257,  77  N.  E.  1073. 

28  Pierce  v.  Stablemen's  Union,  156  Cal.  70,  103  Pac.  324;  Goldberg  &  Co. 
V.  Stablemen's  Union,  149  Cal.  429,  86  Pac.  806,  8  L.  R.  A.  (N.  S.)  460, 
117  Am.  St.  Rep.  145. 

29  3  Mich.  Comp.  Laws,  §§  10025,  10026. 

'» United  States  Heater  Co,  v.  Iron  Moulders'  Union,  129  Mich.  354, 
88  N.  W.  889. 

592 


LABOR   OR   TRADE    UNIONS  §§  539,  540 

§  539.  Statute  as  to  Labels  and  Stamps. 

A  statute  entitled  "An  act  to  protect  manufacturers 
from  the  use  of  counterfeit  labels  and  stamps"  and  which 
by  its  first  section  extends  to  "any  person,  association 
or  union"  will  be  construed  as  contemplating  unincor- 
porated associations  or  unions  and  as  protecting  trader 
unions  in  the  use  of  labels  for  trade  union  purposes. •''' 

§  540.  Legality  of  Union  as  Affected  by  Constitution  of 
Union. 

Where  the  constitution  of  a  trade  union  as  a  whole  is 
not  illegal,  it  will  not  be  deprived  of  the  protection  of 
the  law  for  what  would  otherwise  be  its  rights  if  in  some 
incident  or  particular  the  purposes  which  it  expresses  are 
unlawful.  ^2 

"  Tracy  v.  Banker,  170  Mass.  266,  49  N.  E.  308,  39  L.  R.  A.  508. 
"  Tracy  v.  Banker,  170  Mass.  266,  49  N.  E.  308,  39  L.  R.  A.  508. 


38  593 


APPENDIX  A 

THE  STANDARD  OIL  COMPANY  OF  NEW  JERSEY 
ET  AL.  V.  THE  UNITED  STATES 

(221  U.  S.  1,  55  L.  cd. ,  31  Sup.  Ct.  502) 

APPEAL  FROM  THE  CIRCUIT  COURT  OF  THE  UNITED  STATES 
FOR  THE  EASTERN  DISTRICT  OF  MISSOURI 

Argued  March  14,  15,  16,  1910;  restored  to  docket  for  reargument  April  11, 
1910;  reargued  January  12,  13,  16,  17,  1911.— Decided  May  15,  1911. 

Headnotes  ' 

The  Anti-trust  Act  of  July  2,  1890,  chap.  647,  26  Stat.  209,  should  be  con- 
strued in  the  Ught  of  reason;  and,  as  so  construed,  it  prohibits  all  con- 
tracts and  combination  which  amount  to  an  unreasonable  or  undue  re- 
straint of  trade  in  interstate  commerce. 

The  combination  of  the  defendants  in  this  case  is  an  unreasonable  and 
undue  restraint  of  trade  in  petroleum  and  its  products  moving  in  inter- 
state commerce,  and  falls  within  the  prohibitions  of  the  act  as  so  con- 
strued. 

Where  one  of  the  defendants  in  a  suit,  brought  by  the  Government  in  a 
Circuit  Court  of  the  United  States  under  the  authority  of  §  4  of  the  Anti- 
Trust  Act  of  July  2,  1890,  is  within  the  district,  the  court,  under  the 
authority  of  §  5  of  that  act,  can  take  jurisdiction  and  order  notice  to  be 
served  upon  the  non-resident  defendants. 

Allegations  aa  to  facts  occurring  prior  to  the  passage  of  the  Anti-Trust  Act 
may  be  considered  solely  to  throw  hght  on  acts  done  after  the  passage 
of  the  act. 

The  debates  in  Congress  on  the  Anti-Trust  Act  of  1890  show  that  one  of 
the  influences  leading  to  the  enactment  of  the  statute  was  doubt  as  to 
whether  there  is  a  common  law  of  the  United  States  governing  the  mak- 
ing of  contracts  in  restraint  of  trade  and  the  creation  and  maintenance 
of  monopolies  in  the  absence  of  legislation. 

WTiile  debates  of  the  body  enacting  it  may  not  be  used  as  means  for  inter- 
preting a  statute,  they  may  be  resorted  to  as  a  means  of  ascertaining  the 
conditions  under  which  it  was  enacted. 

The  terms  "restraint  of  trade,"  and  "attempts  to  monopolize,"  as  used 
in  the  Anti-Trust  Act,  took  their  origin  in  the  common  law  and  were 
familiar  in  the  law  of  this  countrj'  prior  to  and  at  the  time  of  the  adop- 

*  Headnotes,  Opinion   and  Dissenting  Opinion  are  official;  L.  ed.  and 
Sup.  Ct.  citations  arc  not  in  original. 

595 


APPENDIX   A 

tion  of  the  act,  and  their  meaning  should  be  sought  from  the  conceptions 
of  both  English  and  American  law  prior  to  the  passage  of  the  act. 

The  original  doctrine  that  all  contracts  in  restraint  of  trade  were  illegal 
was  long  since  so  modified  in  the  interest  of  freedom  of  individuals  to 
contract  that  the  contract  was  valid  if  the  resulting  restraint  was  only 
partial  in  its  operation  and  was  otherwise  reasonable. 

The  early  struggle  in  England  against  the  power  to  create  monopolies  re- 
sulted in  establishing  that  those  institutions  were  incompatible  with  the 
English  Constitution. 

At  common  law  monopolies  were  unlawful  because  of  their  restriction  upon 
individual  freedom  of  contract  and  their  injury  to  the  public  and  at 
common  law;  and  contracts  creating  the  same  evils  were  brought  within 
the  prohibition  as  impeding  the  due  course  of,  or  being  in  restraint  of, 
trade. 

At  the  time  of  the  passage  of  the  Anti-Trust  Act  the  Enghsh  rule  was  that 
the  individual  was  free  to  contract  and  to  abstain  from  contracting  and 
to  exercise  every  reasonable  right  in  regard  thereto,  except  only  as  he 
was  restricted  from  voluntarily  and  unreasonably  or  for  wrongful  pur- 
poses restraining  his  right  to  carry  on  his  trade.  Mogul  Steamship  Co. 
V.  McGregor,  1892,  A.  C.  25. 

A  decision  of  the  House  of  Lords,  although  announced  after  an  event,  may 
serve  reflexly  to  show  the  state  of  the  law  in  England  at  the  time  of  such 
event. 

This  country  has  followed  the  line  of  development  of  the  law  of  England, 
and  the  public  policy  has  been  to  prohibit,  or  treat  as  illegal,  contracts, 
or  acts  entered  into  with  intent  to  wrong  the  public  and  which  unrea- 
sonably restrict  competitive  conditions,  limit  the  right  of  individuals, 
restrain  the  free  flow  of  commerce,  or  bring  about  public  evils  such  as 
the  enhancement  of  prices. 

The  Anti-Trust  Act  of  1890  was  enacted  in  the  Ught  of  the  then  existing 
practical  conception  of  the  law  against  restraint  of  trade,  and  the  intent 
of  Congress  was  not  to  restrain  the  right  to  make  and  enforce  contracts, 
whether  resulting  from  combinations  or  otherwise,  which  do  not  unduly 
restrain  interstate  or  foreign  commerce,  but  to  protect  that  commerce 
from  contracts  or  combinations  by  methods,  whether  old  or  new,  which 
would  constitute  an  interference  with,  or  an  undue  restraint  upon,  it. 

The  Anti-Trust  Act  contemplated  and  required  a  standard  of  interpreta- 
tion, and  it  was  intended  that  the  standard  of  reason  which  had  been 
applied  at  the  common  law  should  be  applied  in  determining  whether 
particular  acts  were  within  its  prohibitions. 

The  word  "person"  in  §  2  of  the  Anti-Trust  Act,  as  construed  by  reference 
to  §  8  thereof,  implies  a  corporal  ion  as  well  as  an  individual. 

The  commerce  referred  to  by  the  words  "any  part"  in  §  2  of  the  Anti-Trust 
Act,  as  construed  in  the  light  of  the  manifest  purpose  of  that  act,  in- 
cludes geographically  any  part  of  the  United  States  and  also  any  of  the 
classes  of  things  forming  a  part  of  interstate  or  foreign  commerce. 

The  words  "to  monopolize"  and  "monopolize"  as  used  in  §  2  of  the  Anti- 
Trust  Act  reach  every  act  bringing  about  the  prohibited  result. 

Freedom  to  contract  is  the  essence  of  freedoai  from  undue  restraint  on  the 
right  to  contract. 

59r> 


APPENDIX   A 

In  [jrior  cases  where  general  language  has  been  used,  to  the  effect  that  rea- 
Bon  could  not  be  resorted  to  in  determining  whether  a  particular  case 
waa  wiliiin  the  proliibitions  of  the  Anti-TruHt  Act,  the  unrea«(jnableneHH 
of  th(^  acts  under  consideration  was  pointed  out  and  those  cases  are  only 
authoritative  by  the  certitude  that  the  rule  of  reason  was  ajjplied;  United 
States  V.  Trans-Missouri  Freight  Association,  166  U.  S.  290,  41  L.  ed. 
1007,  17  Sup.  Ct.  540,  and  United  States  v.  Joint  Tratlic  Association, 
171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25;  hmited  and  qualihed  so  far 
a.s  they  conflict  with  the  construction  now  given  to  the  .\nti-Trust  Act 
of  1890. 

The  api)lication  of  the  Anti-Trust  Act  to  combinations  involving  the  pro- 
duction of  commodities  within  the  States  does  not  so  extend  the  power 
of  Congress  to  subjects  dehors  its  authority  as  to  render  the  statute  un- 
constitutional. United  States  v.  E.  C.  Knight  Co.,  l.")0  U.  S.  1,  39  L. 
Ed.  325,  15  Sup.  Ct.  249,  distinguished. 

The  Anti-Trust  Act  generically  enumerates  the  character  of  the  acts  pro- 
hibited and  the  wrongs  which  it  intends  to  prevent  and  is  susceptible  of 
being  enforced  without  any  judicial  exertion  of  legislative  power. 

The  unification  of  power  and  coni rol  over  a  commodity  such  as  petroleum, 
and  its  products,  by  combining  in  one  corporation  the  stocks  of  many 
other  corporations  aggregating  a  vast  capital  gives  rise,  of  itself,  to  the 
prima  facie  presumption  of  an  intent  and  purpose  to  dominate  the  in- 
dustry connected  with,  and  gain  perpetual  control  of  the  movement  of, 
that  commodity  and  its  products  in  the  channels  of  interstate  commerce 
in  violation  of  the  Anti-Trust  Act  of  1890,  and  that  presumption  is  made 
conclusive  by  proof  of  specific  acts  such  as  those  in  the  record  of  this 
case. 

The  fact  that  a  combination  over  the  products  of  a  commodity  such  as 
petroleum  does  not  include  the  crude  article  itself  does  not  take  the 
combination  outside  of  the  Anti-Trust  Act  when  it  appears  that  the 
monopolization  of  the  manufactured  products  necessarily  controls  the 
crude  article. 

Penalties  which  are  not  authorized  by  the  law  cannot  be  inflicted  by  ju- 
dicial authority. 

The  remedy  to  be  administered  in  case  of  a  combination  violating  the  Anti- 
Trust  Act  is  two-fold:  first,  to  forbid  the  continuance  of  the  prohibited 
act,  and  second,  to  so  dissolve  the  combination  as  to  neutralize  the  force 
of  the  unlawful  power. 

The  constituents  of  an  unlawful  combination  under  the  Anti-Trust  Act 
should  not  be  deprived  of  power  to  make  normal  and  lawful  contracts, 
but  should  be  restrained  from  continuing  or  recreating  the  unlawful 
combination  by  any  means  whatever;  and  a  dissolution  of  the  offending 
combination  should  not  deprive  the  constituents  of  the  right  to  live 
under  the  law  but  should  compel  them  to  obey  it. 

In  determining  the  remedy  against  an  unlawful  combination,  the  court 
must  consider  the  result  and  not  inflict  serious  injury  on  the  pubhc  by 
causing  a  cessation  of  interstate  conunerce  in  a  necessarj'  commodity. 

173  Fed.  Rep.  177,  modified  and  affirmed. 

The  facts,  which  niv()l\'e  the  construction  of  the  Sher- 

597 


APPENDIX   A 

man  Anti-Trust  Act  of  July  2,  1890,  and  whether  defend- 
ants had  violated  its  provisions,  are  stated  in  the  opinion. 

Mr.  John  G.  Johnson,  and  Mr.  John  G.  Milburn,  with 
whom  Mr.  Frank  L.  Crawford  was  on  the  brief,  for  ap- 
pellants. 

Mr.  D.  T.  Watson,  also  for  appellants. 

The  Attorney  General  and  Mr.  Frank  B.  Kellogg,  with 
whom  Mr.  Cordenio  N.  Severance  was  on  the  brief,  for 
the  United  States: 

Mr.  Chief  Justice  White  delivered  the  opinion  of  the 
court. 

The  Standard  Oil  Company  of  New  Jersey  and  33  other 
corporations,  John  D.  Rockefeller,  William  Rockefeller 
and  five  other  individual  defendants  prosecute  this  appeal 
to  reverse  a  decree  of  the  court  below.  Such  decree  was 
entered  upon  a  bill  filed  by  the  United  States  under  author- 
ity of  §  4,  of  the  Act  of  July  2,  1890,  chap.  647,  p.  209, 
known  as  the  Anti-Trust  Act,  and  had  for  its  object  the 
enforcement  of  the  provisions  of  that  act.  The  record  is 
inordinately  voluminous,  consisting  of  twenty-three  vol- 
umes of  printed  matter,  aggregating  about  twelve  thou- 
sand pages,  containing  a  vast  amount  of  confusing  and  con- 
flicting testimony  relating  to  innumerable,  complex  and 
varied  business  transactions,  extending  over  a  period  of 
nearly  forty  years.  In  an  effort  to  pave  the  way  to  reach 
the  subjects  which  we  are  called  upon  to  consider,  we 
propose  at  the  outset,  following  the  order  of  the  bill,  to 
give  the  merest  possible  outline  of  its  contents,  to  sum- 
marize the  answer,  to  indicate  the  course  of  the  trial,  and 
point  out  briefly  the  decision  below  rendered. 

The  bill  and  exhibits,  covering  one  hundred  and  seventy 

pages  of  the  printed  record,  was  filed  on  November  15, 

1906.    Corporations  known  as  Standard  Oil  Company  of 

New  Jersey,  Standard  Oil  Company  of  California,  Stand- 

598 


APPKXDIX    A 

ard  Oil  Company  of  Indiana,  Standard  Oil  Company  of 
Iowa,  Standard  Oil  Company  of  Kansas,  Standard  Oil 
Company  of  Kentucky,  Standard  Oil  Company  of  Ne- 
braska, Standard  Oil  Company  of  New  York,  Standard 
Oil  Company  of  Ohio  and  sixty-two  other  corporations 
and  partnerships,  as  also  seven  individuals  were  named  as 
defendants.  The  bill  was  divided  into  thirty  numbered 
sections,  and  sought  relief  upon  the  theory  that  the  vari- 
ous defendants  were  engaged  in  conspiring  "to  restrain 
the  trade  and  commerce  in  petroleum,  conmionly  called 
'crude  oil,'  in  refined  oil,  and  in  the  other  products  of  pe- 
troleum, among  the  several  States  and  Territories  of  the 
United  States  and  the  District  of  Columbia  and  with 
foreign  nations,  and  to  monopolize  the  said  commerce." 
The  conspiracy  was  alleged  to  have  been  formed  in  or 
about  the  year  1870  by  three  of  the  individual  defendants, 
viz:  John  D.  Rockefeller,  William  Rockefeller  and  Henry 
M.  Flagler.  The  detailed  averments  concerning  the  al- 
leged conspiracy  were  arranged  with  reference  to  three 
periods,  the  first  from  1870  to  1882,  the  second  from  1882 
to  1899,  and  the  third  from  1899  to  the  time  of  the  filing 
of  the  bill. 

The  general  charge  concerning  the  period  from  1870  to 
1882  was  as  follows: 

"That  during  said  first  period  the  said  individual  de- 
fendants, in  connection  with  the  Standard  Oil  Company 
of  Ohio,  purchased  and  obtained  interest  through  stock 
ownership  and  otherwise  in,  and  entered  into  agreements 
with,  various  persons,  firms,  corporations  and  limited 
partnerships  engaged  in  purchasing,  .shipping,  refining,  and 
selling  petroleum  and  its  products  among  the  various 
States  for  the  purpose  of  fixing  the  price  of  crude  and  re- 
fined oil  and  the  products  thereof,  limiting  the  production 
thereof,  and  controUing  the  transportation  therein,  and 
thereby  restraining  trade  and  commerce  among  the  sev- 
eral States,  and  monopolizing  the  said  commerce." 

To  establish  this  charge  it  was  averred  that  John  D. 
and  William  Rockefeller  and  several  other  named  individ- 
uals, who,  prior  to  1870,  composed  three  separate  partner- 

599 


APPENDIX   A 

ships  engaged  in  the  business  of  refining  crude  oil  and 
shipping  its  products  in  interstate  commerce,  organized 
in  the  year  1870,  a  corporation  known  as  the  Standard 
Oil  Company  of  Ohio  and  transferred  to  that  company 
the  business  of  the  said  partnerships,  the  members  thereof 
becoming,  in  proportion  to  their  prior  ownership,  stock- 
holders in  the  corporation.  It  was  averred  that  the  other 
individual  defendants  soon  afterwards  become  participants 
in  the  illegal  combination  and  either  transferred  property 
to  the  corporation  or  to  individuals  to  be  held  for  the  bene- 
fit of  all  parties  in  interest  in  proportion  to  their  respective 
interests  in  the  combination;  that  is,  in  proportion  to  their 
stock  ownership  in  the  Standard  Oil  Company  of  Ohio. 
By  the  means  thus  stated,  it  was  charged  that  by  the  year 
1872,  the  combination  had  acquired  substantially  all  but 
three  or  four  of  the  thirty-five  or  forty  oil  refineries  lo- 
cated in  Cleveland,  Ohio.  By  reason  of  the  power  thus 
obtained  and  in  further  execution  of  the  intent  and  pur- 
pose to  restrain  trade  and  to  monopolize  the  commerce, 
interstate  as  well  as  intrastate,  in  petroleum  and  its  prod- 
ucts, the  bill  alleged  that  the  combination  and  its  mem- 
bers obtained  large  preferential  rates  and  rebates  in  many 
and  devious  ways  over  their  competitors  from  various  rail- 
road companies,  and  that  by  means  of  the  advantage  thus 
obtained  many,  if  not  virtually  all,  competitors  were  forced 
either  to  become  members  of  the  combination  or  were 
driven  out  of  business;  and  thus,  it  was  alleged,  during  the 
period  in  question  the  following  results  were  brought 
about :  a.That  the  combination,  in  addition  to  the  refineries 
in  Cleveland  which  it  had  acquired  as  previously  stated, 
and  which  it  had  either  dismantled  to  limit  production  or 
continued  to  operate,  also  from  time  to  time  acquired  a 
large  number  of  refineries  of  crude  petroleum,  situated 
in  New  York,  Pennsylvania,  Ohio  and  elsewhere.  The 
properties  thus  acquired,  like  those  previously  obtained, 
although  belonging  to  and  being  held  for  the  benefit  of 
the  combination,  were  ostensibly  divergently  controlled, 
some  of  them  being  put  in  the  name  of  the  Standard  Oil 
Company  of  Ohio,  some  in  the  name  of  corporations  or 
COO 


APPENDIX   A 

limited  partnerships  affiliated  therewith,  or  some  being 
left  in  the  name  of  the  orginal  owners  who  had  become 
stockholders  in  the  Standard  Oil  Company  of  Ohio  and 
thus  members  of  the  alleged  illegal  combination,  b.  That 
the  combination  had  obtained  control  of  the  pipe  lines 
available  for  transporting  oil  from  the  oil  fields  to  the  re- 
fineries in  Cleveland,  Pittsburg,  Titusville,  Philadelphia, 
New  York  and  New  Jersey,  c.  That  the  combination 
during  the  period  named  had  obtained  a  complete  mastery 
over  the  oil  industry,  controlling  90  per  cent  of  the  busi- 
ness of  producing,  shipping,  refining  and  selling  petroleum 
and  its  products,  and  thus  was  able  to  fix  the  price  of  crude 
and  refined  petroleum  and  to  restrain  and  monopolize  all 
interstate  commerce  in  those  products. 

The  averments  bearing  upon  the  sfecond  period  (1882 
to  1899)  had  relation  to  the  claim: 

"That  during  the  said  second  period  of  conspiracy  the 
defendants  entered  into  a  contract  and  trust  agreement, 
by  which  various  independent  firms,  corporations,  limited 
partnerships  and  individuals  engaged  in  purchasing,  trans- 
porting, refining,  shipping  and  selling  oil  and  the  products 
thereof  among  the  various  States  turned  over  the  manage- 
ment of  their  said  business,  corporations  and  limited  part- 
nerships to  nine  trustees,  composed  chiefly  of  certain  indi- 
viduals defendant  herein,  which  said  trust  agreement  was 
in  restraint  of  trade  and  conmierce  and  in  violation  of  law, 
as  hereinafter  more  particularly  alleged." 

The  trust  agreement  thus  referred  to  was  set  out  in  the 
bill.  It  was  made  in  January,  1882.  By  its  terms  the 
stock  of  forty  corporations,  including  the  Standard  Oil 
Company  of  Ohio,  and  a  large  quantity  of  various  proper- 
ties which  had  been  previously  acquired  by  the  alleged 
combination  and  which  was  held  in  diverse  forms,  as  we 
have  previously  indicated,  for  the  benefit  of  the  members 
of  the  combination,  was  vested  in  the  trustees  and  their 
successors,  'Ho  be  held  for  all  parties  in  interest  jointly." 
In  the  body  of  the  trust  agreement  was  contained  a  list  of 
the  various  individuals  and  corporations  and  limited  part- 
nerships whose  stockholders  and  members,  or  a  portion 

GOl 


APPENDIX   A 

thereof,  became  parties  to  the  agreement.    This  list  is  in 
the  margin.^ 

1  1st.  All  the  stockholders  and  members  of  the  following  corporations 
and  limited  partnerships,  to  wit: 

Acme  Oil  Company,  New  York. 

Acme  Oil  Company,  Pennsylvania. 

Atlantic  Refining  Company  of  Philadelphia. 

Bush  &  Co.  (Limited). 

Camden  Consolidated  Oil  Company. 

Ehzabethport  Acid  Works. 

Imperial  Refining  Company  (Limited). 

Charles  Pratt  &  Co. 

Paine,  Ablett  &  Co. 

Standard  Oil  Company,  Ohio. 

Standard  Oil  Company,  Pittsbm-g. 

Smith's  Ferry  Oil  Transportation  Company. 

Solar  Oil  Company  (Limited). 

Sone  &  Fleming  Manufacturing  Company  (Limited). 

Also  all  the  stockholders  and  members  of  such  other  corporations  and 
limited  partnerships  as  may  hereafter  join  in  this  agreement  at  the  request 
of  the  trustees  herein  provided  for. 

2d.  The  following  individuals,  to  wit: 

W.  C.  Andrews,  John  D.  Archbold,  Lide  K.  Arter,  J.  A.  Bostwick,  Ben- 
jamin Brewster,  D.  Bushnell,  Thomas  C.  Bushnell,  J.  N.  Camden,  Henry 
L.  Davis,  H.  M.  Flagler,  Mrs.  H.  M.  Flagler,  John  Huntington,  H.  A. 
Hutchins,  Charles  F.  G.  Heye,  A.  B.  Jennings,  Charles  Lockhart,  A.  M. 
McGregor,  William  H.  Macy,  William  H.  Macy,  Jr.,  estate  of  Josiah  Macy, 
William  H.  Macy,  Jr.,  executor;  O.  H.  Payne,  A.  J.  Pouch,  John  D.  Rocke- 
feller, William  Rockefeller,  Henry  H.  Rogers,  W.  P.  Thompson,  J.  J. 
Vandergrift,  William  T.  Wardwell,  W.  G.  Warden,  Joseph  L.  Warden, 
Warden,  Frew  &  Co.,  Louise  C.  Wheaton,  H.  M.  Hanna,  and  George  W. 
Chapin,  D.  M.  Harkness,  D.  M.  Harkness,  trustee,  S.  V.  Harkness,  O.  H. 
Payne,  trustee;  Charles  Pratt,  Horace  A.  Pratt,  C.  M.  Pratt,  Julia  H.  York, 
George  H.  Vilas,  M.  R.  Keith,  trustees,  George  F.  Chester. 

Also  all  such  individuals  as  may  hereafter  join  in  the  agreement  at  the 
request  of  the  trustees  herein  provided  for. 

3d.  A  portion  of  the  stockholders  and  members  of  the  following  corpora- 
tions and  limited  partnerships,  to  wit: 

American  Lubricating  Oil  Company. 

Baltimore  United  Oil  Company. 

Beacon  Oil  Company. 

Bush  &  Denslow  Manufacturing  Company. 

Central  Refining  Co.  of  Pittsburg. 

Chesebrough  Manufacturing  Company. 

Chess  Carley  Company. 

Consolidated  Tank  Line  Company. 

Inland  Oil  Company. 

Keystone  Refining  Company. 

Maverick  Oil  Company. 

602 


APPENDIX   A 

The  agrpcmcnt  made  provision  for  the  method  of  con- 
trolling and  managing  the  property  by  the  trustees,  for 
the  formation  of  additional  manufacturing,  etc.,  corpora- 
tions in  various  States,  and  the  trust,  unless  terminated  by 
a  mode  specified,  was  to  continue  "during  the  lives  of  the 
survivors  and  survivor  of  the  trustees  named  in  the  agree- 
ment and  for  twenty-one  years  thereafter,"  The  agree- 
ment provided  for  the  issue  of  Standard  Oil  Trust  certifi- 
cates to  represent  the  interest  arising  under  the  trust  in 
the  properties  affected  by  the  trust,  which  of  course  in 
view  of  the  provisions  of  the  agreement  and  the  subject 
to  which  it  related  caused  the  interest  in  the  certificates 
to  be  coincident  with  and  the  exact  representative  of 
the  interest  in  the  combination,  that  is,  in  the  Standard 
Oil  Company  of  Ohio.  Soon  afterwards  it  was  alleged 
the  trustees  organized  the  Standard  Oil  Company  of 
New  Jersey  and  the  Standard  Oil  Company  of  New 
York,  the  former  having  a  capital  stock  of  $3,000,000  and 
the  latter  a  capital  stock  of  $5,000,000,  subsequently 
increased  to  $10,000,000  and  $15,000,000  respectively. 
The  bill  alleged  "that  pursuant  to  said  trust  agreement 
the  said  trustees  caused  to  be  transferred  to  themselves  the 
stocks  of  all  corporations  and  limited  partnerships  named 
in  said  trust  agreement,  and  caused  various  of  the  individ- 

National  Transit  Company. 

Portland  Kerosene  Oil  Company. 

Producers'  Consolidated  Land  and  Petroleum  Company. 

Signal  Oil  Works  (Limited). 

Thompson  &  Bedford  Company  (Limited). 

Devoe  Manufacturing  Company. 

Eclipse  Lubricating  Oil  Company  (Limited). 

Empire  Refining  Company  (Limited). 

Franklin  Pipe  Company  (Limited). 

Galena  Oil  Works  (Limited). 

Galena  Farm  Oil  Company  (Limited). 

Germania  Mining  Company. 

Vacuum  Oil  Company. 

H.  C.  Van  Tine  &  Company  (Limited). 

Waters-Pierce  Oil  Company. 

Also  stockholders  and  members  (not  being  all  thereof)  of  other  corpora- 
tions and  limited  jiartncrships  who  may  hereafter  join  in  this  agreement 
at  the  request  of  the  trustees  herein  provided  for. 

603 


APPENDIX   A 

uals  and  copartnerships,  who  owned  apparently  independ- 
ent refineries  and  other  properties  employed  in  the  busi- 
ness of  refining  and  transporting  and  selling  oil  in  and 
among  said  various  States  and  Territories  of  the  United 
States  as  aforesaid,  to  transfer  their  property  situated  in 
said  several  States  to  the  respective  Standard  Oil  Com- 
panies of  said  States  of  New  York,  New  Jersey,  Pennsyl- 
vania and  Ohio,  and  other  corporations  organized  or  ac- 
quired by  said  trustees  from  time  to  time.  *  *  *"  For 
the  stocks  and  property  so  acquired  the  trustees  issued 
trust  certificates.  It  was  alleged  that  in  1888  the  trustees 
"unlawfully  controlled  the  stock  and  ownership  of  various 
corporations  and  limited  partnerships  engaged  in  such 
purchase  and  transportation,  refining,  selling,  and  ship- 
ping of  oil,"  as  per  a  list  which  is  excerpted  in  the  margin.^ 


'  List  of  Corporations  the  Stocks  of  Which  Were  Wholly  or  Partially 

Held  by  the  Trustees  of  Standard  Oil  Trus 

«, 

Capital 

S.  0.  trust 

Stock. 

ownership. 

New  York  State: 

Acme  Oil  Company,  manufacturers 

$300,000 

Entire. 

of  petroleum  products. 

Atlas  Refining  Company,  manufac- 

200,000 

Do. 

turers  of  petroleum  products. 

American      Wick      Manufacturing 

25,000 

Do. 

Company,  manufacturers  of  lamp 

wicks. 

Bush    &    Denslow    Manufacturing 

300,000 

50  per  cent. 

Company,  manufacturers  of  pe- 

troleum products. 

Chesebrough  Manufacturing  Com- 

500,000 

2,661-5,000 

pany,  manufacturers  of  petroleum. 

Central   Refining   Company   (Lim- 

200,000 

1-67.2  per  ct. 

ited),  manufacturers  of  petroleum 

products. 

Devoe    Manufacturing    Company, 

300,000 

Entire. 

packers,  manufacturers  of  petro- 

leum. 

Empire   Refining   Company   (Lim- 

100,000 

80  per  cent. 

ited),  manufacturers  of  petroleum 

products. 

604 

APPENDIX   A 


The  bill  charged  that  during  the  second  period  quo  war- 
ranto proceedings  were  commenced  against  the  Standard 
Oil  Company  of  Ohio,  which  resulted  in  the  entry  by  the 
Supreme  Court  of  Ohio,  on  March  2,  1892,  of  a  decree 
adjudging  the  trust  agreement  to  be  void,  not  only  be- 
cause the  Standard  Oil  Company  of  Ohio  was  a  part}'  to 
the  same,  but  also  because  the  agreement  in  and  of  itself 


Capital 

S.  0.  trust 

Stock. 

ownership. 

New  York  State  icont.): 

Oswego   Manufacturing  Company, 

100,000 

Entire. 

manufacturers  of  wood  cases. 

Pratt     Manufacturing     Company, 

500,000 

Do. 

manufacturers  of  petroleum  prod- 

ucts. 

Standard    Oil    Company    of    New 

5,000,000 

Do. 

York,    manufacturers    of    petro- 

leum products. 

Sone    &    Fleming     Manufacturing 

250,000 

Do. 

Company  (Limited),  manufactur- 

ers of  petroleum  products. 

Thompson    &    Bedford    Company 

250,000 

80  per  cent. 

(Limited),  manufacturers  of  pe- 

troleum products. 

Vacuum   Oil   Company,   manufac- 

25,000 

75  per  cent. 

turers  of  petroleum  products. 

New  Jersey: 

Eagle  Oil  Company,  manufacturers 

350,000 

Entire. 

of  petroleum  products. 

McKirgan  Oil  Company,  jobbers  of 

75,000 

Do. 

petroleum  products. 

Standard    Oil    Company    of    New 

3,000,000 

Do. 

Jersey,   manufacturers  of  petro- 

leum products. 

Pennsylvania: 

Acme  Oil  Company,  manufacturers 

300,000 

Do. 

of  petroleum  products. 

Atlantic  Refining  Company,  manu- 

400,000 

Do. 

facturers  of  petroleum  products. 

Galena  Oil  Works  (Limited),  manu- 

150,000 

863^  per  cent. 

facturers  of  petroleum  products. 

Imperial  Refining  Company  (Lim- 

300,000 

Entu-e. 

ited),  manufacturers  of  petroleum 

products. 

605 


APPENDIX   A 


was  in  restraint  of  trade  and  amounted  to  the  creation  of 
an  unlawful  monopoly.  It  was  alleged  that  shortly  after 
this  decision,  seemingly  for  the  purpose  of  complying 
therewith,  voluntary  proceedings  were  had  apparently  to 
dissolve  the  trust,  but  that  these  proceedings  were  a  sub- 
terfuge and  a  sham  because  they  simply  amounted  to  a 


Capital 

S.  0.  trust 

Stock. 

ownership. 

Pennsylvania  icont.): 

Producers'  Consolidated  Land  and 

1,000,000 

/jz  per  cent.* 

Petroleum   Company,   producers 

of  crude  oil. 

National  Transit  Company,  trans- 

25,455,200 

94  per  cent. 

porters  of  crude  oil. 

Standard  Oil  Company,  manufac- 

400,000 

Entire. 

turers  of  petroleum  products. 

Signal  Oil  Works  (Limited),  manu- 

100,000 

38%  per  cent. 

facturers  of  petroleum  products. 

Ohio: 

Consolidated  Tank-Line  Company, 

1,000,000 

57  per  cent. 

jobbers  of  petroleum  products. 

Inland  Oil  Companj^,  jobbers  of  pe- 

50,000 

50  per  cent. 

troleum  products. 

Standard  Oil  Company,  manufac- 

3,500,000 

Entire. 

turers  of  petroleum  products. 

Solar    Refining    Company,    manu- 

500,000 

Do. 

facturers  of  petroleum  products. 

Kentucky: 

Standard  Oil  Company,  jobbers  of 

600,000 

Do. 

petroleum  products. 

Maryland : 

Baltimore    United    Oil    Company, 

600,000 

5,059-6,000 

manufacturers  of  petroleum  prod- 

ucts. 

West  Virginia: 

Camden    Consolidated    Oil    Com- 

200,000 

51  per  cent. 

pany,    manufacturers    of    petro- 

leum products. 

Minnesota: 

Standard  Oil  Company,  jobbers  of 

100,000 

Entire. 

petroleum  products. 

i.VliboULiri . 

Waters-Pierce   Oil   Company,   job- 

400,000 

50  per  cent. 

bers  of  petroleum  products. 

606 

APPENDIX   A 

transfer  of  the  stock  held  by  the  trust  in  64  of  the  com- 
panies which  it  controlled  to  some  of  the  remaining  20 
companies,  it  having  controlled  before  the  decree  84  in  all, 
thereby,  while  seemingly  in  part  giving  up  its  dominion, 
yet  in  reality  preserving  the  same  by  means  of  the  control 
of  the  companies  as  to  which  it  had  retained  complete 
authority.  It  was  charged  that  especially  was  this  the 
case,  as  the  stock  in  the  companies  selected  for  transfer 
was  virtually  owned  by  the  nine  trustees  or  the  members 
of  their  immediate  families  or  associates.  The  bill  further 
alleged  that  in  1897  the  Attorney-General  of  Ohio  insti- 
tuted contempt  proceedings  in  the  quo  warranto  case 
based  upon  the  claim  that  the  trust  had  not  been  dissolved 
as  required  by  the  decree  in  that  case.  About  the  same 
time  also  proceedings  in  quo  warranto  were  commenced 
to  forfeit  the  charter  of  a  pipe  line  known  as  the  Buckeye 
Pipe  Line  Company,  an  Ohio  corporation,  whose  stock, 
it  was  alleged,  was  owned  by  the  members  of  the  combina- 
tion, on  the  ground  of  its  connection  with  the  trust  which 
had  been  held  to  be  illegal. 

The  result  of  these  proceedings,  the  bill  charged,  caused 
a  resort  to  the  alleged  wTongful  acts  asserted  to  have  been 
conunitted  during  the  third  period,  as  follows: 

"That  during  the  third  period  of  said  conspiracy  and  in 
pursuance  thereof  the  said  individual  defendants  operated 


Capital 

S.  0.  trust 

Stock. 

ownership. 

Massachusetts: 

Beacon  Oil  Company,   jobbers  of 

100,000 

Entire. 

petroleum  products. 

Maverick  Oil  Company,  jobbers  of 

100,000 

Do. 

petroleum  products. 

Maine: 

Portland  Kerosene  Oil  Company, 

200,000 

Do. 

jobbers  of  petroleum  products. 

Iowa: 

Standard  Oil  Company,  jobbers  of 

600,000 

60  per  cent. 

petroleum  products. 

Continental  Oil  Company,  jobbers 

300,000 

62>^  per  cent. 

of  petroleum  products. 

607 


APPENDIX 


through  the  Standard  Oil  Company  of  New  Jersey,  as  a 
holding  corporation,  which  corporation  obtained  and  ac- 
quired the  majority  of  the  stocks  of  the  various  corpora- 
tions engaged  in  purchasing,  transporting,  refining,  ship- 
ping, and  selling  oil  into  and  among  the  various  States  and 
Territories  of  the  United  States  and  the  District  of  Colum- 
bia and  with  foreign  nations,  and  thereby  managed  and 
controlled  the  same,  in  violation  of  the  laws  of  the  United 
States,  as  hereinafter  more  particularly  alleged." 

It  was  alleged  that  in  or  about  the  month  of  January, 
1899,  the  individual  defendants  caused  the  charter  of  the 
Standard  Oil  Company  of  New  Jersey  to  be  amended; 
"so  that  the  business  and  objects  of  said  company  were 
stated  as  follows,  to  wit:  'To  do  all  kinds  of  mining,  man- 
ufacturing, and  trading  business;  transporting  goods  and 
merchandise  by  land  or  water  in  any  manner;  to  buy, 
sell,  lease,  and  improve  land;  build  houses,  structures, 
vessels,  cars,  wharves,  docks,  and  piers;  to  lay  and  operate 
pipe  lines;  to  erect  lines  for  conducting  electricity;  to  enter 
into  and  carry  out  contracts  of  every  kind  pertaining  to  its 
business;  to  acquire,  use,  sell,  and  grant  licenses  under  pat- 
ent rights;  to  purchase  or  otherwise  acquire,  hold,  sell, 
assign,  and  transfer  shares  of  capital  stock  and  bonds  or 
other  evidences  of  indebtedness  of  corporations,  and  to 
exercise  all  the  privileges  of  ownership,  including  voting 
upon  the  stock  so  held;  to  carry  on  its  business  and  have 
offices  and  agencies  therefor  in  all  parts  of  the  world,  and 
to  hold,  purchase,  mortgage,  and  convey  real  estate  and 
personal  property  outside  the  State  of  New  Jersey.'" 

The  capital  stock  of  the  company  —  which  since 
March  19,  1892,  had  been  $10,000,000— was  increased  to 
$110,000,000;  and  the  individual  defendants,  as  thereto- 
fore, continued  to  be  a  majority  of  the  board  of  directors. 

Without  going  into  detail  it  suffices  to  say  that  it  was 
alleged  in  the  bill  that  shortly  after  these  proceedings  the 
trust  came  to  an  end,  the  stock  of  the  various  corporations 
which  had  been  controlled  by  it  being  transferred  by  its 
holders  to  the  Standard  Oil  Company  of  New  Jersey, 
which  corporation  issued  therefor  certificates  of  its  com- 
G08 


APPENDIX   A 

mon  stock  to  the  amount  of  S97,250,000.  The  bill  con- 
tained allegations  referring  to  the  development  of  new 
oil  fields,  for  example,  in  Cahfornia,  southeastern  Kansas, 
northern  Indian  Territory,  and  northern  Oklahoma,  and 
made  reference  to  the  building  or  otherwise  acquiring  by 
the  combination  of  refineries  and  pipe  Hnes  in  the  new 
fields  for  the  purpose  of  restraining  and  monopohzing  the 
interstate  trade  in  petroleum  and  its  products. 

Reiterating  in  substance  the  averments  that  both  the 
Standard  Oil  Trust  from  1882  to  1899  and  the  Standard 
Oil  Company  of  New  Jersey  since  1899  had  monopolized 
and  restrained  interstate  commerce  in  petroleum  and  its 
products,  the  bill  at  great  length  additionally  set  forth 
various  means  by  which  during  the  second  and  third 
periods,  in  addition  to  the  effect  occasioned  by  the  combi- 
nation of  alleged  previously  independent  concerns,  the 
monopoly  and  restraint  complained  of  was  continued. 
Without  attempting  to  follow  the  elaborate  averments  on 
these  subjects  spread  over  fifty-seven  pages  of  the  printed 
record,  it  suffices  to  say  that  such  averments  may  properly 
be  grouped  under  the  following  heads:  Rebates,  prefer- 
ences and  other  discriminatory  practices  in  favor  of  the 
combination  by  railroad  companies;  restraint  and  monopo- 
hzation  by  control  of  pipe  lines,  and  unfair  practices 
against  competing  pipe  lines;  contracts  wdth  competitors 
in  restraint  of  trade;  unfair  methods  of  competition,  such 
as  local  price  cutting  at  the  points  where  necessary  to  sup- 
press competition ;  espionage  of  the  business  of  competitors; 
the  operation  of  bogus  independent  companies,  and  pay- 
ment of  rebates  on  oil,  with  the  like  intent;  the  division 
of  the  United  States  into  districts  and  the  limiting  of  the 
operations  of  the  various  subsidiary  corporations  as  to  such 
districts  so  that  competition  in  the  sale  of  petroleum  prod- 
ucts between  such  corporations  had  been  entkel}^  ehmi- 
nated  and  destroyed;  and  finally  reference  was  made  to 
what  was  afieged  to  be  the  ''enormous  and  unreasonable 
profits"  earned  by  the  Standard  Oil  Trust  and  the  Stand- 
ard Oil  Company  as  a  result  of  the  alleged  monopoly; 
which  presumably  was  averred  as  a  means  of  reflexly  in- 
"39  609 


APPENDIX   A 

ferring  the  scope  and  power  acquired  by  the  alleged  com- 
bination. 

Coming  to  the  prayer  of  the  bill,  it  suffices  to  say  that 
in  general  terms  the  substantial  relief  asked  was,  first, 
that  the  combination  in  restraint  of  interstate  trade  and 
commerce  and  which  had  monopolized  the  same,  as  alleged 
in  the  bill,  be  found  to  have  existence  and  that  the  par- 
ties thereto  be  perpetually  enjoined  from  doing  any  further 
act  to  give  effect  to  it;  second,  that  the  transfer  of  the 
stocks  of  the  various  corporations  to  the  Standard  Oil 
Company  of  New  Jersey,  as  alleged  in  the  bill,  be  held  to 
be  in  violation  of  the  first  and  second  sections  of  the  Anti- 
Trust  Act,  and  that  the  Standard  Oil  Company  of  New 
Jersey  be  enjoined  and  restrained  from  in  any  manner  con- 
tinuing to  exert  control  over  the  subsidiary  corporations 
by  means  of  ownership  of  said  stock  or  othei'wise;  third, 
that  specific  relief  by  injunction  be  awarded  against  fur- 
ther violation  of  the  statute  by  any  of  the  acts  specifically 
complained  of  in  the  bill.  There  was  also  a  prayer  for 
general  reUef. 

Of  the  numerous  defendants  named  in  the  bill,  the 
Waters-Pierce  Oil  Company  was  the  only  resident  of  the 
district  in  which  the  suit  was  commenced  and  the  only 
defendant  served  with  process  therein.  Contemporaneous 
with  the  filing  of  the  bill  the  court  made  an  order,  under 
§  5  of  the  Anti-Trust  Act,  for  the  service  of  process  upon 
all  the  other  defendants,  wherever  they  could  be  found. 
Thereafter  the  various  defendants  unsuccessfully  moved 
to  vacate  the  order  for  service  on  non-resident  defendants 
or  filed  pleas  to  the  jurisdiction.  Joint  exceptions  were 
likewise  unsuccessfully  filed,  upon  the  ground  of  imperti- 
nence, to  many  of  the  averments  of  the  bill  of  complaint, 
particularly  those  which  related  to  acts  alleged  to  have 
been  done  by  the  combination  prior  to  the  passage  of  the 
Anti-Trust  Act  and  prior  to  the  year  1899. 

Certain  of  the  defendants  filed  separate  answers,  and  a 
joint  answer  was  filed  on  behalf  of  the  Standard  Oil  Com- 
pany of  New  Jersey  and  numerous  of  the  other  defendants. 
The  scope  of  the  answers  will  be  adequately  indicated  by 
610 


APPENDIX    A 

quoting  a  summary  on  the  subject  made  in  the  brief  for 
the  appellants. 

"It  is  sufficient  to  say  that,  whilst  admitting  many  of 
the  alleged  acquisitions  of  property,  the  formation  of  the 
so-called  trust  of  1882,  its  dissolution  in  1892,  and  the 
acquisition  by  the  Standard  Oil  Company  of  New  Jersey  of 
the  stocks  of  the  various  corporations  in  1899,  they  deny 
all  the  allegations  respecting  combinations  or  conspiracies 
to  restrain  or  monopohze  the  oil  trade;  and  particularly 
that  the  so-called  trust  of  1882,  or  the  acquisition  of  the 
shares  of  the  defendant  companies  by  the  Standard  Oil 
Company  of  New  Jersey  in  1899,  was  a  combination  of 
independent  or  competing  concerns  or  corporations.  The 
averments  of  the  petition  respecting  the  means  adopted 
to  monopolize  the  oil  trade  are  traversed  either  by  a 
denial  of  the  acts  alleged  or  of  their  purpose,  intent  or 
effect." 

On  June  24,  1907,  the  cause  being  at  issue,  a  special 
examiner  was  appointed  to  take  the  evidence,  and  his  re- 
port was  filed  March  22,  1909.  It  was  heard  on  April  5 
to  10,  1909,  under  the  expediting  act  of  February  11,  1903, 
before  a  Circuit  Court  consisting  of  four  judges. 

The  court  decided  in  favor  of  the  United  States.  In 
the  opinion  delivered,  all  the  multitude  of  acts  of  wrong- 
doing charged  in  the  bill  were  put  aside,  in  so  far  as  they 
were  alleged  to  have  been  committed  prior  to  the  passage 
of  the  Anti-Trust  Act,  "except  as  evidence  of  their  (the  de- 
fendants') purpose,  of  their  continuing  conduct  and  of  its 
effect."    (173  Fed.  Rep.  177.) 

By  the  decree  which  was  entered  it  was  adjudged  that 
the  combining  of  the  stocks  of  various  companies  in  the 
hands  of  the  Standard  Oil  Company  of  New  Jersey  in  1899 
constituted  a  combination  in  restraint  of  trade  and  also  an 
attempt  to  monopolize  and  a  monopolization  under  §  2 
of  the  Anti-Trust  Act.  The  decree  was  against  seven 
individual  defendants,  the  Standard  Oil  Company  of  New 
Jersey,  thirty-six  domestic  companies  and  one  foreign  com- 
pany w^hich  the  Standard  Oil  Company  of  New  Jersey 
controls  by  stock  ownership;  these  38  corporate  defend- 

611 


APPENDIX   A 

ants  being  held  to  be  parties  to  the  combination  found  to 
exist.  ^ 

The  bill  was  dismissed  as  to  all  other  corporate  defend- 
ants, 33  in  number,  it  being  adjudged  by  §  3  of  the  decree 
that  they  ''have  not  been  proved  to  be  engaged  in  the  oper- 
ation or  carrying  out  of  the  combination."- 

The  Standard  Oil  Company  of  New  Jersey  was  en- 
joined from  voting  the  stocks  or  exerting  any  control  over 
the  said  37  subsidiary  companies,  and  the  subsidiary  com- 
panies were  enjoined  from  paying  any  dividends  as  to  the 
Standard  Oil  Company  or  permitting  it  to  exercise  any 
control  over  them  by  virtue  of  the  stock  ownership  or 
power  acquired  by  means  of  the  combination.  The  individ- 
uals and  corporations  were  also  enjoined  from  entering 
into  or  carrying  into  effect  any  hke  combination  which 
would  evade  the  decree.  Further,  the  individual  defend- 
ants, the  Standard  Oil  Company,  and  the  37  subsidiary 
corporations  were  enjoined  from  engaging  or  continuing  in 
interstate  commerce  in  petroleum  or  its  products  during 
the  continuance  of  the  illegal  combination. 

At  the  outset  a  question  of  jurisdiction  requires  consid- 
eration, and  we  shall,  also,  as  a  preliminary,  dispose  of 
another  question,  to  the  end  that  our  attention  may  be 
completely  concentrated  upon  the  merits  of  the  contro- 
versy when  we  come  to  consider  them. 

First.  We  are  of  opinion  that  in  consequence  of  the  pres- 
ence within  the  district  of  the  Waters-Pierce  Oil  Company, 
the  court,  under  the  authority  of  §  5  of  the  Anti-Trust 
Act,  rightly  took  jurisdiction  over  the  cause  and  properly 


1  Counsel  for  appellants  says:  "Of  the  38  (37)  corporate  defendants 
named  in  section  2  of  the  decree  and  as  to  which  the  judgment  of  the  court 
appUes,  four  have  not  appealed,  to  wit:  Corsicana  Refining  Co.,  Man- 
hattan Oil  Co.,  Security  Oil  Co.,  Waters-Pierce  Oil  Co.,  and  one,  the  Stand- 
ard Oil  Co.  of  Iowa,  has  been  liquidated  and  no  longer  exists." 

2  Of  the  dismissed  defendants  16  were  natural  gas  companies  and  10 
were  companies  which  were  liquidated  and  ceased  to  exist  before  the  filing 
of  the  petition.  The  other  dismissed  defendants,  7  in  number,  were:  Flor- 
ence Oil  Refining  Co.,  United  Oil  Co.,  Tidewater  Oil  Co.,  Tide  Water  Pipe 
Co.  (L't'd),  Piatt  &  Washburn  Refining  Co.,  Franklin  Pipe  Co.  and  Penn- 
sylvania Oil  Co. 

612 


APPENDIX   A 

ordered  notice  to  be  served  upon  the  non-resident  defend- 
ants. 

Second.  The  overruling  of  the  exceptions  taken  to  so 
much  of  the  bill  as  counted  upon  acts  occurring  prior  to 
the  passage  of  the  Anti-Trust  Act, — whatever  may  be  the 
view  as  an  original  question  of  the  duty  to  restrict  the  con- 
troversy to  a  much  narrower  area  than  that  propounded 
by  the  bill, — we  think  by  no  possibility  in  the  present  stage 
of  the  case  can  the  action  of  the  court  be  treated  as  preju- 
dicial error  justifying  reversal.  We  say  this  because  the 
court,  as  we  shall  do,  gave  no  weight  to  the  testimon}^  ad- 
duced under  the  averments  complained  of  except  in  so  far 
as  it  tended  to  throw  light  upon  the  acts  done  after  the 
passage  of  the  Anti-Trust  Act  and  the  results  of  which  it 
was  charged  were  being  participated  in  and  enjoyed  by 
the  alleged  combination  at  the  time  of  the  filing  of  the 
bill. 

We  are  thus  brought  face  to  face  with  the  merits  of  the 
controversy. 

Both  as  to  the  law  and  as  to  the  facts  the  opposing  con- 
tentions pressed  in  the  argument  are  numerous  and  in  all 
their  aspects  are  so  irreconcilable  that  it  is  difficult  to 
reduce  them  to  some  fundamental  generalization,  which 
by  being  disposed  of  would  decide  them  all.  For  instance, 
as  to  the  law.  While  both  sides  agree  that  the  deter- 
mination of  the  controversy  rests  upon  the  correct  con- 
struction and  apphcation  of  the  first  and  second  sections 
of  the  Anti-Trust  Act,  yet  the  views  as  to  the  meaning  of 
the  act  are  as  wide  apart  as  the  poles,  since  there  is  no  real 
point  of  agreement  on  any  view  of  the  act.  And  this  also 
is  the  case  as  to  the  scope  and  effect  of  authorities  rehed 
upon,  even  although  in  some  instances  one  and  the  same 
authority  is  asserted  to  be  controlling. 

So  also  is  it  as  to  the  facts.  Thus,  on  the  one  hand, 
with  relentless  pertinacity  and  minuteness  of  analysis, 
it  is  insisted  that  the  facts  establish  that  the  assailed  com- 
bination took  its  birth  in  a  purpose  to  unlawfully  acquire 
wealth  by  oppressing  the  public  and  destroying  the  just 
rights  of  others,  and  that  its  entire  career  exemplifies  an 

G13 


APPENDIX  A 


inexorable  caiTying  out  of  such  wrongful  intents,  since,  it 
is  asserted,  the  pathway  of  the  combination  from  the  be- 
ginning to  the  time  of  the  filing  of  the  bill  is  marked  with 
constant  proofs  of  wrong  inflicted  upon  the  public  and  is 
strewn  with  the  wrecks  resulting  from  crushing  out,  with- 
out regard  to  law,  the  individual  rights  of  others.  Indeed, 
so  conclusive,  it  is  urged,  is  the  proof  on  these  subjects  that 
it  is  asserted  that  the  existence  of  the  principal  corporate 
defendant— the  Standard  Oil  Company  of  New  Jersey— 
with  the  vast  accumulation  of  property  which  it  owns  or 
controls,  because  of  its  infinite  potency  for  harm  and  the 
dangerous  example  which  its  continued  existence  affords, 
is  an  open  and  enduring  menace  to  all  freedom  of  trade 
and  is  a  byword  and  reproach  to  modern  economic  meth- 
ods. On  the  other  hand,  in  a  powerful  analysis  of  the  facts, 
it  is  insisted  that  they  demonstrate  that  the  origin  and 
development  of  the  vast  business  which  the  defendants 
control  was  but  the  result  of  lawful  competitive  methods, 
guided  by  economic  genius  of  the  highest  order,  sustained 
by  courage,  by  a  keen  insight  into  commercial  situations, 
resulting  in  the  acquisition  of  great  wealth,  but  at  the  same 
time  serving  to  stimulate  and  increase  production,  to 
widely  extend  the  distribution  of  the  products  of  petroleum 
at  a  cost  largely  below  that  which  would  have  otherwise 
prevailed,  thus  proving  to  be  at  one  and  the  same  time  a 
benefaction  to  the  general  pubhc  as  well  as  of  enormous 
advantage  to  individuals.  It  is  not  denied  that  in  the  enor- 
mous volume  of  proof  contained  in  the  record  in  the  pe- 
riod of  almost  a  lifetime  to  which  that  proof  is  addressed, 
there  may  be  found  acts  of  wrongdoing,  but  the  insistence 
is  that  they  were  rather  the  exception  than  the  rule,  and 
in  most  cases  were  either  the  result  of  too  great  individual 
zeal  in  the  keen  rivalries  of  business  or  of  the  methods  and 
habits  of  dealing  which,  even  if  wrong,  were  commonly 
practiced  at  the  time.  And  to  discover  and  state  the  truth 
concerning  these  contentions  both  arguments  call  for  the 
analysis  and  weighing,  as  we  have  said  at  the  outset,  of  a 
jungle  of  conflicting  testimony  covering  a  period  of  forty 
years,  a  duty  difficult  to  rightly  perform  and,  even  if  satis- 
614 


APPENDIX  A 

factorily  accomplished,  almost  impossible  to  state  with 
any  reasonable  regard  to  brevity. 

Duly  appreciating  the  situation  just  stated,  it  is  certain 
that  only  one  point  of  concord  between  the  parties  is  dis- 
cernable,  which  is,  that  the  controversy  in  every  aspect  is 
controlled  by  a  correct  conception  of  the  meaning  of  the 
first  and  second  sections  of  the  Anti-Trust  Act.  We  shall 
therefore — departing  from  what  otherwise  would  be  the 
natural  order  of  analysis — make  this  one  point  of  har- 
mony the  initial  basis  of  our  examination  of  the  conten- 
tions, relying  upon  the  conception  that  by  doing  so  some 
harmonious  resonance  may  result  adecjuate  to  dominate 
and  control  the  discord  with  which  the  case  abounds. 
That  is  to  say,  we  shall  first  come  to  consider  the  meaning 
of  the  fii'st  and  second  sections  of  the  Anti-Trust  Act  by 
the  text,  and  after  discerning  what  by  that  process  appears 
to  be  its  true  meaning  we  shall  proceed  to  consider  the 
respective  contentions  of  the  parties  concerning  the  act, 
the  strength  or  weakness  of  those  contentions,  as  well  as 
the  accuracy  of  the  meaning  of  the  act  as  deduced  from  the 
text  in  the  light  of  the  prior  decisions  of  this  court  con- 
cerning it.  ^Yhen  we  have  done  this  we  shall  then  ap- 
proach the  facts.  Following  this  course  we  shall  make 
our  investigation  under  four  separate  headings:  First. 
The  text  of  the  first  and  second  sections  of  the  act  origi- 
nally considered  and  its  meaning  in  the  fight  of  the  com- 
mon law  and  the  law  of  this  country  at  the  time  of  its 
adoption.  Second.  The  contentions  of  the  parties  con- 
cerning the  act,  and  the  scope  and  effect  of  the  decisions 
of  this  court  upon  which  they  rely.  Third.  The  applica- 
tion of  the  statute  to  facts,  and.  Fourth.  The  remedy,  if 
any,  to  be  afforded  as  the  result  of  such  application. 

First.     The  text  of  the  act  and  its  meaning. 

We  quote  the  text  of  the  first  and  second  sections  of 
the  act,  as  follows: 

"Section  1.  Every  contract,  combination  in  the  form 
of  trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade 
or  commerce,  among  the  several  States,  or  with  foreign 
nations,  is  hereby  declared  to  be  illegal.     Every  person 

615 


APPENDIX  A 

who  shall  make  any  such  contract,  or  engage  in  any  such 
combmation  or  conspiracy,  shall  be  deemed  guilty  of  a 
misdemeanor,  and,  on  conviction  thereof,  shall  be  pun- 
ished by  fine  not  exceeding  five  thousand  dollars,  or  by 
imprisonment  not  exceeding  one  year,  or  by  both  said 
punishments,  in  the  discretion  of  the  court. 

''Sec.  2.  Every  person  who  shall  monopolize,  or  attempt 
to  monopolize,  or  combine  or  conspire  with  any  other  per- 
son or  persons,  to  monopolize  any  part  of  the  trade  or  com- 
merce among  the  several  States,  or  with  foreign  nations, 
shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  convic- 
tion thereof,  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not  exceeding  one 
year,  or  by  both  said  punishments,  in  the  discretion  of  the 
court." 

The  debates  show  that  doubt  as  to  whether  there  was  a 
common  law  of  the  United  States  which  governed  the  sub- 
ject in  the  absence  of  legislation  was  among  the  influences 
leading  to  the  passage  of  the  act.  They  conclusively 
show,  however,  that  the  main  cause  which  led  to  the  legis- 
lation was  the  thought  that  it  was  required  by  the  eco- 
nomic condition  of  the  times,  that  is,  the  vast  accumulation 
of  wealth  in  the  hands  of  corporations  and  individuals,  the 
enormous  development  of  corporate  organization,  the  fac- 
ility for  combination  which  such  organizations  afforded, 
the  fact  that  the  facility  was  being  used,  and  that  combina- 
tions known  as  trusts  were  being  multiplied,  and  the  wide- 
spread impression  that  their  power  had  been  and  would  be 
exerted  to  oppress  individuals  and  injure  the  public  gen- 
erally. Although  debates  may  not  be  used  as  a  means  for 
interpreting  a  statute  (United  States  v.  Trans-Missouri 
Freight  Association,  166  U.  S.  318,  41  L.  ed.  1007,  1020, 
17  Sup.  Ct.  540,  550,  and  cases  cited)  that  rule  in  the 
nature  of  things  is  not  violated  by  resorting  to  debates  as 
a  means  of  ascertaining  the  environment  at  the  time  of  the 
enactment  of  a  particular  law,  that  is,  the  history  of  the 
period  when  it  was  adopted. 

There  can  be  no  doubt  that  the  sole  subject  with  which 
the  first  section  deals  is  restraint  of  trade  as  therein  con- 
616 


APPENDIX  A 

templated,  and  that  the  attempt  to  monopoHze  and  mon- 
opolization is  the  subject  with  which  the  second  section  is 
concerned.  It  is  certain  that  those  terms,  at  least  in 
their  rudimentary  meaning,  took  their  origin  in  the  com- 
mon law,  and  were  also  familiar  in  the  law  of  this  country 
prior  to  and  at  the  time  of  the  adoption  of  the  act  in  ques- 
tion. 

We  shall  endeavor  then,  first  to  seek  their  meaning,  not 
by  indulging  in  an  elaborate  and  learned  analysis  of  the 
English  law  and  of  the  law  of  this  country,  but  by  making 
a  very  brief  reference  to  the  elementary  and  indisputable 
conceptions  of  both  the  EngUsh  and  American  law  on  the 
subject  prior  to  the  passage  of  the  Anti-Trust  Act. 

a.  It  is  certain  that  at  a  very  remote  period  the  words 
"contract  in  restraint  of  trade"  in  England  came  to  refer 
to  some  voluntary  restraint  put  by  contract  by  an  individ- 
ual on  his  right  to  carry  on  his  trade  or  calUng.  Originally 
all  such  contracts  were  considered  to  be  illegal,  because 
it  was  deemed  they  were  injurious  to  the  pubhc  as  well 
as  to  the  individuals  who  made  them.  In  the  interest  of 
the  freedom  of  individuals  to  contract  this  doctrine  was 
modified  so  that  it  was  only  when  a  restraint  by  contract 
was  so  general  as  to  be  coterminous  with  the  kingdom  that 
it  was  treated  as  void.  That  is  to  say,  if  the  restraint  was 
partial  in  its  operation  and  was  otherwise  reasonable  the 
contract  was  held  to  be  vaUd: 

6.  Monopolies  were  defined  by  Lord  Coke  as  follows: 

"  'A  monopoly  is  an  institution,  or  allowance  by  the  king 
by  his  grant,  commission,  or  other^\ise  to  any  person  or 
persons,  bodies  politic  or  corporate,  of  or  for  the  sole  buy- 
ing, selling,  making, working,  or  using  of  anything,  whereby 
any  person  or  persons,  bodies  politic  or  corporate,  are 
sought  to  be  restrained  of  any  freedom  or  Hberty  that  they 
had  before,  or  hindered  in  their  lawful  trade.'  (3  Inst. 
181,  chap.  85.)" 

Hawkins  thus  defined  them : 

"  '  A  monopoly  is  an  allowance  by  the  king  to  a  particu- 
lar person  or  persons  of  the  sole  buying,  selling,  making, 
working,  or  using  of  anything  whereby  the  subject  in 

617 


APPENDIX  A 

general  is  restrained  from  the  freedom  of  manufacturing  or 
trading  which  he  had  before.'  (Hawk.  P.  C.  bk.  1,  chap. 
29.)" 

The  frequent  granting  of  monopoUes  and  the  struggle 
which  led  to  a  denial  of  the  power  to  create  them,  that  is 
to  say,  to  the  estabhshment  that  they  were  incompatible 
with  the  English  constitution  is  known  to  all  and  need  not 
be  reviewed.  The  evils  which  led  to  the  public  outcry 
against  monopolies  and  to  the  final  denial  of  the  power  to 
make  them  may  be  thus  summarily  stated:  1.  The  power 
which  the  monopoly  gave  to  the  one  who  enjoyed  it  to  fix 
the  price  and  thereby  injure  the  public;  2.  The  power 
which  it  engendered  of  enabling  a  limitation  on  produc- 
tion; and,  3.  The  danger  of  deterioration  in  quality  of  the 
monopolized  article  which  it  was  deemed  was  the  inevi- 
table resultant  of  the  monopolistic  control  over  its  produc- 
tion and  sale.  As  monopoly  as  thus  conceived  embraced 
only  a  consequence  arising  from  an  exertion  of  sovereign 
power,  no  express  restrictions  or  prohibitions  obtained 
against  the  creation  by  an  individual  of  a  monopoly  as 
such.  But  as  it  was  considered,  at  least  so  far  as  the  neces- 
saries of  life  were  concerned,  that  individuals  by  the  abuse 
of  their  right  to  contract  might  be  able  to  usurp  the  power 
arbitrarily  to  enhance  prices,  one  of  the  wrongs  arising 
from  monopoly,  it  came  to  be  that  laws  were  passed  re- 
lating to  offenses  such  as  forestalling,  regrating  and  en- 
grossing by  which  prohibitions  were  placed  upon  the 
power  of  individuals  to  deal  under  such  circumstances 
and  conditions  as,  according  to  the  conception  of  the 
times,  created  a  presumption  that  the  dealings  were  not 
simply  the  honest  exertion  of  one's  right  to  contract  for 
his  own  benefit  unaccompanied  by  a  wrongful  motive  to 
injure  others,  but  were  the  consequence  of  a  contract  or 
course  of  dealing  of  such  a  character  as  to  give  rise  to  the 
presumption  of  an  intent  to  injure  others  through  the 
means,  for  instance,  of  a  monopolistic  increase  of  prices. 
This  is  illustrated  by  the  definition  of  engrossing  found  in 
the  statute,  5  and  6  Edw.  VI,  chap.  14,  as  follows: 

"Whatsoever  person  or  persons  *  *  *  shall  engross 
618 


APPENDIX  A 

or  get  into  his  or  their  hands  by  buying,  contracting,  or 
promise-taking,  other  than  by  demise,  grant,  or  lease  of 
land,  or  tithe,  any  corn  growing  in  the  fields,  or  any  other 
corn  or  grain,  butter,  cheese,  fish,  or  other  dead  victual, 
whatsoever,  within  the  realm  of  England,  to  the  intent  to 
sell  the  same  again,  shall  be  accepted,  reputed,  and  taken 
an  unlawful  engrosser  or  engrossers." 

As  by  the  statutes  providing  against  engrossing  the 
quantity  engrossed  was  not  required  to  be  the  whole  or  a 
proximate  part  of  the  whole  of  an  article,  it  is  clear  that 
there  was  a  wide  difference  between  monopoly  and  en- 
grossing, etc.  But  as  the  principal  wrong  which  it  was 
deemed  would  result  from  monopoly,  that  is,  an  enhance- 
ment of  the  price,  was  the  same  wrong  to  which  it  was 
thought  the  prohibited  engrossment  would  give  rise,  it 
came  to  pass  that  monopoly  and  engrossing  were  re- 
garded as  virtually  one  and  the  same  thing.  In  other 
words,  the  prohibited  act  of  engrossing  because  of  its 
inevitable  accomplishment  of  one  of  the  evils  deemed  to 
be  engendered  by  monopoly,  came  to  be  referred  to  as 
being  a  monopoly  or  constituting  an  attempt  to  monopo- 
hze.  Thus  Pollexfen,  in  his  argument  in  East  India  Com- 
pany V.  Sandys,  Skin.  165,  169,  said: 

"By  common  law,  he  said  that  trade  is  free,  and  for 
that  cited  3  Inst.  81;  F.  B.  65;  1  Roll.  4;  that  the  common 
law  is  as  much  against  'monopoly'  as  'engrossing;'  and 
that  they  differ  only,  that  a  'monopoly'  is  by  patent  from 
the  king,  the  other  is  by  the  act  of  the  subject  between 
party  and  party;  but  that  the  mischiefs  are  the  same  from 
both,  and  there  is  the  same  law  against  both.  Moore, 
673;  11  Rep.  84.  The  sole  trade  of  anything  is  'engross- 
ing' ex  rei  natura,  for  whosoever  hath  the  sole  trade  of 
buying  and  selling  hath  'engrossed'  that  trade;  and  who- 
soever hath  the  sole  trade  to  any  country,  hath  the  sole 
trade  of  bu3dng  and  selling  the  produce  of  that  country, 
at  his  own  price,  which  is  an  'engrossing.'" 

And  by  operation  of  the  mental  process  which  led  to 
considering  as  a  monopoly  acts  which  although  they  did 
not  constitute  a  monopoly  were  thought  to  produce  some 

619 


APPENDIX  A 

of  its  baneful  effects,  so  also  because  of  the  impediment 
or  burden  to  the  due  course  of  trade  which  they  produced, 
such  acts  came  to  be  referred  to  as  in  restraint  of  trade. 
This  is  shown  by  my  Lord  Coke's  definition  of  monopoly 
as  being  ''an  institution  or  allowance  *  *  *  whereby 
any  person  or  persons,  bodies  politic  or  corporate,  are 
sought  to  be  restrained  of  any  freedom  or  liberty  that 
they  had  before  or  hindered  in  their  lawful  trade."  It  is 
illustrated  also  by  the  definition  which  Hawkins  gives  of 
monopoly  wherein  it  is  said  that  the  effect  of  monopoly  is 
to  restrain  the  citizen  "from  the  freedom  of  manufactur- 
ing or  trading  which  he  had  before."  And  see  especially 
the  opinion  of  Parker,  C.  J.,  in  Mitchel  v.  Reynolds  (1711), 
1  P.  Williams,  181,  where  a  classification  is  made  of  monop- 
oly which  brings  it  generically  within  the  description  of 
restraint  of  trade. 

Generalizing  these  considerations,  the  situation  is  this: 
1.  That  by  the  common  law  monopolies  were  unlawful 
because  of  their  restriction  upon  individual  freedom  of 
contract  and  their  injury  to  the  public.  2.  That  as  to 
necessaries  of  life  the  freedom  of  the  individual  to  deal 
was  restricted  where  the  nature  and  character  of  the  deal- 
ing was  such  as  to  engender  the  presumption  of  intent  to 
bring  about  at  least  one  of  the  injuries  which  it  was  deemed 
would  result  from  monopoly,  that  is  an  undue  enhance- 
ment of  price.  3.  That  to  protect  the  freedom  of  contract 
of  the  individual  not  only  in  his  own  interest,  but  prin- 
cipally in  the  interest  of  the  common  weal,  a  contract  of  an 
individual  by  which  he  put  an  unreasonable  restraint 
upon  himself  as  to  carrying  on  his  trade  or  business  was 
void.  And  that  at  common  law  the  evils  consequent  upon 
engrossing,  etc.,  caused  those  things  to  be  treated  as  com- 
ing within  monopoly  and  sometimes  to  be  called  monopoly 
and  the  same  considerations  caused  monopoly  because  of 
its  operation  and  effect,  to  be  brought  within  and  spoken 
of  generally  as  impeding  the  due  course  of  or  being  in 
restraint  of  trade. 

From  the  development  of  more  accurate  economic  con- 
ceptions and  the  changes  in  conditions  of  society  it  came 
620 


APPENDIX   A 

to  be  recognized  that  the  acts  prohibited  by  the  engross- 
ing, forestalling,  etc.,  statutes  did  not  have  the  harmful 
tendency  which  they  were  presumed  to  have  when  the 
legislation  concerning  them  was  enacted,  and  therefore 
did  not  justify  the  presumption  which  had  previously  been 
deduced  from  them,  but,  on  the  contrary,  such  acts  tended 
to  fructify  and  develop  trade.  See  the  statutes  of  12th 
George  III,  chap.  71,  enacted  in  1772,  and  statute  of  7  and 
8  Victoria,  chap.  24,  enacted  in  1844,  repealing  the  prohibi- 
tions against  engrossing,  forestalling,  etc.,  upon  the  ex- 
press ground  that  the  prohibited  acts  had  come  to  be 
considered  as  favorable  to  the  development  of  and  not  in 
restraint  of  trade.  It  is  remarkable  that  nowhere  at  com- 
mon law  can  there  be  found  a  prohibition  against  the 
creation  of  monopoly  by  an  individual.  This  would  seem 
to  manifest,  either  consciously  or  intuitively,  a  profound 
conception  as  to  the  inevitable  operation  of  economic 
forces  and  the  equipoise  or  balance  in  favor  of  the  protec- 
tion of  the  rights  of  individuals  which  resulted.  That  is 
to  say,  as  it  was  deemed  that  monopoly  in  the  concrete 
could  only  arise  from  an  act  of  sovereign  power,  and,  such 
sovereign  power  being  restrained,  prohibitions  as  to  in- 
dividuals were  directed,  not  against  the  creation  of  mo- 
nopoly, but  were  only  applied  to  such  acts  in  relation 
to  particular  subjects  as  to  which  it  was  deemed,  if  not 
restrained,  some  of  the  consequences  of  monopoly  might 
result.  After  all,  this  was  but  an  instinctive  recognition 
of  the  truisms  that  the  course  of  trade  could  not  be  made 
free  by  obstructing  it,  and  that  an  individual's  right  to 
trade  could  not  be  protected  by  destroying  such  right. 
From  the  review  just  made  it  clearly  results  that  out- 
side of  the  restrictions  resulting  from  the  want  of  power 
in  an  individual  to  voluntarily  and  unreasonably  restrain 
his  right  to  carry  on  his  trade  or  business  and  outside  of 
the  want  of  right  to  restrain  the  free  com'se  of  trade  by 
contracts  or  acts  which  implied  a  wTongful  purpose,  free- 
dom to  contract  and  to  abstain  from  contracting  and  to 
exercise  every  reasonable  right  incident  thereto  became 
the  rule  in  the  English  law.    The  scope  and  effect  of  this 

G21 


APPENDIX   A 

freedom  to  trade  and  contract  is  clearly  shown  by  the 
decision  in  Mogul  Steamship  Co.  v.  McGregor  (1892), 
A.  C.  25.  While  it  is  true  that  the  decision  of  the  House 
of  Lords  in  the  case  in  question  was  announced  shortly 
after  the  passage  of  the  Anti-Trust  Act,  it  serves  reflexly 
to  show  the  exact  state  of  the  law  in  England  at  the  time 
the  Anti-Trust  statute  was  enacted. 

In  this  country  also  the  acts  from  which  it  was  deemed 
there  resulted  a  part  if  not  all  of  the  injurious  conse- 
quences ascribed  to  monopoly,  came  to  be  referred  to  as 
a  monopoly  itself.  In  other  words,  here  as  had  been  the 
case  in  England,  practical  common  sense  caused  atten- 
tion to  be  concentrated  not  upon  the  theoretically  cor- 
rect name  to  be  given  to  the  condition  or  acts  which  gave 
rise  to  a  harmful  result,  but  to  the  result  itself  and  to 
the  remedying  of  the  evils  which  it  produced.  The 
statement  just  made  is  illustrated  by  an  early  statute  of 
the  Province  of  Massachusetts,  that  is,  chap.  31  of  the 
laws  of  1778-1779,  by  which  monopoly  and  forestalling 
were  expressly  treated  as  one  and  the  same  thing. 

It  is  also  true  that  while  the  principles  concerning  con- 
tracts in  restraint  of  trade,  that  is,  voluntary  restraint 
put  by  a  person  on  his  right  to  pursue  his  calling,  hence 
only  operating  subjectively,  came  generally  to  be  recog- 
nized in  accordance  with  the  Enghsh  rule,  it  came  more- 
over to  pass  that  contracts  or  acts  which  it  was  considered 
had  a  monopolistic  tendency,  especially  those  which 
were  thought  to  unduly  diminish  competition  and  hence 
to  enhance  prices — in  other  words,  to  monopolize — came 
also  in  a  generic  sense  to  be  spoken  of  and  treated  as 
they  had  been  in  England,  as  restricting  the  due  course 
of  trade,  and  therefore  as  being  in  restraint  of  trade. 
The  dread  of  monopoly  as  an  emanation  of  governmental 
power,  while  it  passed  at  an  early  date  out  of  mind  in 
this  country,  as  a  result  of  the  structure  of  our  Govern- 
ment, did  not  serve  to  assuage  the  fear  as  to  the  evil 
consequences  which  might  arise  from  the  acts  of  individ- 
uals producing  or  tending  to  produce  the  consequences  of 
monopoly.  It  resulted  that  treating  such  acts  as  we 
622 


APPENDIX    A 

have  said  as  amounting  to  monopoly,  sometimes  consti- 
tutional restrictions,  again  legislative  enactments  or 
judicial  decisions,  served  to  enforce  and  illustrate  the 
purpose  to  prevent  the  occurrence  of  the  evils  recognized 
in  the  mother  country  as  consequent  upon  monopoly, 
by  providing  against  contracts  or  acts  of  individuals  or 
combinations  of  individuals  or  corporations  deemed  to 
be  conducive  to  such  results.  To  refer  to  the  constitu- 
tional or  legislative  provisions  on  the  subject  or  many 
judicial  decisions  which  illustrate  it  would  unnecessarily 
prolong  this  opinion.  We  append  in  the  margin  a  note 
to  treatises,  etc.,  wherein  are  contained  references  to  con- 
stitutional and  statutory  provisions  and  to  numerous 
decisions,  etc.,  relating  to  the  subject.' 

It  will  be  found  that  as  modern  conditions  arose  the 
trend  of  legislation  and  judicial  decision  came  more  and 
more  to  adapt  the  recognized  restrictions  to  new  mani- 
festations of  conduct  or  of  dealing  which  it  was  thought 
justified  the  inference  of  intent  to  do  the  wrongs  which  it 
had  been  the  purpose  to  prevent  from  the  beginning. 
The  evolution  is  clearly  pointed  out  in  National  Cotton 
Oil  Co.  V.  Texas,  197  U.  S.  115,  49  L.  ed.  689,  25  Sup. 
Ct.  379,  and  Shawnee  Compress  Co.  v.  Anderson,  209 
U.  S.  423,  28  Sup.  Ct.  572,  52  L.  ed.  865;  and,  indeed, 
will  be  found  to  be  illustrated  in  various  aspects  by  the 
decisions  of  this  court  which  have  been  concerned  with 
the  enforcement  of  the  act  we  are  now  considering. 

Without  going  into  detail  and  but  very  briefly  sur- 
veying the  whole  field,  it  may  be  with  accuracy  said  that 
the  dread  of  enhancement  of  prices  and  of  other  wrongs 
which  it  was  thought  would  flow  from  the  undue  limita- 
tion on  competitive  conditions  caused  by  contracts  or 
other  acts  of  individuals  or  corporations,  led,  as  a  matter 
of  public  policy,  to  the  prohibition  or  treating  as  illegal 
all  contracts  or  acts  which  were  unreasonably  restrictive 

'  Purdy's  Beach  on  Private  Corporations,  vol.  2,  pp.  140.3  et  seq.,  chapter 
on  Trusts  and  Monopolies;  Cooke  on  Trade  and  Labor  Combinations, 
App.  II,  pp.  194-195;  Am.  &  Eng.  Ency.  Law,  2d  ed.,  article  "Monopolies 
and  Trusts,"  pp.  844  et  seq. 

623 


APPENDIX  A 

of  competitive  conditions,  either  from  the  nature  or  char- 
acter of  the  contract  or  act  or  where  the  surrounding  cir- 
cumstances were  such  as  to  justify  the  conclusion  that 
they  had  not  been  entered  into  or  performed  with  the 
legitimate  purpose  of  reasonably  forwarding  personal  in- 
terest and  developing  trade,  but  on  the  contrary  were  of 
such  a  character  as  to  give  rise  to  the  inference  or  pre- 
sumption that  they  had  been  entered  into  or  done  with 
the  intent  to  do  wrong  to  the  general  public  and  to  limit 
the  right  of  individuals,  thus  restraining  the  free  flow  of 
commerce  and  tending  to  bring  about  the  evils,  such  as 
enhancement  of  prices,  which  were  considered  to  be  against 
public  policy.  It  is  equally  true  to  say  that  the  survey 
of  the  legislation  in  this  country  on  this  subject  from 
the  beginning  will  show,  depending  as  it  did  upon  the 
economic  conceptions  which  obtained  at  the  time  when 
the  legislation  was  adopted  or  judicial  decision  was  ren- 
dered, that  contracts  or  acts  were  at  one  time  deemed  to 
be  of  such  a  character  as  to  justify  the  inference  of  wrong- 
ful intent  which  were  at  another  period  thought  not  to 
be  of  that  character.  But  this  again,  as  we  have  seen, 
simply  followed  the  line  of  development  of  the  law  of 
England. 

Let  us  consider  the  language  of  the  first  and  second 
sections,  guided  by  the  principle  that  where  words  are 
employed  in  a  statute  which  had  at  the  time  a  well-known 
meaning  at  common  law  or  in  the  law  of  this  country 
they  are  presumed  to  have  been  used  in  that  sense  un- 
less the  context  compels  to  the  contrary.^ 

As  to  the  first  section,  the  words  to  be  interpreted  are: 
"Every  contract,  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy  in  restraint  of  trade  or  com- 
merce *  *  *  is  hereby  declared  to  be  illegal."  As  there 
is  no  room  for  dispute  that  the  statute  was  intended  to 

'  Swearingen  v.  United  States,  161  U.  S.  446,  40  L.  ed.  765,  16  Sup.  Ct. 
662;  United  States  v.  Wong  Kim  Ark,  169  U.  S.  649,  42  L.  ed.  890,  18  Sup. 
Ct.  456;  Keck  v.  United  States,  172  U.  S.  446,  19  Sup.  Ct.  254,  43  L.  ed. 
505;  Kepner  v.  United  States,  195  U.  S.  100,  126,  49  L.  ed.  114,  24  Sup. 
Ct.  797. 

624 


APPENDIX   A 

formulate  a  rule  for  the  regulaton  of  interstate  and 
foreign  commerce,  the  question  is  what  was  the  rule 
which  it  adopted? 

In  view  of  the  common  law  and  the  law  in  this  country 
as  to  restraint  of  trade,  which  we  have  reviewed,  and 
the  illuminating  effect  which  that  history  must  have 
under  the  rule  to  which  we  have  referred,  we  think  it 
results : 

a.  That  the  context  manifests  that  the  statute  was 
drawn  in  the  light  of  the  existing  practical  conception  of 
the  law  of  restraint  of  trade,  because  it  groups  as  ^\ithin 
that  class,  not  only  contracts  which  were  in  restraint  of 
trade  in  the  subjective  sense,  but  all  contracts  or  acts 
which  theoretically  were  attempts  to  monopolize,  yet 
which  in  practice  had  come  to  be  considered  as  in  restraint 
of  trade  in  a  broad  sense. 

h.  That  in  view  of  the  many  new  forms  of  contracts 
and  combinations  which  were  being  evolved  from  existing 
economic  conditions,  it  was  deemed  essential  by  an  all- 
embracing  enumeration  to  make  sure  that  no  form  of 
contract  or  combination  by  which  an  undue  restraint  of 
interstate  or  foreign  commerce  was  brought  about  could 
save  such  restraint  from  condemnation.  The  statute  un- 
der this  view  evidenced  the  intent  not  to  restrain  the  right 
to  make  and  enforce  contracts,  whether  resulting  from 
combination  or  otherwise,  which  did  not  unduly  restrain 
interstate  or  foreign  commerce,  but  to  protect  that  com- 
merce from  being  restrained  by  methods,  w^hether  old  or 
new,  which  would  constitute  an  interference  that  is  an 
undue  restraint. 

c.  And  as  the  contracts  or  acts  embraced  in  the  pro- 
vision were  not  expressly  defined,  since  the  enmneration 
addressed  itself  simply  to  classes  of  acts,  those  classes 
being  broad  enough  to  embrace  every  conceivable  con- 
tract or  combination  which  could  be  made  concerning 
trade  or  commerce  or  the  subjects  of  such  commerce,  and 
thus  caused  any  act  done  by  any  of  the  enumerated 
methods  anywhere  in  the  whole  field  of  human  activity 
to  be  illegal  if  in  restraint  of  trade,  it  inevitably  follows 
40  625 


APPENDIX  A 

that  the  provision  necessarily  called  for  the  exercise  of 
judgment  which  required  that  some  standard  should  be 
resorted  to  for  the  purpose  of  determining  whether  the 
prohibitions  contained  in  the  statute  had  or  had  not  in 
any  given  case  been  violated.  Thus  not  specifying  but 
indubitably  contemplating  and  requiring  a  standard,  it 
follows  that  it  was  intended  that  the  standard  of  reason 
which  had  been  applied  at  the  common  law  and  in  this 
country  in  dealing  with  subjects  of  the  character  em- 
braced by  the  statute,  was  intended  to  be  the  measure 
used  for  the  purpose  of  determining  whether  in  a  given 
case  a  particular  act  had  or  had  not  brought  about  the 
wrong  against  which  the  statute  provided. 

And  a  consideration  of  the  text  of  the  second  section 
serves  to  establish  that  it  was  intended  to  supplement  the 
first  and  to  make  sure  that  by  no  possible  guise  could 
the  public  policy  embodied  in  the  first  section  be  frus- 
trated or  evaded.  The  prohibitions  of  the  second  embrace 
"Every  person  who  shall  monopolize,  or  attempt  to 
monopolize,  or  combine  or  conspire  with  any  other  per- 
son or  persons,  to  monopolize  any  part  of  the  trade  or 
commerce  among  the  several  states,  or  with  foreign 
nations,*  *  *"  By  reference  to  the  terms  of  §  8  it  is 
certain  that  the  word  person  clearly  implies  a  corpora- 
tion as  well  as  an  individual. 

The  conamerce  referred  to  by  the  words  "any  part" 
construed  in  the  light  of  the  manifest  purpose  of  the 
statute  has  both  a  geographical  and  a  distributive  signif- 
icance, that  is  it  includes  any  portion  of  the  United  States 
and  any  one  of  the  classes  of  things  forming  a  part  of 
interstate  or  foreign  commerce. 

Undoubtedly,  the  words  "to  monopolize"  and  "mo- 
nopolize" as  used  in  the  section  reach  every  act  bringing 
about  the  prohibited  results.  The  ambiguity,  if  any,  is 
involved  in  determining  what  is  intended  by  monopolize. 
But  this  ambiguity  is  readily  dispelled  in  the  light  of  the 
previous  history  of  the  law  of  restraint  of  trade  to  which 
we  have  referred  and  the  indication  which  it  gives  of  the 
practical  evolution  by  which  monopoly  and  the  acts  which 
626 


APPENDIX   A 

produce  the  same  result  as  monopoly,  that  'is,  an  undue 
restraint  of  the  course  of  trade,  all  came  to  be  spoken  of 
as,  and  to  be  indeed  synonymous  with,  restraint  of  trade. 
In  other  words,  having  by  the  first  section  forbidden  all 
means  of  monopolizing  trade,  that  is,  unduly  restraining 
it  by  means  of  every  contract,  combination,  etc.,  the 
second  section  seeks,  if  possible,  to  make  the  prohibitions 
of  the  act  all  the  more  complete  and  perfect  by  embracing 
all  attempts  to  reach  the  end  prohibited  by  the  first  sec- 
tion, that  is,  restraints  of  trade,  by  any  attempt  to  mo- 
nopolize, or  monopolization  thereof,  even  although  the 
acts  by  which  such  results  are  attempted  to  be  brought 
about  or  are  brought  about  be  not  embraced  within  the 
general  enumeration  of  the  first  section.  And,  of  course, 
when  the  second  section  is  thus  harmonized  with  and 
made  as  it  was  intended  to  be  the  complement  of  the 
first,  it  becomes  obvious  that  the  criteria  to  be  resorted 
to  in  any  given  case  for  the  purpose  of  ascertaining 
whether  violations  of  the  section  have  been  committed, 
is  the  rule  of  reason  guided  by  the  established  law  and 
by  the  plain  duty  to  enforce  the  prohibitions  of  the  act 
and  thus  the  public  policy  which  its  restrictions  were 
obviously  enacted  to  subserve.  And  it  is  worthy  of  ob- 
servation, as  we  have  previously  remarked  concerning 
the  common  law,  that  although  the  statute  by  the  com- 
prehensiveness of  the  enumerations  embodied  in  both  the 
first  and  second  sections  makes  it  certain  that  its  purpose 
was  to  prevent  undue  restraints  of  every  kind  or  nature, 
nevertheless  by  the  omission  of  any  direct  prohibition 
against  monopoly  in  the  concrete  it  indicates  a  conscious- 
ness that  the  freedom  of  the  individual  right  to  contract 
when  not  unduly  or  improperly  exercised  was  the  most 
efficient  means  for  the  prevention  of  monopoly,  since  the 
operation  of  the  centrifugal  and  centripetal  forces  resulting 
from  the  right  to  freely  contract  was  the  means  by  which 
monopoly  would  be  inevitably  prevented  if  no  extraneous 
or  sovereign  power  imposed  it  and  no  right  to  make  un- 
lawful contracts  having  a  monopolistic  tendency  were 
permitted.     In   other  words  that  freedom   to   contract 

627 


APPENDIX  A 

was  the  essence  of  freedom  from  undue  restraint  on  the 
right  to  contract. 

Clear  as  it  seems  to  us  is  the  meaning  of  the  provisions 
of  the  statute  in  the  Ught  of  the  review  which  we  have 
made,  nevertheless  before  definitively  applying  that  mean- 
ing it  behooves  us  to  consider  the  contentions  urged  on 
one  side  or  the  other  concerning  the  meaning  of  the  statute, 
which,  if  maintained,  would  give  to  it,  in  some  aspects 
a  much  wider  and  in  every  view  at  least  a  somewhat  dif- 
ferent significance.  And  to  do  this  brings  us  to  the  second 
question  which,  at  the  outset,  we  have  stated  it  was  oui* 
purpose  to  consider  and  dispose  of. 

Second.  The  contentions  of  the  parties  as  to  the  meaning  of 
the  statute  and  the  decisions  of  this  court  relied  upon  con- 
cerning those  contentions. 

In  substance,  the  propositions  urged  by  the  Govern- 
ment are  reducible  to  this:  That  the  language  of  the 
statute  embraces  every  contract,  combination,  etc.,  in 
restraint  of  trade,  and  hence  its  text  leaves  no  room  for 
the  exercise  of  judgment,  but  simply  imposes  the  plain 
duty  of  applying  its  prohibitions  to  every  case  within  its 
literal  language.  The  error  involved  lies  in  assuming  the 
matter  to  be  decided.  This  is  true  because  as  the  acts 
which  may  come  under  the  classes  stated  in  the  first 
section  and  the  restraint  of  trade  to  which  that  section 
applies  are  not  specifically  enumerated  or  defined,  it  is 
obvious  that  judgment  must  in  every  case  be  called  into 
play  in  order  to  determine  whether  a  particular  act  is 
embraced  within  the  statutory  classes,  and  whether  if 
the  act  is  within  such  classes  its  nature  or  effect  causes 
it  to  be  a  restraint  of  trade  within  the  intendment  of  the 
act.  To  hold  to  the  contrary  would  require  the  conclu- 
sion either  that  every  contract,  act  or  combination  of 
any  kind  or  nature,  whether  it  operated  a  restraint  on 
trade  or  not,  was  within  the  statute,  and  thus  the  statute 
would  be  destructive  of  all  right  to  contract  or  agree  or 
combine  in  any  respect  whatever  as  to  subjects  embraced 
in  interstate  trade  or  commerce,  or  if  this  conclusion 
were  not  reached,  then  the  contention  would  require  it 
628 


APPENDIX    A 

to  be  held  that  as  the  statute  did  not  define  the  things 
to  which  it  related  and  excluded  resort  to  the  only  means 
by  which  the  acts  to  which  it  relates  could  be  ascertained 
— the  light  of  reason— the  enforcement  of  the  statute  was 
impossible  because  of  its  uncertainty.  The  merely  generic 
enumeration  which  the  statute  makes  of  the  acts  to  which 
it  refers  and  the  absence  of  any  definition  of  restraint  of 
trade  as  used  in  the  statute  leaves  room  for  but  one  con- 
clusion, which  is,  that  it  was  expressly  designed  not  to 
unduly  limit  the  application  of  the  act  by  precise  def- 
inition, but  while  clearly  fixing  a  standard,  that  is,  by 
defining  the  ulterior  boundaries  which  could  not  be  trans- 
gressed with  impunity,  to  leave  it  to  be  determined  by 
the  light  of  reason,  guided  by  the  principles  of  law  and 
the  duty  to  apply  and  enforce  the  public  policy  embodied 
in  the  statute,  in  every  given  case  whether  any  particular 
act  or  contract  was  within  the  contemplation  of  the 
statute. 

But,  it  is  said,  persuasive  as  these  views  may  be,  they 
may  not  be  here  applied,  because  the  previous  decisions 
of  this  court  have  given  to  the  statute  a  meaning  which 
expressly  excludes  the  construction  which  must  result 
from  the  reasoning  stated.  The  cases  are  United  States 
V.  Freight  Association,  166  U.  S.  290,  41  L.  ed.  1007, 
17  Sup.  Ct.  540,  and  United  States  v.  Joint  Traffic  Asso- 
ciation, 171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25. 
Both  the  cases  involved  the  legality  of  combinations  or 
associations  of  railroads  engaged  in  interstate  commerce 
for  the  purpose  of  controlling  the  conduct  of  the  parties 
to  the  association  or  combination  in  many  particulars. 
The  association  or  combination  was  assailed  in  each  case 
as  being  in  violation  of  the  statute.  It  was  held  that 
they  were.  It  is  undoubted  that  in  the  opinion  in  each 
case  general  language  was  made  use  of,  which,  when 
separated  from  its  context,  would  justify  the  conclusion 
that  it  was  decided  that  reason  could  not  be  resorted  to 
for  the  purpose  of  determining  whether  the  acts  com- 
plained of  were  within  the  statute.  It  is,  however,  also 
true  that  the  nature  and  character  of  the  contract  or 

629 


APPENDIX  A 

agreement  in  each  case  was  fully  referred  to  and  sug- 
gestions as  to  their  um-easonableness  pointed  out  in  order 
to  indicate  that  they  were  within  the  prohibitions  of  the 
statute.  As  the  cases  cannot  by  any  possible  conception 
be  treated  as  authoritative  without  the  certitude  that 
reason  was  resorted  to  for  the  purpose  of  deciding  them, 
it  follows  as  a  matter  of  course  that  it  must  have  been 
held  by  the  light  of  reason,  since  the  conclusion  could 
not  have  been  otherwise  reached,  that  the  assailed  con- 
tracts or  agreements  were  within  the  general  enumera- 
tion of  the  statute,  and  that  their  operation  and  effect 
brought  about  the  restraint  of  trade  which  the  statute 
prohibited.  This  being  inevitable,  the  deduction  can  in 
reason  only  be  this :  That  in  the  cases  relied  upon  it  having 
been  found  that  the  acts  complained  of  were  within  the 
statute  and  operated  to  produce  the  injuries  which  the 
statute  forbade,  that  resort  to  reason  was  not  permissible 
in  order  to  allow  that  to  be  done  which  the  statute  pro- 
hibited. This  being  true,  the  rulings  in  the  cases  relied 
upon  when  rightly  appreciated  were  therefore  this  and 
nothing  more :  That  as  considering  the  contracts  or  agree- 
ments, their  necessary  effect  and  the  character  of  the 
parties  by  whom  they  were  made,  they  were  clearly  re- 
straints of  trade  within  the  purview  of  the  statute,  they 
could  not  be  taken  out  of  that  category  by  indulging  in 
general  reasoning  as  to  the  expediency  or  non-expediency 
of  having  made  the  contracts  or  the  wisdom  or  want  of 
wisdom  of  the  statute  which  prohibited  their  being  made. 
That  is  to  say,  the  cases  but  decided  that  the  nature  and 
character  of  the  contracts,  creating  as  they  did  a  conclu- 
sive presumption  which  brought  them  within  the  statute, 
such  result  was  not  to  be  disregarded  by  the  substitution 
of  a  judicial  appreciation  of  what  the  law  ought  to  be 
for  the  plain  judicial  duty  of  enforcing  the  law  as  it  was 
made. 

But  aside  from  reasoning  it  is  true  to  say  that  the  cases 
relied  upon  do  not  when  rightly  construed  sustain  the 
doctrine  contended  for  as  established  by  all  of  the  numer- 
ous decisions  of  this  court  which  have  applied  and  en- 
630 


APPENDIX   A 

forced  the  Anti-Trust  Act,  .since  they  all  in  the  very  nature 
of  things  rest  upon  the  premise  that  reason  was  the  guide 
by  which  the  provisions  of  the  act  were  in  every  case 
interpreted.  Indeed  intermediate  the  decision  of  the  two 
cases,  that  is,  after  the  decision  in  the  Freight  Associa- 
tion Case  and  before  the  decision  in  the  Joint  Traffic 
Case,  the  case  of  Hopkins  v.  United  States,  171  U.  S. 
578,  43  L.  ed.  290,  19  Sup.  Ct.  40,  was  decided,  the 
opinion  being  delivered  by  Mr.  Justice  Peckham,  who 
wrote  both  the  opinions  in  the  Freight  Association  and 
the  Joint  Traffic  cases.  And,  referring  in  the  Hopkins 
Case  to  the  broad  claim  made  as  to  the  rule  of  interpre- 
tation announced  in  the  Freight  Association  Case,  it  was 
said  (p.  592):  "To  treat  as  condemned  by  the  act  all 
agreements  under  which,  as  a  result,  the  cost  of  conduct- 
ing an  interstate  commercial  business  may  be  increased 
would  enlarge  the  application  of  the  act  far  beyond  the 
fair  meaning  of  the  language  used.  There  must  be  some 
direct  and  immediate  effect  upon  interstate  commerce 
in  order  to  come  within  the  act."  And  in  the  Joint 
Traffic  Case  this  statement  was  expressly  reiterated  and 
approved  and  illustrated  by  example;  like  limitation  on 
the  general  language  used  in  Freight  Association  and 
Joint  Traffic  cases  is  also  the  clear  result  of  Bement  v. 
National  Harrow  Co.,  186  U.  S.  70,  92,  46  L.  ed.  1058, 
22  Sup.  Ct.  747,  and  especially  of  Cincinnati  Packet  Co. 
V.  Bay,  200  U.  S.  179,  50  L.  ed.  428,  26  Sup.  Ct.  208. 

If  the  criterion  by  which  it  is  to  be  determined  in  all 
cases  whether  every  contract,  combination,  etc.,  is  a  re- 
straint of  trade  within  the  intendment  of  the  law,  is  the 
direct  or  indirect  effect  of  the  acts  involved,  then  of 
course  the  rule  of  reason  becomes  the  guide,  and  the 
construction  which  we  have  given  the  statute,  instead  of 
being  refuted  by  the  cases  relied  upon,  is  by  those  cases 
demonstrated  to  be  correct.  This  is  true,  because  as  the 
construction  which  we  have  deduced  from  the  history  of 
the  act  and  the  analysis  of  its  text  is  simply  that  in  every 
case  where  it  is  clamied  that  an  act  or  acts  are  in  viola- 
tion of  the  statute  the  rule  of  reason,  in  the  light  of  the 

031 


APPENDIX   A 

prinoiples  of  law  and  the  public  policy  which  the  act 
embodies,  must  be  applied.  From  this  it  follows,  since 
that  rule  and  the  result  of  the  test  as  to  direct  or  indirect, 
in  their  ultimate  aspect,  come  to  one  and  the  same  thing, 
that  the  difference  between  the  two  is  therefore  only 
that  which  obtains  between  things  which  do  not  differ  at 
all. 

If  it  be  true  that  there  is  this  identity  of  result  between 
the  rule  intended  to  be  applied  in  the  Freight  Association 
Case,  that  is,  the  rule  of  direct  and  indirect,  and  the  rule 
of  reason  which  under  the  statute  as  we  construe  it 
should  be  here  applied,  it  may  be  asked  how  was  it  that 
in  the  opinion  in  the  Freight  Association  Case  much  con- 
sideration was  given  to  the  subject  of  whether  the  agree- 
ment or  combination  which  was  involved  in  that  case 
could  be  taken  out  of  the  prohibitions  of  the  statute  upon 
the  theory  of  its  reasonableness.  The  question  is  per- 
tinent and  must  be  fully  and  frankly  met,  for  if  it  be 
now  deemed  that  the  Freight  Association  Case  was  mis- 
takenly decided  or  too  broadly  stated,  the  doctrine  which 
it  announced  should  be  either  expressly  overruled  or 
limited. 

The  confusion  which  gives  rise  to  the  question  results 
from  failing  to  distinguish  between  the  want  of  power  to 
take  a  case  which  by  its  terms  or  the  circumstances  which 
surrounded  it,  considering  among  such  circumstances  the 
character  of  the  parties,  is  plainly  within  the  statute,  out 
of  the  operation  of  the  statute  by  resort  to  reason  in  effect 
to  establish  that  the  contract  ought  not  to  be  treated  as 
within  the  statute,  and  the  duty  in  every  case  where  it  be- 
came necessary  from  the  nature  and  character  of  the  par- 
ties to  decide  whether  it  was  within  the  statute  to  pass 
upon  that  question  by  the  light  of  reason.  This  distinc- 
tion, we  think,  serves  to  point  out  what  in  its  ultimate  con- 
ception was  the  thought  underlying  the  reference  to  the 
rule  of  reason  made  in  the  Freight  Association  Case,  es- 
pecially when  such  reference  is  interpreted  by  the  con- 
text of  the  opinion  and  in  the  light  of  the  subsequent 
opinion  in  the  Hopkins  Case  and  in  Cincinnati  Packet 
632 


APPENDIX    A 

Company  v.  Bay,  200  U.  S.  179,  26  Sup.  Ct.  208,  50  L. 
ed.  428. 

And  in  order  not  in  the  slightest  degree  to  be  wanting 
in  frankness,  we  say  that  in  so  far,  however,  as  by  separat- 
ing the  general  language  used  in  the  opinions  in  the  Freight 
Association  and  Joint  Traffic  cases  from  the  context  and 
the  subject  and  parties  with  which  the  cases  were  con- 
cerned, it  may  be  conceived  that  the  language  referred  to 
conflicts  with  the  construction  which  we  give  the  statute, 
they  are  necessarily  now  limited  and  qualified.  We  see 
no  possible  escape  from  this  conclusion  if  we  are  to  ad- 
here to  the  many  cases  decided  in  this  court  in  which 
the  Anti-Trust  Law  has  been  applied  and  enforced  and 
if  the  duty  to  apply  and  enforce  that  law  in  the  future  is  to 
continue  to  exist.  The  first  is  true,  because  the  construc- 
tion which  we  now  give  the  statute  does  not  in  the  sHght- 
est  degree  conflict  with  a  single  previous  case  decided 
concerning  the  Anti-Trust  Law  aside  from  the  contention 
as  to  the  Freight  Association  and  Joint  Traffic  cases,  and 
because  every  one  of  those  cases  applied  the  rule  of  reason 
for  the  purpose  of  determining  whether  the  subject  before 
the  court  was  within  the  statute.  The  second  is  also  true, 
since,  as  we  have  already  pointed  out,  unaided  by  the 
light  of  reason  it  is  impossible  to  undei'stand  how  the  stat- 
ute may  in  the  future  be  enforced  and  the  public  pohcy 
which  it  establishes  be  made  efficacious. 

So  far  as  the  objections  of  the  defendants  are  concerned 
they  are  all  embraced  imder  two  headings: — 

a.  That  the  act,  even  if  the  averments  of  the  bill  be  true, 
cannot  be  constitutionally  applied,  because  to  do  so  would 
extend  the  power  of  Congress  to  subjects  dehors  the  reach 
of  its  authority  to  regulate  commerce,  by  enabling  that 
body  to  deal  with  mere  questions  of  production  of  com- 
modities within  the  States.  But  all  the  structure  upon 
which  this  argument  proceeds  is  based  upon  the  decision 
in  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  1,  39  L.  ed. 
390,  15  Sup.  Ct.  325.  The  view,  however,  which  the  argu- 
ment takes  of  that  case  and  the  arguments  based  upon  that 
view  have  been  so  repeatedly  pressed  upon  this  court  in 

633 


APPENDIX   A 

connection  with  the  interpretation  and  enforcement  of 
the  Anti-Trust  Act,  and  have  been  so  necessarily  and 
expressly  decided  to  be  unsound  as  to  cause  the  conten- 
tions to  be  plainly  foreclosed  and  to  require  no  express 
notice.  United  States  v.  Northern  Securities  Co.,  193  U.  S. 
197,  334,  48  L.  ed.  679,  24  Sup.  Ct.  436;  Loewe  v.  Lawlor, 
208  U.  S.  274,  28  Sup.  Ct.  301,  52  L.  ed.  488;  Swift  &  Co. 
V.  United  States,  196  U.  S.  375,  25  Sup.  Ct.  276,  49  L.  ed. 
518;  Montague  v.  Lowry,  193  U.  S.  38,  48  L.  ed.  608,  24 
Sup.  Ct.  307;  Shawnee  Compress  Co.  v.  Anderson,  209 
U.  S.  423,  28  Sup.  Ct.  572,  52  L.  ed.  865. 

h.  Many  arguments  are  pressed  in  various  forms  of 
statement  which  in  substance  amount  to  contending  that 
the  statute  cannot  be  applied  under  the  facts  of  this  case 
without  impairing  rights  of  property  and  destroying  the 
freedom  of  contract  or  trade,  which  is  essentially  necessary 
to  the  well-being  of  society  and  which  it  is  insisted  is  pro- 
tected by  the  constitutional  guaranty  of  due  process  of  law. 
But  the  ultimate  foundation  of  all  these  arguments  is  the 
assumption  that  reason  may  not  be  resorted  to  in  interpret- 
ing and  applying  the  statute,  and  therefore  that  the  statute 
unreasonably  restricts  the  right  to  contract  and  unreason- 
ably operates  upon  the  right  to  acquire  and  hold  property. 
As  the  premise  is  demonstrated  to  be  unsound  by  the  con- 
struction we  have  given  the  statute,  of  course  the  proposi- 
tions which  rest  upon  that  premise  need  not  be  further 
noticed. 

So  far  as  the  arguments  proceed  upon  the  conception 
that  in  view  of  the  generality  of  the  statute  it  is  not  sus- 
ceptible of  being  enforced  by  the  coiuts  because  it  cannot 
be  carried  out  without  a  judicial  exertion  of  legislative 
power,  they  are  clearly  unsound.  The  statute  certainly 
generically  enumerates  the  character  of  acts  which  it 
prohibits  and  the  wrong  which  it  was  intended  to  prevent. 
The  propositions  therefore  but  insist  that,  consistently 
with  the  fundamental  principles  of  due  process  of  law,  it 
never  can  be  left  to  the  judiciary  to  decide  whether  in  a 
given  case  particular  acts  come  within  a  generic  statutory 
provision.  But  to  reduce  the  propositions,  however,  to 
634 


APPENDIX   A 

this  their  final  meaning  makes  it  clear  that  in  substance 
they  deny  the  existence  of  essential  legislative  authority 
and  challenge  the  right  of  the  judiciary  to  perform  duties 
which  that  department  of  the  government  has  exerted  from 
the  beginning.  This  is  so  clear  as  to  require  no  elaboration. 
Yet,  let  us  demonstrate  that  which  needs  no  demonstra- 
tion, by  a  few  obvious  examples.  Take  for  instance  the 
familiar  cases  where  the  judiciary  is  called  upon  to  deter- 
mine whether  a  particular  act  or  acts  are  within  a  given 
prohibition,  depending  upon  wrongful  intent.  Take  ques- 
tions of  fraud.  Consider  the  power  which  must  be  exer- 
cised in  every  case  where  the  courts  are  called  upon  to  de- 
termine whether  particular  acts  are  invalid  which  are, 
abstractly  speaking,  in  and  of  themselves  valid,  but  which 
are  asserted  to  be  invalid  because  of  their  direct  effect 
upon  interstate  commerce. 

We  come  then  to  the  third  proposition  requiring  consid- 
eration, viz: 

Third.  The  facts  and  the  application  of  the  statute  to  them. 

Beyond  dispute  the  proofs  establish  substantially  as 
alleged  in  the  bill  the  following  facts: 

1.  The  creation  of  the  Standard  Oil  Company  of 
Ohio; 

2.  The  organization  of  the  Standard  Oil  Trust  of  1882, 
and  also  a  previous  one  of  1879,  not  referred  to  in  the  bill, 
and  the  proceedings  in  the  Supreme  Court  of  Ohio,  cul- 
minating in  a  decree  based  upon  the  finding  that  the  com- 
pany was  unlawfully  a  party  to  that  trust;  the  transfer 
by  the  trustees  of  stocks  in  certain  of  the  companies;  the 
contempt  proceedings;  and,  finally,  the  increase  of  the  cap- 
ital of  the  Standard  Oil  Company  of  New  Jersey  and  the 
acquisition  by  that  company  of  the  shares  of  the  stock  of 
the  other  corporations  in  exchange  for  its  certificates. 

The  vast  amount  of  property  and  the  possibilities  of 
far-reaching  control  which  resulted  from  the  facts  last 
stated  are  shown  by  the  statement  which  we  have  pre- 
viously annexed  concerning  the  parties  to  the  trust  agree- 
ment of  1882,  and  the  corporations  whose  stock  was  held 
by  the  trustees  under  the  trust  and  which  came  therefore  to 

035 


APPENDIX  A 

be  held  by  the  New  Jersey  corporation.  But  these  state- 
ments do  not  with  accuracy  convey  an  appreciation  of  the 
situation  as  it  existed  at  the  time  of  the  entry  of  the  decree 
below,  since  during  the  more  than  ten  years  which  elapsed 
between  the  acquiring  by  the  New  Jersey  corporation  of 
the  stock  and  other  property  which  was  formerly  held  by 
the  trustees  under  the  trust  agreement,  the  situation  of 
course  had  somewhat  changed,  a  change  which  when  an- 
alyzed in  the  light  of  the  proof,  we  think,  establishes  that 
the  result  of  enlarging  the  capital  stock  of  the  New  Jersey' 
company  and  giving  it  the  vast  power  to  which  we  have 
referred  produced  its  normal  consequence,  that  is,  it  gave 
to  the  corporation,  despite  enormous  dividends  and  de- 
spite the  dropping  out  of  certain  corporations  enumerated 
in  the  decree  of  the  court  below,  an  enlarged  and  more 
perfect  sway  and  control  over  the  trade  and  commerce  in 
petroleum  and  its  products.  The  ultimate  situation  re- 
ferred to  will  be  made  manifest  by  an  examination  of  §§  2 
and  4  of  the  decree  below,  which  are  excerpted  in  the  mar- 
gin.^ 

1  Section  2.  That  the  defendants  John  D.  Rockefeller,  William  Rocke- 
feller, Henry  H.  Rogers,  Henry  M.  Flagler,  John  D.  Archbold,  Oliver  H. 
Payne,  and  Charles  M.  Pratt,  hereafter  called  the  seven  individual  de- 
fendants, united  vdth  the  Standard  Oil  Company  and  other  defendants 
to  form  and  effectuate  this  combination,  and  since  its  formation  have  been 
and  still  are  engaged  in  carrying  it  into  effect  and  continuing  it;  that  the 
defendants  Anglo-American  Oil  Company  (Limited),  Atlantic  Refining 
Company,  Buckeye  Pipe  Line  Company,  Borne-Scrymser  Company, 
Chesebrough  Manufacturing  Company,  Consolidated,  Cumberland  Pipe 
Line  Company,  Colonial  Oil  Company,  Continental  Oil  Company,  Cres- 
cent Pipe  Line  Company,  Henry  C.  Folger,  Jr.,  and  Calvin  N.  Payne,  a 
copartnership  doing  business  under  the  firm  name  and  style  of  Corsicana 
Refining  Companj^  Eureka  Pipe  Line  Company,  Galena  Signal  Oil  Com- 
pany, Indiana  Pipe  Line  Company,  Manhattan  Oil  Company,  National 
Transit  Company,  New  York  Transit  Company,  Northern  Pipe  Line  Com- 
pany, Ohio  Oil  Companj',  Prairie  Oil  and  Gas  Company,  Security  Oil 
Company,  Solar  Refining  Company,  Southern  Pipe  Line  Company,  South 
Penn  Oil  Company,  Southwest  Pennsylvania  Pipe  Lines  Company,  Stand- 
ard Oil  Company,  of  California,  Standard  Oil  Company,  of  Indiana,  Stand- 
ard Oil  Company,  of  Iowa,  Standard  Oil  Company,  of  Kansas,  Standard 
Oil  Company,  of  Kentucky,  Standard  Oil  Company,  of  Nebraska,  Standard 
Oil  Company,  of  New  York,  Standard  Oil  Company,  of  Ohio,  Swan  and 
Finch  Company,  Union  Tank  Line  Comjiany,  Vacuum  Oil  Company, 
Washington  Oil  Company,  Waters-Pierce  Oil  Company,  have  entered  into 

G36 


APPENDIX   A 

Giving  to  the  facts  just  stated,  the  weight  which  it  was 
deemed  they  were  entitled  to,  in  the  hght  afforded  by  the 

and  became  parties  to  this  combination  and  are  either  actively  operating 
or  aiding  in  the  operation  of  it;  that  by  moans  of  this  combination  the  de- 
fendants named  in  this  scetion  liave  eombined  and  conspired  to  monopo- 
lize, have  monopolized,  and  are  continuing  to  monopolize  a  substantial 
part  of  the  commerce  among  the  States,  in  the;  territories  and  with  foreign 
nations,  in  violation  of  section  2  of  the  i^nli-Truat  Act. 


Section  4.  That  in  the  fornialion  and  execution  of  the  combination  or 
conspiracy  the  Standard  Company  has  issued  its  stock  to  the  amount  of 
more  than  $90,000,()()()  in  exchange  for  the  stocks  of  other  corporations 
which  it  holds,  and  it  now  owns  and  controls  all  of  the  capital  stock  of 
many  corporations,  a  majority  of  the  stock  or  controlling  interests  in  some 
corporations  and  stock  in  other  corporations  as  follows : 

Total  Owned  by 
Name  of  comjiany,                              capital          Standard  Oil 

stock.  Company. 

Anglo-American  Oil  Company,  Limited £1,000,000  £999.740 

Atlantic  Refining  Company $5,000,000  $5,000,000 

Bome-Scrymser  Company 200,000  199,700 

Buckeye  Pipe  Line  Company 10,000,000  9,999,700 

Chesebrough  Manufacturing  Company,  Con- 
solidated             500,000  277,700 

Colonial  Oil  Comjjany 250,000  249,300 

Continental  Oil  Company 300,000  300,000 

Crescent  Pipe  Line  Company 3,000,000  3,000,000 

Eureka  Pipe  Line  Company 5,000,000  4,999,400 

Galena-Signal  Oil  Company 10,000,000  7,079,500 

Indiana  Pipe  Line  Company 1,000,000  999,700 

LawTence  Natural  Gas  Company 450,000  450,000 

Mahoning  Gas  Fuel  Company 150,000  149,900 

Mountain  State  Gas  Company 500,000  500,000 

National  Transit  Company 25,455,200  25,451,6.50 

New  York  Transit  Company 5,000,000  5,000,000 

Northern  Pipe  Line  Company 4,000,000  4,000,000 

Northwestern  Ohio  Natural  Gas  Company.  .         2,775,250  1,649,4.50 

Ohio  Oil  Company 10,000,000  9,999,850 

People's  Natural  Gas  Company 1,000,000  1,0(X).000 

Pittsburg  Natural  Gas  Comimny 310,0(K)  310,000 

Solar  Refining  Company 500,000  499,400 

Southern  Pipe  Line  Company 10,000,000  1 0,000,000 

South  Penn  Oil  Company 2,500,000  2,.=^00,000 

Southwest  Pennsylvania  Pipe  Lines 3,5(X),000  3,500,000 

Standard  Oil  Company  (of  California, 17,000,000  16,999,500 

Standard  Oil  Company  (of  Indiana) 1,000,000  999,000 

Standard  Oil  Company  (of  Iowa) 1,000,000  1,000,000 

Standard  Oil  Company  (of  Kansas) 1,000,000  999,300 

637 


APPENDIX   A 

proof  of  other  cognate  facts  and  circumstances,  the  court 
below  held  that  the  acts  and  deahngs  established  by  the 

Total  Owned  by 

Name  of  company.  capital     National  Trans- 

stock,  it  Company. 

Standard  Oil  Company  (of  Kentucky) 1,000,000  997,200 

Standard  Oil  Company  (of  Nebraska) 600,000  599,500 

Standard  Oil  Company  (of  New  York) 15,000,000         15,000,000 

Standard  Oil  Company  (of  Ohio) 3,500,000  3,499,400 

Swan  and  Finch  Company 100,000  100,000 

Union  Tank  Line  Company 3,500,000  3,499,400 

Vacuum  Oil  Company 2,500,000  2,500,000 

Washington  Oil  Company 100,000  71,480 

Waters-Pierce  Oil  Company 400,000  274,700 

That  the  defendant  National  Transit  Company,  which  is  owned  and 
controlled  by  the  Standard  Oil  Company  as  aforesaid,  owns  and  controls 
the  amounts  of  the  capital  stocks  of  the  following-named  corporations  and 
limited  partnerships  stated  opposite  each,  respectively,  as  follows: 

Connecting  Gas  Company $825,000  $412,000 

Cumberland  Pipe  Line  Company 1,000,000  998,500 

East  Ohio  Gas  Company 6,000,000  5,999,500 

FrankUn  Pipe  Company,  Limited 50,000  19,500 

Prairie  Oil  and  Gas  Company 10,000,000  9,999,500 

That  the  Standard  Company  has  also  acquired  the  control  by  the  owner- 
ship of  its  stock  or  otherwise  of  the  Security  Oil  Company,  a  corporation 
created  under  the  laws  of  Texas,  which  owns  a  refinery  at  Beaumont  in 
that  State,  and  the  Manhattan  Oil  Company,  a  corporation,  which  owns 
a  pipe  line  situated  in  the  States  of  Indiana  and  Ohio;  that  the  Standard 
Company,  and  the  corporations  and  partnerships  named  in  Section  2,  are 
engaged  in  the  various  branches  of  the  business  of  producing,  purchasing 
and  transporting  petroleum  in  the  principal  oil-producing  districts  of  the 
United  States,  in  New  York,  Pennsylvania,  West  Virginia,  Tennessee, 
Kentucky,  Ohio,  Indiana,  Illinois,  Kansas,  Oklahoma,  Louisiana,  Texas, 
Colorado  and  California,  in  shipping  and  transporting  the  oil  through  pipe 
lines  owned  or  controlled  by  these  companies  from  the  various  oil-producing 
districts  into  and  through  other  States,  in  refining  the  petroleum  and  man- 
ufacturing it  into  various  products,  in  shipping  the  petroleum  and  the 
j)roducts  thereof  into  the  States  and  territories  of  the  United  States,  the 
District  of  Columbia  and  to  foreign  nations,  in  shipping  the  petroleum  and 
its  products  in  tank  cars  owned  or  controlled  by  the  subsidiary  companies 
into  various  States  and  territories  of  the  United  States  and  into  the  Dis- 
trict of  Columbia,  and  in  selling  the  petroleum  and  its  products  in  various 
places  in  the  States  and  territories  of  the  United  States,  in  the  District  of 
Columbia  and  in  foreign  countries;  that  the  Standard  Company  controls 
the  subsidiary  companies  and  directs  the  management  thereof  so  that  none 
of  the  subsidiary  companies  competes  with  any  other  of  those  companies 
or  with  the  Standard  Company,  but  their  trade  is  all  managed  as  that  of  a 
single  person. 

638 


APPENDIX   A 

proof  operated  to  destroy  the  ''potentiality  of  competi- 
tion" which  otherwise  would  have  existed  to  such  an  extent 
as  to  cause  the  transfers  of  stock  which  were  made  to  the 
New  Jersey  corporation  and  the  control  which  resulted 
over  the  many  and  various  subsidiary  corporations  to  be  a 
combination  or  conspiracy  in  restraint  of  trade  in  violation 
of  the  first  section  of  the  act,  but  also  to  be  an  attempt  to 
monopolize  and  a  monopolization  bringing  about  a  peren- 
nial violation  of  the  second  section. 

We  see  no  cause  to  doubt  the  correctness  of  these  con- 
clusions, considering  the  subject  from  every  aspect,  that 
is,  both  in  view  of  the  facts  established  by  the  record  and 
the  necessary  operation  and  effect  of  the  law  as  we  have 
construed  it  upon  the  inferences  deducible  from  the  facts, 
for  the  following  reasons: 

a.  Because  the  unification  of  power  and  control  over 
petroleum  and  its  products  which  was  the  inevitable 
result  of  the  combining  in  the  New  Jersey  corporation 
by  the  increase  of  its  stock  and  the  transfer  to  it  of  the 
stocks  of  so  many  other  corporations,  aggregating  so  vast 
a  capital,  gives  rise,  in  and  of  itself,  in  the  absence  of 
countervailing  circumstances,  to  say  the  least,  to  the 
prima  facie  presumption  of  intent  and  purpose  to  main- 
tain the  dominancy  over  the  oil  industry,  not  as  a  result 
of  normal  methods  of  industrial  development,  but  by  new 
means  of  combination  which  were  resorted  to  in  order 
that  greater  power  might  be  added  than  would  otherwise 
have  arisen  had  normal  methods  been  followed,  the  whole 
with  the  purpose  of  excluding  others  from  the  trade  and 
thus  centralizing  in  the  combination  a  perpetual  control 
of  the  movements  of  petroleum  and  its  products  in  the 
channels  of  interstate  commerce. 

b.  Because  the  prima  facie  presumption  of  intent  to 
restrain  trade,  to  monopolize  and  to  bring  about  monopo- 
lization resulting  from  the  act  of  expanding  the  stock  of 
the  New  Jerse}'^  corporation  and  vesting  it  with  such  vast 
control  of  the  oil  industry,  is  made  conclusive  by  consid- 
ering, 1,  the  conduct  of  the  persons  or  corporations  who 
were  mainly  instrumental  in  bringing  about  the  extension 

639 


APPENDIX   A 


of  power  in  the  New  Jersey  corporation  before  the  con- 
summation of  that  result  and  prior  to  the  formation  of 
the  trust  agreements  of  1879  and  1882;  2,  by  considering 
the  proof  as  to  what  was  done  under  those  agreements  and 
the  acts  which  unmediately  preceded  the  vesting  of  power 
in  the  New  Jersey  corporation  as  well  as  by  weighing  the 
modes  in  which  the  power  vested  in  that  corporation  has 
been  exerted  and  the  results  which  have  arisen  from  it. 
Recurring  to  the  acts  done  by  the  individuals  or  cor- 
porations who  were  mainly  instrumental  in  bringing  about 
the  expansion  of  the  New  Jersey  corporation  during  the 
period  prior  to  the  formation  of  the  trust  agreements  of 
1879  and  1882,  including  those  agreements,  not  for  the 
purpose  of  weighing  the  substantial  merit  of  the  numerous 
charges  of  wrongdoing  made  during  such  period,  but  solely 
as  an  aid  for  discovering  intent  and  purpose,  we  think 
no  disinterested  mind  can  survey  the  period  in  question 
without  being  irresistibly  driven  to  the  conclusion  that 
the  very  genius  for  commercial  development  and  organ- 
ization which  it  would  seem  was  manifested  from  the 
beginning  soon  begot  an  intent  and  purpose  to  exclude 
others  which  was  frequently  manifested  by  acts  and  deal- 
ings wholly  inconsistent  with  the  theory  that  they  were 
made  with  the  single  conception  of  advancing  the  develop- 
ment of  business  power  by  usual  methods,  but  which  on 
the   contrary  necessarily  involved  the  intent  to  drive 
others  from  the  field  and  to  exclude  them  from  their  right 
to  trade  and  thus  accomplish  the  mastery  which  was  the 
end  in  view.    And,  considering  the  period  from  the  date 
of  the  trust  agreements  of  1879  and  1882,  up  to  the  time 
of  the  expansion  of  the  New  Jersey  corporation,   the 
gradual  extension  of  the  power  over  the  commerce  in  oil 
which   ensued,   the  decision   of   the   Supreme  Court  of 
Ohio,  the  tardiness  or  reluctance  in  conforming  to  the 
commands  of  that  decision,   the  method  first  adopted 
and  that  which  finally  culminated  in  the  plan  of  the 
New  Jersey  corporation,  all  additionally  serve  to  make 
manifest  the  continued  existence  of  the  intent  which  we 
have  previously  indicated  and  which  among  other  things 
640 


APPENDIX    A 

impelled  the  expansion  of  the  New  Jersey  corporation. 
The  exercise  of  the  power  which  resulted  from  that  or- 
ganization fortifies  the  foregoing  conclusions,  since  the 
development  which  came,  the  acquisition  here  and  there 
which  ensued  of  every  ef!icient  means  by  which  competi- 
tion could  have  been  asserted,  the  slow  but  resistless 
methods  which  followed  by  which  means  of  transporta- 
tion were  absorbed  and  brought  under  control,  the  system 
of  marketing  which  was  adopted  by  which  the  country 
was  divided  into  districts  and  the  trade  in  each  district 
in  oil  was  turned  over  to  a  designated  corporation  withiij 
the  combination  and  all  others  were  excluded,  all  lead 
the  mind  up  to  a  conviction  of  a  purpose  and  intent 
which  we  think  is  so  certain  as  practically  to  cause  th» 
subject  not  to  be  within  the  domain  of  reasonable  con- 
tention. 

The  inference  that  no  attempt  to  monopolize  could 
have  been  intended,  and  that  no  monopolization  resulted 
from  the  acts  complained  of,  since  it  is  established  that 
a  very  small  percentage  of  the  crude  oil  produced  was 
controlled  by  the  combination,  is  unwarranted.  As  sub- 
stantial power  over  the  crude  product  was  the  ine\atable 
result  of  the  absolute  control  which  existed  over  the  re- 
fined product,  the  monopolization  of  the  one  carried  with 
it  the  power  to  control  the  other,  and  if  the  inference 
which  this  situation  suggests  were  developed,  which  we 
deem  it  unnecessary  to  do,  they  might  well  serve  to  add 
additional  cogency  to  the  presumption  of  intent  to  mo- 
nopolize which  we  have  found  arises  from  the  unques- 
tioned proof  on  other  subjects. 

We  are  thus  brought  to  the  last  subject  which  we  are 
called  upon  to  consider,  viz: 

Fourth.  The  remedy  to  be  administered. 

It  may  be  conceded  that  ordinarily  where  it  was  found 
that  acts  had  been  done  in  violation  of  the  statute,  ade- 
quate measures  of  relief  would  result  from  restraining  the 
doing  of  such  acts  in  the  future.  Swift  v.  United  States, 
196  U.  S.  375,  25  Sup.  Ct.  276,  49  L.  ed.  518.  But  in  a 
case  like  this,  where  the  condition  which  has  been  brought 
41  641 


APPENDIX   A 

about  in  violation  of  the  statute,  in  and  of  itself,  is  not 
only  a  continued  attempt  to  monopolize,  but  also  a  mo- 
nopolization, the  duty  to  enforce  the  statute  requires  the 
appHcation  of  broader  and  more  controlling  remedies. 
As  penalties  which  are  not  authorized  by  law  may  not 
be  inflicted  by  judicial  authority,  it  follows  that  to  meet 
the  situation  with  which  we  are  confronted  the  applica- 
tion of  remedies  two-fold  in  character  becomes  essential: 
1st.  To  forbid  the  doing  in  the  future  of  acts  like  those 
which  we  have  found  to  have  been  done  in  the  past 
which  would  be  violative  of  the  statute.  2d.  The  exertion 
of  such  measure  of  relief  as  will  efTectually  dissolve  the 
combination  found  to  exist  in  violation  of  the  statute, 
and  thus  neutralize  the  extension  and  continually  oper- 
ating force  which  the  possession  of  the  power  unlawfully 
obtained  has  brought  and  will  continue  to  bring  about. 

In  applying  remedies  for  this  purpose,  however,  the 
fact  must  not  be  overlooked  that  injury  to  the  public  by 
the  prevention  of  an  undue  restraint  on,  or  the  monopo- 
lization of  trade  or  commerce  is  the  foundation  upon  which 
the  prohibitions  of  the  statute  rest,  and  moreover  that  one 
of  the  fundamental  purposes  of  the  statute  is  to  protect, 
not  to  destroy,  rights  of  property. 

Let  us  then,  as  a  means  of  accurately  determining  what 
relief  we  are  to  afford,  first  come  to  consider  what  relief 
was  afforded  by  the  court  below,  in  order  to  fix  how  far 
it  is  necessary  to  take  from  or  add  to  that  relief,  to  the 
end  that  the  prohibitions  of  the  statute  may  have  com- 
plete and  operative  force. 

The  court  below  by  virtue  of  §§  1,  2,  and  4  of  its  decree, 
which  we  have  in  part  previously  excerpted  in  the  margin, 
adjudged  that  the  New  Jersey  corporation  in  so  far  as  it 
held  the  stock  of  the  various  corporations,  recited  in  §§  2 
and  4  of  the  decree,  or  controlled  the  same  was  a  combina- 
tion in  violation  of  the  first  section  of  the  act,  and  an 
attempt  to  monopolize  or  a  monopolization  contrary  to 
the  second  section  of  the  act.  It  commanded  the  dissolu- 
tion of  the  combination,  and  therefore  in  effect,  directed 
the  transfer  by  the  New  Jersey  corporation  back  to  the 
642 


APPENDIX   A 

stockholders  of  the  various  subsidiary  corporations  en- 
titled to  the  same  of  the  stock  which  had  been  turned  over 
to  the  New  Jersey  company  in  exchange  for  its  stock.  To 
make  this  command  effective  §  5  of  the  decree  forbade 
the  New  Jersey  corporation  from  in  any  form  or  manner 
exercising  any  ownership  or  exerting  any  power  directly 
or  indirectly  in  virtue  of  its  apparent  title  to  ttie  stocks  of 
the  subsidiary  corporations,  and  prohibited  those  subsid- 
iary corporations  from  paying  any  dividends  to  the  New 
Jersey  corporation  or  doing  any  act  which  would  recog- 
nize further  power  in  that  company,  except  to  the  extent 
that  it  was  necessary  to  enable  that  company  to  transfer 
the  stock.  So  far  as  the  owners  of  the  stock  of  the  subsid- 
iary corporations  and  the  corporations  themselves  were 
concerned  after  the  stock  had  been  transferred,  §  6  of  the 
decree  enjoined  them  from  in  any  way  conspiring  or  com- 
bining to  violate  the  act  or  to  monopolize  or  attempt  to 
monopolize  in  virtue  of  their  ownership  of  the  stock  trans- 
ferred to  them,  and  prohibited  all  agreements  between  the 
subsidiary  corporations  or  other  stockholders  in  the  future, 
tending  to  produce  or  bring  about  further  violations  of 
the  act. 

By  §  7,  pending  the  accomplishment  of  the  dissolution 
of  the  combination  by  the  transfer  of  stock  and  until  it 
was  consummated,  the  defendants  named  in  §  1,  con- 
stituting all  the  corporations  to  which  we  have  referred, 
were  enjoined  from  engaging  in  or  carrying  on  interstate 
commerce.  And  by  §  9,  among  other  things  a  delay  of 
thirty  days  was  granted  for  the  carrying  into  effect  of 
the  directions  of  the  decree. 

So  far  as  the  decree  held  that  the  ownership  of  the  stock 
of  the  New  Jersey  corporation  constituted  a  combination 
in  violation  of  the  first  section  and  an  attempt  to  create  a 
monopoly  or  to  monopolize  under  the  second  section  and 
commanded  the  dissolution  of  the  combination,  the  decree 
was  clearly  appropriate.  And  this  also  is  true  of  §  5  of  the 
decree  which  restrained  both  the  New  Jersey  corporation 
and  the  subsidiary  corporations  from  doing  anything 
which  would  recognize  or  give  effect  to  further  ownership 

643 


APPENDIX   A 

in  the  New  Jersey  corporation  of  the  stocks  which  were 
ordered  to  be  retransf erred. 

But  the  contention  is  that,  in  so  far  as  the  rehef  by  way 
of  injunction  which  was  awarded  by  §  6  against  the 
stockholders  of  the  subsidiary  corporations  or  the  sub- 
sidiary corporations  themselves  after  the  transfer  of  stock 
by  the  New  Jersey  corporation  was  completed  in  con- 
formity to  the  decree,  the  relief  awarded  was  too  broad: 
a.  Because  it  was  not  sufficiently  specific  and  tended  to 
cause  those  who  were  within  the  embrace  of  the  order  to 
cease  to  be  under  the  protection  of  the  law  of  the  land 
and  required  them  to  thereafter  conduct  their  business 
under  the  jeopardy  of  punishments  for  contempt  for  vio- 
lating a  general  injunction.  New  Haven  R.  R.  v.  Inter- 
state Commerce  Commission,  200  U.  S.  404,  50  L.  ed. 
515,  26  Sup.  Ct.  272.  Besides  it  is  said  that  the  restraint 
imposed  by  §  6 — even  putting  out  of  view  the  considera- 
tion just  stated — was  moreover  calculated  to  do  injury 
to  the  public  and  it  may  be  in  and  of  itself  to  produce  the 
very  restraint  on  the  due  course  of  trade  which  it  was 
intended  to  prevent.  We  say  this  since  it  does  not  neces- 
sarily follow  because  an  illegal  restraint  of  trade  or  an 
attempt  to  monopolize  or  a  monopolization  resulted  from 
the  combination  and  the  transfer  of  the  stocks  of  the  sub- 
sidiary corporations  to  the  New  Jersey  corporation  that 
a  like  restraint  or  attempt  to  monopolize  or  monopoliza- 
tion would  necessarily  arise  from  agreements  between  one 
or  more  of  the  subsidiary  corporations  after  the  transfer 
of  the  stock  by  the  New  Jersey  corporation.  For  illustra- 
tion, take  the  pipe  lines.  By  the  effect  of  the  transfer  of 
the  stock  the  pipe  lines  would  come  under  the  control  of 
various  corporations  instead  of  being  subjected  to  a  uni- 
form control.  If  various  corporations  owning  the  lines 
determined  in  the  public  interests  to  so  combine  as  to 
make  a  continuous  line,  such  agreement  or  combination 
would  not  be  repugnant  to  the  act,  and  yet  it  might  be 
restrained  by  the  decree.  As  another  example,  take  the 
Union  Tank  Line  Company,  one  of  the  subsidiary  cor- 
porations, the  owner  practically  of  all  the  tank  cars  in 
rD44 


APPENDIX    A 

use  by  the  combination.  If  no  possibility  existed  of  agree- 
ments for  the  distribution  of  these  cars  among  the  sub- 
sidiary corporations,  the  most  serious  detriment  to  the 
pubHc  interest  might  result.  Conceding  the  merit,  ab- 
stractly considered,  of  these  contentions  they  are  irrel- 
evant. We  so  think,  since  we  construe  the  sixth  para- 
graph of  the  decree,  not  as  depriving  the  stockholders 
or  the  corporations,  after  the  dissolution  of  the  combina- 
tion, of  the  power  to  make  normal  and  lawful  contracts 
or  agreements,  but  as  restraining  them  from,  by  any 
device  whatever,  recreating  directly  or  indirectly  the  il- 
legal combination  which  the  decree  dissolved.  In  other 
words  we  construe  the  sixth  paragraph  of  the  decree, 
not  as  depriving  the  stockholders  or  corporations  of  the 
right  to  live  under  the  law  of  the  land,  but  as  compelling 
obedience  to  that  law.  As  therefore  the  sixth  paragraph 
as  thus  construed  is  not  amenable  to  the  criticism  directed 
against  it  and  cannot  produce  the  harmful  results  which 
the  arguments  suggest  it  was  obviously  right.  We  think 
that  in  view  of  the  magnitude  of  the  interests  involved 
and  their  complexity  that  the  delay  of  thirty  days  allowed 
for  executing  the  decree  was  too  short  and  should  be 
extended  so  as  to  embrace  a  period  of  at  least  six  months. 
So  also,  in  view  of  the  possible  serious  injury  to  result 
to  the  public  from  an  absolute  cessation  of  interstate 
commerce  in  petroleum  and  its  products  by  such  vast 
agencies  as  are  embraced  in  the  combination,  a-  result 
which  might  arise  from  that  portion  of  the  decree  which 
enjoined  carrying  on  of  interstate  commerce  not  only 
by  the  New  Jersey  corporation  but  by  all  the  subsidiary 
companies  until  the  dissolution  of  the  combination  by 
the  transfer  of  the  stocks  in  accordance  with  the  decree 
should  not  have  been  awarded. 

Our  conclusion  is  that  the  decree  below  was  right  and 
should  be  afhrmed,  except  as  to  the  minor  matters  concern- 
ing which  we  have  indicated  the  decree  should  be  modified. 
Our  order  will  therefore  be  one  of  affirmance  with  direc- 
tions, however,  to  modify  the  decree  in  accordance  with 
this  opinion.     The  court  below  to  retain  jurisdiction  to 

G45 


APPENDIX  A 

the  extent  necessary  to  compel  compliance  in  every  re- 
spect with  its  decree. 

And  it  is  so  ordered. 

Mr.  Justice  Harlan  concurring  in  part,  and  dissent- 
ing in  part. 

A  sense  of  duty  constrains  me  to  express  the  objections 
which  I  have  to  certain  declarations  in  the  opinion  just 
delivered  on  behalf  of  the  court. 

I  concur  in  holding  that  the  Standard  Oil  Company  of 
New  Jersey  and  its  subsidiary  companies  constitute  a 
combination  in  restraint  of  interstate  commerce,  and  that 
they  have  attempted  to  monopolize  and  have  monopoHzed 
parts  of  such  commerce — all  in  violation  of  what  is  known 
as  the  Anti-Trust  Act  of  1890,  26  Stat.  209,  chap.  647. 
The  evidence  in  this  case  overwhelmingly  sustained  that 
view  and  led  the  Circuit  Court,  by  its  final  decree,  to  order 
the  dissolution  of  the  New  Jersey  corporation  and  the  dis- 
continuance of  the  illegal  combination  between  that  cor- 
poration and  its  subsidiary  companies. 

In  my  judgment,  the  decree  below  should  have  been 
affirmed  without  qualification.  But  the  court,  while  ar- 
firming  the  decree,  directs  some  modifications  in  respect 
of  what  it  characterizes  as  "minor  matters."  It  is  to  be 
apprehended  that  those  modifications  may  prove  to  be 
mischievous.  In  saying  this,  I  have  particularly  in  view 
the  statement  in  the  opinion  that  "it  does  not  necessarily 
follow  that  because  an  illegal  restraint  of  trade  or  an  at- 
tempt to  monopolize  or  a  monopolization  resulted  from  the 
combination  and  the  transfer  of  the  stocks  of  the  subsid- 
iary corporations  to  the  New  Jersey  corporation,  that 
a  like  restraint  of  trade  or  attempt  to  monopolize  or  mo- 
nopolization would  necessarily  arise  from  agreements  be- 
tween one  or  more  of  the  subsidiary  corporations  after 
the  transfer  of  the  stock  by  the  New  Jersey  corporation." 
Taking  this  language,  in  connection  with  other  parts  of 
the  opinion,  the  subsidiary  companies  are  thus,  in  effect, 
informed — unwisely,  I  think — that  although  the  New 
646 


APPENDIX  A 

Jersey  corporation,  being  an  illegal  combination,  must  go 
out  of  existence,  ihey  may  join  in  an  agreement  to  restrain 
commerce  among  the  States  if  such  restraint  be  not  "un- 
due." 

In  order  that  my  objections  to  certain  parts  of  the 
court's  opinion  may  distinctly  appear,  I  must  state  the 
circumstances  under  which  Congress  passed  the  Anti- 
Trust  Act,  and  trace  the  course  of  judicial  decisions  as  to 
its  meaning  and  scope.  This  is  the  more  necessary  be- 
cause the  court  by  its  decision,  when  interpreted  by  the 
language  of  its  opinion,  has  not  only  upset  the  long- 
settled  interpretation  of  the  act,  but  has  usurped  the  con- 
stitutional functions  of  the  legislative  branch  of  the  Govern- 
ment. With  all  due  respect  for  the  opinions  of  others,  I 
feel  bound  to  say  that  what  the  court  has  said  may  well 
cause  some  alarm  for  the  integrity  of  our  institutions. 
Let  us  see  how  the  matter  stands. 

All  who  recall  the  condition  of  the  country  in  1890  will 
remember  that  there  was  everywhere,  among  the  people 
generally,  a  deep  feehng  of  unrest.  The  Nation  had  been 
rid  of  human  slavery — fortunately,  as  all  now  feel — but 
the  conviction  was  universal  that  the  country  was  in  real 
danger  from  another  kind  of  slavery  sought  to  be  fastened 
on  the  American  people,  namely,  the  slavery  that  would 
result  from  aggregations  of  capital  in  the  hands  of  a  few 
individuals  and  corporations  controlling,  for  their  own 
profit  and  advantage  exclusively,  the  entire  business  of 
the  country,  including  the  production  and  sale  of  the  nec- 
essaries of  life.  Such  a  danger  was  thought  to  be  then 
imminent,  and  all  felt  that  it  must  be  met  firmly  and  by 
such  statutory  regulations  as  would  adequately  protect 
the  people  against  oppression  and  wrong.  Congress  there- 
fore took  up  the  matter  and  gave  the  whole  subject  the 
fullest  consideration.  All  agreed  that  the  National  Gov- 
ernment could  not,  by  legislation,  regulate  the  domestic 
trade  carried  on  wholly  within  the  several  States;  for 
power  to  regulate  such  trade  remained  with,  because 
ii^yer  surrendered  by,  the  States.  But,  under  authority 
expressly  granted  to  it  by  the  Constitution,  Congress  could 

047 


APPENDIX  A 


regulate  commerce  among  the  several  States  and  with 
foreign  states.  Its  authority  to  regulate  such  commerce 
was  and  is  paramount,  due  force  being  given  to  other 
provisions  of  the  fundamental  law  devised  by  the  fathers 
for  the  safety  of  the  Government  and  for  the  protection 
and  security  of  the  essential  rights  inhering  in  life,  hberty 
and  property. 

Guided  by  these  considerations,  and  to  the  end  that  the 
people,  so  far  as  interstate  commerce  was  concerned,  might 
not  be  dominated  by  vast  combinations  and  monopolies 
having  power  to  advance  their  own  selfish  ends,  regard- 
less of  the  general  interests  and  welfare,  Congress  passed 
the  Anti-Trust  Act  of  1890  in  these  w^ords  (the  itahcs  here 
and  elsewhere  in  this  opinion  are  mine) : 

"Sec.  1.  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade  or 
commerce  among  the  several  States,  or  with  foreign  na- 
tions, is  hereby  declared  to  be  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  com- 
bination or  conspiracy,  shall  be  deemed  guilty  of  a  mis- 
demeanor, and,  on  conviction  thereof,  shall  be  punished 
by  fine  not  exceeding  five  thousand  dollars,  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  pun- 
ishments, in  the  discretion  of  the  court.  §  2.  Every  per- 
son who  shall  monopoHze,  or  attempt  to  monopohze,  or 
combine  or  conspire  with  any  other  person  or  persons 
to  monopolize  any  part  of  the  trade  or  commerce  among 
the  several  States,  or  with  foreign  nations,  shall  be  deemed 
guilty  of  a  misdemeanor,  and,  on  conviction  thereof,  shall 
be  punished  by  fine  not  exceeding  five  thousand  dollars, 
or  by  imprisonment  not  exceeding  one  year,  or  by  both 
said  punishments,  in  the  discretion  of  the  court.  §  3.  Every 
contract,  combination  in  form  of  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  trade  or  commerce  in  any  Terri- 
tory of  the  United  States  or  in  the  District  of  Columbia, 
or  in  restraint  of  trade  or  commerce  between  any  such 
Territory  and  another,  or  between  any  such  Territory  or 
Territories  and  any  State  or  States  or  the  District  of 
Columbia;  or  with  foreign  nations,  or  between  the  Dis- 
648 


APPENDIX    A 

trict  of  Columbia  and  an}^  State  or  States  or  foreign  na- 
tions, is  hereby  declared  illegal.  Every  person  who  shall 
make  any  fsuch  contract  or  engage  in  any  such  combination 
or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punishments,  in  the 
discretion  of  the  court."    26  Stat.  209,  chap.  647. 

The  important  inquiry  in  the  present  case  is  as  to  the 
meaning  and  scope  of  that  act  in  its  application  to  inter- 
state commerce. 

In  1896  this  court  had  occasion  to  determine  the  mean- 
ing and  scope  of  the  act  in  an  important  case  known  as 
the  Trans-Missouri  Freight  Case.  166  U.  S.  290,  41  L. 
ed.  1007,  17  Sup.  Ct.  540.  The  question  there  was  as  to 
the  validity  under  the  Anti-Trust  Act  of  a  certain  agree- 
ment between  numerous  railroad  companies,  whereby  they 
formed  an  association  for  the  purpose  of  establishing  and 
maintaining  rates,  rules  and  regulations  in  respect  of 
freight  traffic  over  specified  routes.  Two  questions  were 
involved :  first,  whether  the  act  appHed  to  railroad  carriers; 
second,  whether  the  agreement  the  annulment  of  which  as 
illegal  was  the  basis  of  the  suit  which  the  United  States 
brought.  The  court  held  that  railroad  carriers  were  em- 
braced by  the  act.  In  determining  that  question,  the 
court,  among  other  things,  said: 

"The  language  of  the  act  includes  every  contract,  com- 
bination in  the  form  of  trust  or  otherwise,  or  conspiracy, 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations.  So  far  as  the  very  terms  of  the 
statute  go,  they  apply  to  any  contract  of  the  nature  de- 
scribed. A  contract  therefore  that  is  in  restraint  of  trade 
or  commerce  is,  by  the  strict  language  of  the  act  pro- 
hibited, even  though  such  contract  is  entered  into  be- 
tween competing  common  carriers  by  railroad,  and  only 
for  the  purposes  of  thereby  affecting  traffic  rates  for  the 
transportation  of  persons  and  property.  If  such  an  agree- 
ment restrains  trade  or  conmierce,  it  is  prohibited  by  the 
statute,  unless  it  can  be  said  that  an  agreement,  no  mat- 

649 


APPENDIX  A 

ter  what  its  terms,  relating  only  to  transportation  cannot 
restrain  trade  or  commerce.  We  see  no  escape  from  the 
conclusion  that  if  an  agreement  of  such  a  nature  does  re- 
strain it,  the  agreement  is  condemned  by  this  act.  *  *  * 
Nor  is  it  for  the  substantial  interests  of  the  country  that 
any  one  commodity  should  be  within  the  sole  power  and 
subject  to  the  sole  will  of  one  powerful  combination  of 
capital.  Congress  has,  so  far  as  its  jurisdiction  extends, 
prohibited  all  contracts  or  combinations  in  the  form  of 
trusts  entered  into  for  the  purpose  of  restraining  trade 
and  commerce.  *  *  *  While  the  statute  prohibits  all 
combinations  in  the  form  of  trusts  or  otherwise,  the  limita- 
tion is  not  confined  to  that  form  alone.  All  combinations 
which  are  in  restraint  of  trade  or  commerce  are  prohibited, 
whether  in  the  form  of  trusts  or  in  any  other  form  what- 
ever:' United  States  v.  Freight  Assn.,  166  U.  S.  290,  312, 
324,  326,  41  L.  ed.  1007,  17  Sup.  Ct.  540. 

The  court  then  proceeded  to  consider  the  second  of  the 
above  questions,  saying:  ''The  next  question  to  be  dis- 
cussed is  as  to  what  is  the  true  construction  of  the  statute, 
assuming  that  it  applies  to  common  carriers  by  railroad. 
What  is  the  meaning  of  the  language  as  used  in  the  stat- 
ute, that  'every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or 
conmierce  among  the  several  States  or  with  foreign  na- 
tions, is  hereby  declared  to  be  illegal?'  Is  it  confined  to  a 
contract  or  combination  which  is  only  in  unreasonable 
restraint  of  trade  or  commerce,  or  does  it  include  what 
the  language  of  the  act  plainly  and  in  terms  covers,  all 
contracts  of  that  nature?  It  is  now  with  much  amplifica- 
tion of  argument  urged  that  the  statute,  in  declaring  il- 
legal every  combination  in  the  form  of  trust  or  otherwise, 
or  conspiracy  in  restraint  of  trade  or  commerce,  does  not 
mean  what  the  language  used  therein  plainly  imports,  but 
that  it  only  means  to  declare  illegal  any  such  contract 
which  is  in  unreasonable  restraint  of  trade,  while  leaving 
all  others  unaffected  by  the  provisions  of  the  act;  that  the 
common-law  meaning  of  the  term  'contract  in  restraint 
of  trade'  includes  only  such  contracts  as  are  in  unreason- 
650 


APPENDIX   A 

able  restraint  of  trade,  and  when  that  term  is  used  in  the 
Federal  statute  it  is  not  intended  to  include  all  contracts 
in  restraint  of  trade,  but  only  those  which  are  in  unrea- 
sonable restraint  thereof.  *  *  *  By  the  simple  use  of 
the  term  'contract  in  restraint  of  trade,'  all  contracts  of 
that  nature,  whether  valid  or  otherwise,  would  be  in- 
cluded, and  not  alone  that  kind  of  contract  which  was  in- 
valid and  unenforceable  as  being  in  unreasonable  restraint 
of  trade.  When,  therefore,  the  body  of  an  act  pronounces 
as  illegal  every  contract  or  combination  in  restraint  of 
trade  or  commerce  among  the  several  States,  etc.,  the 
plain  and  ordinary  meaning  of  such  language  is  not  limited 
to  that  kind  of  contract  alone  which  is  in  unreasonable 
restraint  of  trade,  but  all  contracts  are  included  in  such 
language,  and  no  exception  or  limitation  can  be  added 
without  placing  in  the  act  that  which  has  been  omitted 
by  Congress.  *  *  *  If  only  that  kind  of  contract  which 
is  in  unreasonable  restraint  of  trade  be  within  the  meaning 
of  the  statute,  and  declared  ther.ein  to  be  illegal,  it  is  at 
once  apparent  that  the  subject  of  what  is  a  reasonable 
rate  is  attended  with  great  uncertainty.  *  *  *  To  say, 
therefore,  that  the  act  excludes  agreements  which  are 
not  in  unreasonable  restraint  of  trade,  and  which  tend 
simply  to  keep  up  reasonable  rates  for  transportation,  is 
substantially  to  leave  the  question  of  unreasonableness 
to  the  companies  themselves.  *  *  *  But  assuming  that 
agreements  of  this  nature  are  not  void  at  conomon  law  and 
that  the  various  cases  cited  by  the  learned  courts  below 
show  it,  the  answer  to  the  statement  of  their  vahdity  now 
is  to  be  found  in  the  terms  of  the  statute  under  considera- 
tion. *  *  *  The  arguments  which  have  been  addressed 
to  us  against  the  inclusion  of  all  contracts  in  restraint 
of  trade,  as  provided  for  by  the  language  of  the  act,  have 
been  based  upon  the  alleged  presumption  that  Congress, 
notwithstanding  the  language  of  the  act,  could  not  have 
intended  to  embrace  all  contracts,  but  only  such  contracts 
as  were  in  unreasonable  restraint  of  trade.  Under  these 
circumstances  we  are,  therefore,  asked  to  hold  that  the 
act  of  Congress  excepts  contracts  which  are  not  in  unrea- 

051 


APPENDIX   A 

sonable  restraint  of  trade,  and  which  only  keep  rates  up  to 
a  reasonable  price,  notwithstanding  the  language  of  the 
act  makes  no  such  exception.  In  other  words,  we  are  asked 
to  read  into  the  act  by  way  of  judicial  legislation  an  excep- 
tion that  is  not  placed  there  by  the  lawmaking  branch  of  the 
Government,  and  this  is  to  be  done  upon  the  theory  that 
the  impolicy  of  such  legislation  is  so  clear  that  it  cannot 
be  supposed  Congress  intended  the  natural  import  of  the 
language  it  used.    This  we  cannot  and  ought  not  to  do.  *  *  * 

''If  the  act  ought  to  read,  as  contended  for  by  defend- 
ants. Congress  is  the  body  to  amend  it  and  not  this  court,  by 
a  process  of  judicial  legislation  wholly  unjustifiable.  Large 
numbers  do  not  agree  that  the  view  taken  by  defendants 
is  sound  or  true  in  substance,  and  Congress  may  and  very 
probably  did  share  in  that  belief  in  passing  the  act.  The 
public  policy  of  the  Government  is  to  be  found  in  its 
statutes,  and  when  they  have  not  directly  spoken,  then  in 
the  decisions  of  the  courts  and  the  constant  practice  of 
the  government  officials;  but  when  the  lawmaking  power 
speaks  upon  a  particular  subject,  over  which  it  has  con- 
stitutional power  to  legislate,  public  policy  in  such  a  case 
is  what  the  statute  enacts.  If  the  law  prohibits  any  contract 
or  combination  in  restraint  of  trade  or  commerce,  a  con- 
tract or  combination  made  in  violation  of  such  law  is  void, 
whatever  may  have  been  theretofore  decided  by  the  courts 
to  have  been  the  public  policy  of  the  country  on  that  sub- 
ject. The  conclusion  which  we  have  drawn  from  the  ex- 
amination above  made  into  the  question  before  us  is  that 
the  Anti-Trust  Act  applies  to  railroads,  and  that  it  ren- 
ders illegal  all  agreements  which  are  in  restraint  of  trade 
or  commerce  as  we  have  above  defined  that  expression, 
and  the  question  then  arises  whether  the  agreement  be- 
fore us  is  of  that  nature." 

I  have  made  these  extended  extracts  from  the  opinion 
of  the  court  in  the  Trans-Missouri  Freight  Case  in  order 
to  show  beyond  question,  that  the  point  was  there  urged 
by  counsel  that  the  Anti-Trust  Act  condemned  only  con- 
tracts, combinations,  trusts  and  conspiracies  that  were  in 
unreasonable  restraint  of  interstate  commerce,  and  that 
652 


APPENDIX   A 

the  court  in  clear  and  decisive  language  met  that  point. 
It  adjudged  that  Congress  had  in  unequivocal  words  de- 
clared that  ^^  every  contract,  combination,  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  com- 
merce among  the  several  States"  shall  be  illegal,  and  that 
no  distinction,  so  far  as  interstate  commerce  was  concerned, 
was  to  be  tolerated  between  restraints  of  such  c(  mmerce 
as  were  undue  or  unreasonable,  and  restraints  that  were 
due  or  reasonable.  With  full  knowledge  of  the  then  con- 
dition of  the  country  and  of  its  business,  Congress  deter- 
mined to  meet,  and  did  meet,  the  situation  by  an  absolute, 
statutory  prohibition  of  "every  contract,  combination  in 
the  form  of  trust  or  otherwise,  in  restraint  of  trade  or 
commerce."  Still  more;  in  reponse  to  the  suggestion  by 
able  counsel  that  Congress  intended  only  to  strike  down 
such  contracts,  combinations  and  monopolies  as  unreason- 
ably restrained  interstate  commerce,  this  court,  in  words 
too  clear  to  be  misunderstood,  said  that  to  so  hold  was 
"to  read  into  the  act  by  way  oi  judicial  legislation,  an  ex- 
ception not  placed  there  by  the  law-making  branch  of  the 
Government."  ''This,"  the  court  said,  as  we  have  seen, 
"we  cannot  and  ougJ.t  not  to  do." 

It  thus  appears  that  fifteen  years  ago,  when  the  pur- 
pose of  Congress  in  passing  the  Anti-Trust  Act  was  fresh 
in  the  minds  of  courts,  lawyers,  statesmen  and  the  general 
pubHc,  this  court  expressly  dechned  to  indulge  in  judicial 
legislation,  by  inserting  in  the  act  the  word  "unreason- 
able" or  any  other  word  of  like  import.  It  may  be  stated 
here  that  the  country  at  large  accepted  this  view  of  the 
act,  and  the  Federal  courts  throughout  the  entire  country 
enforced  its  provisions  according  to  the  interpretation 
given  in  the  Freight  Association  Case.  What,  then,  was 
to  be  done  by  those  who  questioned  the  soundness  of  the 
interpretation  placed  on  the  act  by  this  court  in  that 
case?  As  the  court  had  decided  that  to  insert  the  word 
"unreasonable"  in  the  act  would  be  "judicial  legisla- 
tion" on  its  part,  the  only  alternative  left  to  those  who 
opposed  the  decision  in  that  case  was  to  induce  Congress 
to  so  amend  the  act  as  to  recognize  the  right  to  restrain 

(353 


APPENDIX   A 

interstate  commerce  to  a  reasonable  extent.  The  public 
press,  magazines  and  law  journals,  the  debates  in  Con- 
gress, speeches  and  addresses  by  public  men  and  jurists, 
all  contain  abundant  evidence  of  the  general  understand- 
ing that  the  meaning,  extent  and  scope  of  the  Anti-Trust 
Act  had  been  judicially  determined  by  this  court,  and  that 
the  only  question  remaining  open  for  discussion  was  the 
wisdom  of  the  policy  declared  by  the  act — a  matter  that 
was  exclusively  within  the  cognizance  of  Congress.  But 
at  every  session  of  Congress  since  the  decision  of  1896, 
the  lawmaking  branch  of  the  Government,  with  full 
knowledge  of  that  decision,  has  refused  to  change  the 
policy  it  had  declared  or  to  so  amend  the  act  of  1890  as 
to  except  from  its  operation  contracts,  combinations  and 
trusts  that  reasonably  restrain  interstate  commerce. 

But  those  who  were  in  combinations  that  were  illegal 
did  not  despair.  They  at  once  set  up  the  baseless  claim 
that  the  decision  of  1896  disturbed  the  ''business  interests 
of  the  country,"  and  let  it  be  known  that  they  would 
never  be  content  until  the  rule  was  established  that  would 
permit  interstate  commerce  to  be  subjected  to  reasonable 
restraints.  Finally,  an  opportunity  came  again  to  raise 
the  same  question  which  this  court  had,  upon  full  con- 
sideration, determined  in  1896.  I  now  allude  to  the  case 
of  United  States  v.  Joint  Traffic  Association,  171  U.  S. 
505,  43  L.  ed.  259,  19  Sup.  Ct.  25,  decided  in  1898.  What 
was  that  case? 

It  was  a  suit  by  the  United  States  against  more  than 
thirty  railroad  companies  to  have  the  court  declare  il- 
legal, under  the  Anti-Trust  Act,  a  certain  agreement  be- 
tween these  companies.  The  relief  asked  was  denied  in 
the  subordinate  Federal  courts  and  the  Government 
brought  the  case  here. 

It  is  important  to  state  the  points  urged  in  that  case 
by  the  defendant  companies  charged  with  violating  the 
Anti-Trust  Act,  and  to  show  that  the  court  promptly  met 
them.  To  that  end  I  make  a  copious  extract  from  the 
opinion  in  the  Joint  Traffic  Case.  Among  other  things, 
the  court  said:  "Upon  comparing  that  agreement  [the 
654 


APPENDIX   A 

one  in  the  Joint  Traffic  Case,  then  under  consideration, 
171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25]  with  the  one 
set  forth  in  the  case  of  United  States  v.  Trans-Missouri 
Freight  Association,  166  U.  S.  290,  41  L.  ed.  1007,  17 
Sup.  Ct.  540,  the  great  similarity  between  them  suggests 
that  a  similar  result  should  be  reached  in  the  two  cases" 
(p.  558).  Learned  counsel  in  the  Joint  Traffic  Case  urged 
a  reconsideration  of  the  question  decided  in  the  Trans- 
Missouri  Case  contending  that  "the  decision  in  that  case 
[the  Trans-Missouri  Freight  Case]  is  quite  plainly  errone- 
ous, and  the  consequences  of  such  error  are  far  reaching 
and  disastrous,  and  clearly  at  war  with  justice  and  sound 
policy,  and  the  construction  placed  upon  the  Anti-Trust 
statute  has  been  received  by  the  public  with  surprise  and 
alarm."  They  suggested  that  the  point  made  in  the 
Joint  Traffic  Case  as  to  the  meaning  and  scope  of  the 
act  might  have  been  but  w^as  not  made  in  the  previous 
case.  The  court  said  (171  U.  S.  559,  43  L.  ed.  259,  283, 
19  Sup.  Ct.  25,  28)  that  'Hhe  report  of  the  Trans-Missouri 
Case  clearly  shows  not  only  that  the  point  now  taken 
was  there  urged  upon  the  attention  of  the  court,  but  it 
was  then  intentionally  and  necessarily  decided." 

The  question  whether  the  court  should  again  consider 
the  point  decided  in  the  Trans-Missouri  Case,  171  U.  S. 
573,  43  L.  ed.  259,  289,  19  Sup.  Ct.  25,  33,  was  disposed 
of  in  the  most  decisive  language,  as  follows:  "Finally, 
we  are  asked  to  reconsider  the  question  decided  in  the 
Trans-Missouri  Case,  and  to  retrace  the  steps  taken 
therein,  because  of  the  plain  error  contained  in  that 
decision  and  the  widespread  alarm  with  which  it  was 
received  and  the  serious  consequences  which  have  re- 
sulted, or  may  soon  result,  from  the  law  as  interpreted  in 
that  case.  It  is  proper  to  remark  that  an  application  for 
a  reconsideration  of  a  question  but  lately  decided  by  this 
court  is  usually  based  upon  a  statement  that  some  of 
the  arguments  employed  on  the  original  hearing  of  the 
question  have  been  overlooked  or  misunderstood,  or  that 
some  controlling  authority  has  been  either  misapplied  by 
the  court  or  passed  over  without  discussion  or  notice. 

655 


APPENDIX   A 

WTiile  this  is  not  strictly  an  application  for  a  rehearing  in 
the  same  case,  yet  in  substance  it  is  the  same  thing. 
The  court  is  asked  to  reconsider  a  question  but  just  de- 
cided after  a  careful  investigation  of  the  matter  involved. 
There  have  heretofore  been  in  effect  two  arguments  of 
precisely  the  same  questions  now  before  the  court,  and 
the  same  arguments  were  addressed  to  us  on  both  those 
occasions.  The  report  of  the  Trans-Missouri  Case  shows 
a  dissenting  opinion  delivered  in  that  case,  and  that  the 
opinion  was  concurred  in  by  three  other  members  of  the 
court.  That  opinion,  it  will  be  seen,  gives  with  great 
force  and  abiHty  the  arguments  against  the  decision 
which  was  finally  arrived  at  by  the  court.  It  was  after 
a  full  discussion  of  the  questions  involved  and  with  the 
knowledge  of  the  views  entertained  by  the  minority  as 
expressed  in  the  dissenting  opinion,  that  the  majority  of 
the  court  came  to  the  conclusion  it  did.  Soon  after  the 
decision  a  petition  for  a  rehearing  of  the  case  was  made, 
supported  by  a  printed  argument  in  its  favor,  and  pressed 
with  an  earnestness  and  vigor  and  at  a  length  which 
were  certainly  commensurate  with  the  importance  of  the 
case.  This  court,  with  care  and  deliberation  and  also 
with  a  full  appreciation  of  their  importance,  again  con- 
sidered the  questions  involved  in  its  former  decision.  A 
majority  of  the  court  once  more  arrived  at  the  conclusion 
it  had  first  announced,  and  accordingly  it  denied  the  ap- 
plication. And  now  for  the  third  time  the  same  arguments 
are  employed,  and  the  court  is  again  asked  to  recant  its 
former  opinion,  and  to  decide  the  same  question  in  direct 
opposition  to  the  conclusion  arrived  at  in  the  Trans- 
Missouri  Case.  The  learned  counsel  while  making  the 
application  frankly  confess  that  the  argument  in  opposi- 
tion to  the  decision  in  the  case  above  named  has  been  so 
fully,  so  clearly  and  so  forcibly  presented  in  the  dissent- 
ing opinion  of  Mr.  Justice  White  [in  the  Freight  Case] 
that  it  is  hardly  possible  to  add  to  it,  nor  is  it  necessary 
to  repeat  it.  The  fact  that  there  was  so  close  a  division 
of  opinion  in  this  court  when  the  matter  was  first  under 
advisement,  together  with  the  different  views  taken  by 
656 


APPENDIX   A 

some  of  the  judges  of  the  lower  courts,  led  us  to  the  most 
careful  and  scrutinizing  examination  of  the  arguments 
advanced  by  both  sides,  and  it  was  after  such  an  exami- 
nation that  the  majority  of  the  court  came  to  the  con- 
clusion it  did.  It  is  not  now  alleged  that  the  court  on 
the  former  occasion  overlooked  any  argument  for  the 
respondents  or  misapphed  any  controlHng  authority.  It 
is  simply  insisted  that  the  court,  notwithstanding  the 
arguments  for  an  opposite  view,  arrived  at  an  erroneous 
result,  which,  for  reasons  already  stated,  ought  to  be 
reconsidered  and  reversed.  As  we  have  twice  already 
deliberately  and  earnestly  considered  the  same  arguments 
which  are  now  for  a  third  time  pressed  upon  our  attention, 
it  could  hardly  be  expected  that  our  opinion  should  now 
change  from  that  already  expressed." 

These  utterances,  taken  in  connection  with  what  was 
previously  said  in  the  Trans-Missouri  Freight  Case,  show 
so  clearly  and  affirmatively  as  to  admit  of  no  doubt  that 
this  court,  many  years  ago,  upon  the  fullest  consideration, 
interpreted  the  Anti-Trust  Act  as  prohibiting  and  making 
illegal  not  only  every  contract  or  combination,  in  whatever 
form,  which  was  in  restraint  of  interstate  commerce,  with- 
out regard  to  its  reasonableness  or  unreasonableness,  but 
all  monopoHes  or  attempts  to  monopohze  "any  part"  of 
such  trade  or  commerce.  Let  me  refer  to  a  few  other 
cases  in  which  the  scope  of  the  decision  in  the  Freight 
Association  Case  was  referred  to:  In  Bement  v.  National 
Harrow  Co.,  186  U.  S.  70,  92,  46  L.  ed.  1058,  22  Sup. 
Ct.  747,  the  court  said:  "It  is  true  that  it  has  been  held 
by  this  court  that  the  act  (Anti-Trust  Act)  included  any 
restraint  of  commerce,  whether  reasonable  or  unreason- 
able"— citing  United  States  v.  Trans-Missouri  Freight 
Asso.,  166  U.  S.  290,  41  L.  ed.  1007,  17  Sup.  Ct.  540; 
United  States  v.  Joint  Traffic  Association,  171  U.  S. 
505,  43  L.  ed.  259,  19  Sup.  Ct.  25;  Addyston  Pipe  &c. 
Co.  V.  United  States,  175  U.  S.  211,  44  L.  ed.  136,  20 
Sup.  Ct.  96.  In  Montague  v.  Lowry,  193  U.  S.  38,  46, 
48  L.  ed.  608,  24  Sup.  Ct.  307,  which  involved  the  vaUd- 
ity,  under  the  Anti-Trust  Act,  of  a  certain  association 
42  657 


APPENDIX   A 

formed  for  the  sale  of  tiles,  mantels,  and  grates,  the  court 
referring  to  the  contention  that  the  sale  of  tiles  in  San 
Francisco  was  so  small  "as  to  be  a  negligible  quantity," 
held  that  the  association  was  nevertheless  a  combination 
in  restraint  of  interstate  trade  or  commerce  in  violation 
of  the  Anti-Trust  Act.  In  Loewe  v.  Lawlor,  208  U.  S. 
274,  297,  52  L.  ed.  488,  28  Sup.  Ct.  301,  all  the  mem- 
bers of  this  court  concurred  in  saying  that  the  Trans- 
Missouri,  Joint  Traffic  and  Northern  Securities  cases  "hold 
in  effect  that  the  Anti-Trust  Law  has  a  broader  applica- 
tion than  the  prohibition  of  restraints  of  trade  unlawful 
at  common  law."  In  Shawnee  Compress  Co.  v.  Ander- 
son (1907),  209  U.  S.  423,  432,  434,  52  L.  ed.  865,  28 
Sup.  Ct.  572,  all  the  members  of  the  court  again  con- 
curred in  declaring  that  "it  has  been  decided  that  not 
,  only  unreasonable,  but  all  direct  restraints  of  trade  are 
prohibited,  the  law  being  thereby  distinguished  from  the 
common  law."  In  United  States  v.  Addyston  Pipe  Com- 
pany, 85  Fed.  Rep.  271,  278,  Judge  Taft,  speaking  for 
the  Circuit  Court  of  Appeals  for  the  Sixth  Circuit,  said 
that  according  to  the  decision  of  this  court  in  the  Freight 
Association  Case,  "contracts  in  restraint  of  interstate 
transportation  were  within  the  statute,  whether  the  re- 
straints could  be  regarded  as  reasonable  at  common  law 
or  not."  In  Chesapeake  &  Ohio  Fuel  Co.  v.  United  States 
(1902),  115  Fed.  Rep.  610,  619,  the  Circuit  Court  of 
Appeals  for  the  Sixth  Circuit,  after  referring  to  the  right 
of  Congress  to  regulate  interstate  commerce,  thus  inter- 
preted the  prior  decisions  of  this  court  in  the  Trans- 
Missouri,  the  Joint  Traffic  and  the  Addyston  Pipe  and 
Steel  Co.  cases:  "In  the  exercise  of  this  right,  Congress 
has  seen  fit  to  prohibit  all  contracts  in  restraint  of  trade. 
It  has  not  left  to  the  courts  the  consideration  of  the  ques- 
tion whether  such  restraint  is  reasonable  or  unreasonable, 
or  whether  the  contract  would  have  been  illegal  at  the 
common  law  or  not.  The  act  leaves  for  consideration  by 
judicial  authority  no  question  of  this  character,  but  all 
contracts  and  combinations  are  declared  illegal  if  in  re- 
straint of  trade  or  commerce  among  the  States."  As  far 
658 


APPENDIX   A 

back  as  Robbins  v.  Shelby  Taxing  District,  120  U.  S. 
489,  497,  30  L.  ed.  694,  7  Sup.  Ct.  592,  it  was  held  that 
certain  local  regulations,  subjecting  drummers  engaged 
in  both  interstate  and  domestic  trade,  could  not  be  sus- 
tained by  reason  of  the  fact  that  no  discrimination  was 
made  among  citizens  of  the  different  States.  The  court 
observed  that  this  did  not  meet  the  difficulty,  for  the 
reason  that  "interstate  commerce  cannot  be  taxed  at 
all."  Under  this  view  Congress  no  doubt  acted,  when  by 
the  Anti-Trust  Act  it  forbade  any  restraint  whatever 
upon  interstate  commerce.  It  manifestly  proceeded  upon 
the  theory  that  interstate  commerce  could  not  be  re- 
strained at  all  by  combinations,  trusts  or  monopolies, 
but  must  be  allowed  to  flow  in  its  accustomed  channels, 
wholly  unvexed  and  unobstructed  by  anything  that  would 
restrain  its  ordinary  movement.  See  also  Minnesota  v. 
Barber,  136  U.  S.  313,  326,  34  L.  ed.  455,  10  Sup.  Ct. 
862;  Brimmer  v.  Rebman,  138  U.  S.  78,  82,  83,  34  L.  ed. 
862,  11  Sup.  Ct.  213. 

In  the  opinion  delivered  on  behalf  of  the  minority  in  the 
Northern  Securities  Case,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436,  our  present  Chief  Justice  referred  to  the 
contentions  made  by  the  defendants  in  the  Freight  As- 
sociation Case,  namely,  one  of  which  was  that  the  agree- 
ment there  involved  did  not  unreasonably  restrain  inter- 
state commerce,  and  said:  "Both  these  contentions  were- 
decided  against  the  association,  the  court  holding  that  the 
Anti-Trust  Act  did  embrace  interstate  carriage  by  rail- 
road corporations,  and  as  that  act  prohibited  anij  contract 
in  restraint  of  interstate  commerce,  it  hence  embraced  all 
contracts  of  that  character,  ivJiether  they  were  reasonable  or 
unreasonable."  One  of  the  Justices  who  dissented  in  the 
Northern  Securities  Case  in  a  separate  opinion,  concurred 
in  by  the  minority,  thus  referred  to  the  Freight  and  Joint 
Traffic  cases:  "For  it  cannot  be  too  carefully  remembered 
that  that  clause  applies  to  'every'  contract  of  the  for- 
bidden kind — a  consideration  which  was  the  turning  point 
of  the  Trans-Missouri  Freight  Association  case.  *  *  * 
Size  has  nothing  to  do  with  the  matter.     A  monopoly 

659 


APPENDIX  A 

of  'any  part'   of  commerce  among   the   States  is  un- 
lawful." 

In  this  connection  it  may  be  well  to  refer  to  the  adverse 
report  made  in  1909,  by  Senator  Kelson,  on  behalf  of  the 
Senate  Judiciary  Committee,  in  reference  to  a  certain  bill 
offered  in  the  Senate  and  which  proposed  to  amend  the 
Anti-Trust  Act  in  various  particulars.  That  report  con- 
tains a  full,  careful  and  able  analysis  of  judicial  decisions 
relating  to  combinations  and  monopolies  in  restraint  of 
trade  and  commerce.  Among  other  things  said  in  it  which 
bear  on  the  questions  involved  in  the  present  case  are 
these:  "The  Anti-Trust  Act  makes  it  a  criminal  offense  to 
violate  the  law,  and  provides  a  punishment  both  by  fine 
and  imprisonment.  To  inject  into  the  act  the  question  of 
whether  an  agreement  or  combination  is  reasonable  or  un- 
reasonable would  render  the  act  as  a  criminal  or  penal  stat- 
ute indefinite  and  uncertain,  and  hence,  to  that  extent,  ut- 
terly nugatory  and  void,  and  would  practically  amount  to 
a  repeal  of  that  part  of  the  act.  *  *  *  And  while  the  same 
technical  objection  does  not  apply  to  civil  prosecutions, 
the  injection  of  the  rule  of  reasonableness  or  unreasonableness 
would  lead  to  the  greatest  variableness  and  uncertainty  in  the 
enforcement  of  the  law.  The  defense  of  reasonable  restraint 
would  be  made  in  every  case  and  there  would  be  as  many 
different  rules  of  reasonableness  as  cases,  courts  and  juries. 
What  one  court  or  jury  might  deem  unreasonable  another 
court  or  jury  might  deem  reasonable.  A  court  or  jury  in 
Ohio  might  find  a  given  agreement  or  combination  reason- 
able, while  a  court  and  jury  in  Wisconsin  might  find  the 
same  agreement  and  combination  unreasonable.  In  the 
case  of  People  v.  Sheldon,  139  N.  Y.  264,  34  N.  E.  785, 
Chief  Justice  Andrews  remarks :  '  If  agreements  and  com- 
binations to  prevent  competition  in  prices  are  or  may  be 
hurtful  to  trade,  the  only  sure  remedy  is  to  prohibit  all  agree- 
ments of  that  character.  If  the  validity  of  such  an  agree- 
ment was  made  to  depend  upon  actual  proof  of  public 
prejudice  or  injury,  it  would  be  very  difficult  in  any  case 
to  establish  the  invalidity,  although  the  moral  evidence 
might  be  very  convincing.'  *  *  *  To  amend  the  Anti- 
660 


APPENDIX   A 

Trust  Act,  as  suggested  by  this  bill,  would  be  to  entirely 
emasculate  it,  and  for  all  practical  purposes  render  it  nuga- 
tory as  a  remedial  statute.  Criminal  prosecutions  would 
not  lie  and  civil  remedies  would  labor  under  the  greatest 
doubt  and  uncertainty.  The  act  as  it  exists  is  clear,  com- 
prehensive, certain  and  highly  remedial.  It  practically 
covers  the  field  of  Federal  jurisdiction,  and  is  in  every 
respect  a  model  law.  To  destroy  or  undermine  it  at  the 
present  juncture,  when  combinations  are  on  the  increase, 
and  appear  to  be  as  oblivious  as  ever  of  the  rights  of  the 
public,  would  be  a  calamity."  The  result  was  the  indefi- 
nite postponement  by  the  Senate  of  any  further  consider- 
ation on  the  proposed  amendments  of  the  Anti-Trust  Act. 
After  what  has  been  adjudged,  upon  full  consideration, 
as  to  the  meaning  and  scope  of  the  Anti-Trust  Act,  and  in 
view  of  the  usages  of  this  court  when  attorneys  for  litigants 
have  attempted  to  reopen  questions  that  have  been  delib- 
erately decided,  I  confess  to  no  little  surprise  as  to  what 
has  occurred  in  the  present  case.  The  court  says  that  the 
previous  cases,  above  cited,  "cannot  by  any  possible  con- 
ception be  treated  as  authoritative  without  the  certitude 
that  reason  was  resorted  to  for  the  purpose  of  deciding 
them."  And  its  opinion  is  full  of  intimations  that  this 
court  proceeded  in  those  cases,  so  far  as  the  present  ques- 
tion is  concerned,  without  being  guided  by  the  "rule  of 
reason,"  or  "the  light  of  reason."  It  is  more  than  once 
intimated,  if  not  suggested,  that  if  the  Anti-Trust  Act  is  to 
be  construed  as  prohibiting  every  contract  or  combination, 
of  whatever  nature,  which  is  in  fact  in  restraint  of  com- 
merce, regardless  of  the  reasonableness  or  unreasonable- 
ness of  such  restraint,  that  fact  would  show  that  the  court 
had  not  proceeded,  in  its  decision,  according  to  "the  light 
of  reason,"  but  had  disregarded  the  "rule  of  reason."  If 
the  court,  in  those  cases,  was  wrong  in  its  construction  of 
the  act,  it  is  certain  that  it  fully  apprehended  the  views 
advanced  by  learned  counsel  in  previous  cases  and  pro- 
nounced them  to  be  untenable.  The  published  reports 
place  this  beyond  all  question.  The  opinion  of  the  court 
was  delivered  by  a  Justice  of  wide  experience  as  a  judicial 

G()l 


APPENDIX   A 

officer,  and  the  court  had  before  it  the  Attorney  General 
of  the  United  States  and  lawyers  who  were  recognized,  on 
all  sides,  as  great  leaders  in  their  profession.  The  same 
eminent  jurist  who  delivered  the  opinion  in  the  Trans- 
Missouri  Case  delivered  the  opinion  in  the  Joint  Traffic 
Association  Case,  and  the  Association  in  that  case  was 
represented  by  lawyers  whose  ability  was  universally 
recognized.  Is  it  to  be  supposed  that  any  point  escaped 
notice  in  those  cases  when  we  think  of  the  sagacity  of  the 
Justice  who  expressed  the  views  of  the  court,  or  of  the 
ability  of  the  profound,  astute  lawyers,  who  sought  such 
an  interpretation  of  the  act  as  would  compel  the  court  to 
insert  words  in  the  statute  which  Congress  had  not  put 
there,  and  the  insertion  of  which  words,  would  amount  to 
"judicial  legislation"?  Now  this  court  is  asked  to  do 
that  which  it  has  distinctly  declared  it  could  not  and  would 
not  do,  and  has  now  done  what  it  then  said  it  could  not 
constitutionally  do.  It  has,  by  mere  interpretation,  modi- 
fied the  act  of  Congress,  and  deprived  it  of  practical  value 
as  a  defensive  measure  against  the  evils  to  be  remedied. 
On  reading  the  opinion  just  delivered,  the  first  inquiry 
will  be,  that  as  the  court  is  unanimous  in  holding  that  the 
particular  things  done  by  the  Standard  Oil  Company  and 
its  subsidiary  companies,  in  this  case,  were  illegal  under 
the  Anti-Trust  Act,  whether  those  things  were  in  reason- 
able or  unreasonable  restraint  of  interstate  commerce,  why 
was  it  necessary  to  make  an  elaborate  argument,  as  is 
done  in  the  opinion,  to  show  that  according  to  the  "rule 
of  reason"  the  act  as  passed  by  Congress  should  be  inter- 
preted as  if  it  contained  the  word  "unreasonable"  or  the 
word  "undue"?  The  only  answer  which,  in  frankness, 
can  be  given  to  this  question  is,  that  the  court  intends  to 
decide  that  its  deliberate  judgment,  fifteen  years  ago,  to 
the  effect  that  the  act  permitted  no  restraint  whatever 
of  interstate  commerce,  whether  reasonable  or  unreason- 
able, was  not  in  accordance  with  the  "rule  of  reason." 
In  effect  the  court  says,  that  it  will  now,  for  the  first  time, 
bring  the  discussion  under  the  "light  of  reason"  and  apply 
the  "rule  of  reason "  to  the  questions  to  be  decided.  I  have 
662 


APPENDIX    A 

the  authority  of  this  court  for  saying  that  such  a  course  of 
proceeding  on  its  part  would  be  "judicial  legislation." 
Still  more,  what  is  now  done  involves  a  serious  depar- 
ture from  the  settled  usages  of  this  court.  Counsel  have 
not  ordinarily  been  allowed  to  discuss  questions  already 
settled  by  previous  decisions.  More  than  once  at  the  pres- 
ent term,  that  rule  has  been  applied.  In  St.  Louis,  I.  M.  & 
S.  Ry.  Co.  v.  Taylor,  210  U.  S.  281,  295,  52  L.  ed.  1061, 
28  Sup.  Ct.  616,  the  court  had  occasion  to  determine  the 
meaning  and  scope  of  the  original  Safety  Appliance  Act 
of  Congress  passed  for  the  protection  of  railroad  employees 
and  passengers  on  interstate  trains.  27  Stat.  531,  §  5, 
chap.  196.  A  particular  construction  of  that  act  was  in- 
sisted upon  by  the  interstate  carrier  which  was  sued  under 
the  Safety  Appliance  Act;  and  the  contention  was  that  a 
different  construction,  than  the  one  insisted  upon  by  the 
carrier,  would  be  a  harsh  one.  After  quoting  the  words  of 
the  act,  ]Mr.  Justice  Moody  said  for  the  court:  ''There 
is  no  escape  from  the  meaning  of  these  words.  Explana- 
tion cannot  clarify  them,  and  ought  not  to  be  employed 
to  confuse  them  or  lessen  their  significance.  The  obvious 
purpose  of  the  legislature  was  to  supplant  the  qualified  duty 
of  the  common  law  with  an  absolute  duty  deemed  by  it  more 
just.  If  the  railroad  does,  in  point  of  fact,  use  cars  which 
do  not  comply  with  the  standard,  it  violates  the  plain 
prohibitions  of  the  law,  and  there  arises  from  that  viola- 
tion the  liability  to  make  compensation  to  one  who  is  in- 
jured by  it.  It  is  urged  that  this  is  a  harsh  construction. 
To  this  we  reply  that,  if  it  be  the  true  construction,  its 
harshness  is  no  concern  of  the  courts.  They  have  no  respon- 
sibility for  the  justice  or  wisdom  of  legislation,  and  no  duty 
except  to  enforce  the  law  as  it  is  written,  unless  it  is  clearly 
beyond  the  constitutional  power  of  the  lawmaking  body.  *  *  * 
It  is  (]uite  conceivable  that  Congress,  contemplating  the  in- 
evitable hardship  of  such  injuries,  and  hoping  to  diminish 
the  economic  loss  to  the  community  resulting  from  them, 
should  deem  it  wise  to  impose  their  burdens  upon  those 
who  could  measurably  control  their  causes,  instead  of 
upon  those  who  are  in  the  main  helpless  in  that  regard. 

663 


APPENDIX   A 

Such  a  policy  would  be  intelligible,  and,  to  say  the  least, 
not  so  unreasonable  as  to  require  us  to  doubt  that  it  was 
intended,  and  to  seek  some  unnatural  interpretation  of 
conunon  words.  We  see  no  error  in  this  part  of  the  case." 
And  at  the  present  term  of  this  court  we  were  asked,  in  a 
case  arising  under  the  Safety  Appliance  Act,  to  reconsider 
the  question  decided  in  the  Taylor  Case.  We  declined  to 
do  so,  saying  in  an  opinion  just  now  handed  down:  "In 
view  of  these  facts,  we  are  unwilling  to  regard  the  question 
as  to  the  meaning  and  scope  of  the  Safety  Appliance  Act, 
so  far  as  it  relates  to  automatic  couplers  on  trains  mov- 
ing in  interstate  traffic,  as  open  to  further  discussion  here. 
If  the  court  was  wrong  in  the  Taylor  Case  the  way  is  open  for 
such  an  amendment  of  the  statute  as  Congress  may,  in  its  dis- 
cretion, deem  proper.  This  court  ought  not  now  to  disturb 
what  has  been  so  widely  accepted  and  acted  upon  by  the 
courts  as  having  been  decided  in  that  case.  A  contrary 
course  would  cause  infinite  uncertainty,  if  not  mischief, 
in  the  administration  of  the  law  in  the  Federal  courts. 
To  avoid  misapprehension,  it  is  appropriate  to  say  that  we 
are  not  to  be  understood  as  questioning  the  soundness  of 
the  interpretation  heretofore  placed  by  this  court  upon  the 
Safety  Appliance  Act.  We  only  mean  to  say  that  until 
Congress,  by  an  amendment  of  the  statute,  changes  the 
rule  announced  in  the  Taylor  Case,  this  court  will  adhere 
to  and  apply  that  rule."  C,  B.  &  Q.  Ry.  Co.  v.  United 
States,  220  U.  S.  559,  55  L.  ed.  — ,  31  Sup.  Ct.  612.  When 
counsel  in  the  present  case  insisted  upon  a  reversal  of  the 
former  rulings  of  this  court,  and  asked  such  an  interpreta- 
tion of  the  Anti-Trust  Act  as  would  allow  reasonable 
restraints  of  interstate  commerce,  this  court,  in  deference 
to  established  practice,  should,  I  submit,  have  said  to 
them:  ''That  question,  according  to  our  practice,  is  not 
open  for  further  discussion  here.  This  court  long  ago 
deliberately  held  (1)  that  the  act,  interpreting  its  words 
in  their  ordinary  acceptation,  prohibits  all  restraints  of 
interstate  commerce  by  combinations  in  whatever  form, 
and  whether  reasonable  or  unreasonable;  (2)  the  question 
Relates  to  matters  of  public  policy  in  reference  to  commerce 
664 


APPENDIX   A 


among  the  States  and  with  foreign  nations,  and  Congress 
alone  can  deal  with  the  .sul)ject;  (3)  this  court  would  en- 
croach upon  the  authority  of  Congress  if,  under  the  guise 
of  construction,  it  should  assume  to  determine  a  matter  of 
public  policy;  (4)  the  parties  must  go  to  Congress  and  ob- 
tain an  amendment  of  the  Anti-Trust  Act  if  they  think  this 
court  was  wrong  in  its  former  decisions;  and  (5)  this  court 
cannot  and  will  not  judicially  legislate,  since  its  function  is 
to  declare  the  law,  while  it  belongs  to  the  legislative  de- 
partment to  make  the  law.  Such  a  course,  I  am  sure, 
would  not  have  offended  the  "rule  of  reason." 

But  my  brethren,  in  their  wisdom,  have  deemed  it  best 
to  pursue  a  different  course.  They  have  now  said  to  those 
who  condemn  our  former  decisions  and  Xvho  object  to 
all  legislative  prohibitions  of  contracts,  combinations  and 
trusts  in  restraint  of  interstate  commerce,  ''You  may  now 
restrain  such  commerce,  provided  you  are  reasonable 
about  it;  only  take  care  that  the  restraint  is  not  undue." 
The  disposition  of  the  case  under  consideration,  accord- 
ing to  the  views  of  the  defendants,  will,  it  is  claimed,  quiet 
and  give  rest  to  ''the  business  of  the  country."  On  the 
contrary,  I  have  a  strong  conviction  that  it  will  throw 
the  business  of  the  country  into  confusion  and  invite 
widely-extended  and  harassing  htigation,  the  injurious 
effects  of  which  will  be  felt  for  many  years  to  come.  When 
Congress  prohibited  every  contract,  combination  or  mo- 
nopoly, in  restraint  of  commerce,  it  prescribed  a  simple, 
definite  rule  that  all  could  understand,  and  which  could 
be  easily  applied  by  everyone  wishing  to  obey  the  law, 
and  not  to  conduct  their  business  in  violation  of  law. 
But  now,  it  is  to  be  feared,  we  are  to  have,  in  cases  with- 
out number,  the  constantly  recurring  inquiry— difficult 
to  solve  by  proof — whether  the  particular  contract, 
combination,  or  trust  involved  in  each  case  is  or  is  not 
an  "unreasonable"  or  "undue"  restraint  of  trade.  Con- 
gress, in  effect,  said  that  there  should  be  rio  restraint  of 
trade,  in  any  form,  and  this  court  solemnly  adjudged  many 
years  ago  that  Congress  meant  what  it  thus  said  in  clear 
and  explicit  words,  and  that  it  could  not  add  to  the  words 

GG5 


APPENDIX   A 

of  the  act.  But  those  who  condemn  the  action  of  Con- 
gress are  now,  in  effect,  informed  that  the  com'ts  will 
allow  such  restraints  of  interstate  commerce  as  are  shown 
not  to  be  unreasonable  or  undue. 

It  remains  for  me  to  refer,  more  fully  than  I  have  here- 
tofore done,  to  another,  and,  in  my  judgment — if  we  look 
to  the  future — the  most  important  aspect  of  this  case. 
That  aspect  concerns  the  usurpation  by  the  judicial 
branch  of  the  Government  of  the  functions  of  the  legis- 
lative department.  The  illustrious  men  who  laid  the 
foundations  of  our  institutions,  deemed  no  part  of  the 
National  Constitution  of  more  consequence  or  more 
essential  to  the  permanancy  of  our  form  of  government 
than  the  provisions  under  which  were  distributed  the 
powers  of  Government  among  three  separate,  equal  and 
co-ordinate  departments — legislative,  executive,  and  judi- 
cial. This  was  at  that  time  a  new  feature  of  governmental 
regulation  among  the  nations  of  the  earth,  and  it  is  deemed 
by  the  people  of  every  section  of  our  own  country  as  most 
vital  in  the  workings  of  a  representative  republic  whose 
Constitution  was  ordained  and  estabUshed  in  order  to 
accomplish  the  objects  stated  in  its  Preamble  by  the 
means,  but  only  by  the  means,  provided  either  expressly 
or  by  necessary  implication,  by  the  instrument  itself. 
No  department  of  that  government  can  constitutionally 
exercise  the  powers  committed  strictly  to  another  and 
separate  department. 

I  said  at  the  outset  that  the  action  of  the  court  in  this 
case  might  well  alarm  thoughtful  men  who  revered  the 
Constitution.  I  meant  by  this  that  many  things  are  in- 
timated and  said  in  the  court's  opinion  which  will  not  be 
regarded  otherwise  than  as  sanctioning  an  invasion  by  the 
judiciary  of  the  constitutional  domain  of  Congress — an 
attempt  by  interpretation  to  soften  or  modify  what  some 
regard  as  a  harsh  public  policy.  This  court,  let  me  repeat, 
solemnly  adjudged  many  years  ago  that  it  could  not,  ex- 
cept by  "judicial  legislation,"  read  words  into  the  Anti- 
Trust  Act  not  put  there  by  Congress,  and  which,  being 
inserted,  give  it  a  meaning  which  the  words  of  the  Act, 
666 


APPENDIX    A 

as  passed,  if  properly  interpreted,  would  not  justify.  The 
court  has  decided  that  it  could  not  thus  change  a  public 
policy  formulated  and  declared  by  Congress;  that  Con- 
gress has  paramount  authority  to  regulate  interstate 
commerce,  and  that  it  alone  can  change  a  policy  once 
inaugurated  by  legislation.  The  courts  have  nothing  to 
do  with  the  wisdom  or  policy  of  an  act  of  Congress.  Their 
duty  is  to  ascertain  the  will  of  Congress,  and  if  the  statute 
embodying  the  expression  of  that  will  is  constitutional, 
the  courts  must  respect  it.  They  have  no  function  to 
declare  a  pubhc  policy,  nor  to  amend  legislative  enact- 
ments. "What  is  termed  the  poHcy  of  the  Government 
with  reference  to  any  particular  legislation,"  as  this  court 
has  said,  "is  generally  a  very  uncertain  thing,  upon  which 
all  sorts  of  opinions,  each  variant  from  the  other,  may 
be  formed  by  different  persons.  It  is  a  ground  much  too 
unstable  upon  which  to  rest  the  judgment  of  the  court 
in  the  interpretation  of  statutes."  Hadden  v.  Collector, 
5  Wall.  (72  U.  S.)  107,  18  L.  ed.  518.  Nevertheless, 
if  I  do  not  misapprehend  its  opinion,  the  court  has  now 
read  into  the  act  of  Congress  words  which  are  not  to  be 
found  there,  and  has  thereby  done  that  which  it  adjudged 
in  1896  and  1898  could  not  be  done  without  violating 
the  Constitution,  namely,  by  interpretation  of  a  statute, 
changed  a  public  pohcy  declared  by  the  legislative  depart- 
ment. 

After  many  years  of  public  service  at  the  National 
Capital,  and  after  a  somewhat  close  observation  of  the 
conduct  of  pubhc  affairs,  I  am  impelled  to  say  that  there 
is  abroad,  in  our  land,  a  most  harmful  tendency  to  bring 
about  the  amending  of  constitutions  and  legislative  en- 
actments by  means  alone  of  judicial  construction.  As  a 
pubhc  pohcy  has  been  declared  by  the  legislative  depart- 
ment in  respect  of  interstate  commerce,  over  which  Con- 
gress has  entire  control,  under  the  Constitution,  all  con- 
cerned must  patiently  submit  to  what  has  been  lawfully 
done,  until  the  People  of  the  United  States— the  source 
of  all  National  power — shall,  in  their  own  time,  upon 
reflection  and  through  the  legislative  department  of  the 

667 


APPENDIX   A 

Government,  require  a  change  of  that  policy.  There  are 
some  who  say  that  it  is  a  part  of  one's  hberty  to  conduct 
commerce  among  the  States  without  being  subject  to 
governmental  authority.  But  that  would  not  be  Hberty, 
regulated  by  law,  and  liberty,  which  cannot  be  regulated 
by  law,  is  not  to  be  desired.  The  Supreme  Law  of  the 
Land — wliich  is  binding  alike  upon  all — upon  Presidents, 
Congresses,  the  Courts  and  the  People — gives  to  Con- 
gress, and  to  Congress  alone,  authority  to  regulate  inter- 
state commerce,  and  when  Congress  forbids  any  restraint 
of  such  commerce,  in  any  form,  all  must  obey  its  mandate. 
To  overreach  the  action  of  Congress  merely  by  judicial 
construction,  that  is,  by  indirection,  is  a  blow  at  the 
integrity  of  our  governmental  system,  and  in  the  end 
will  prove  most  dangerous  to  all.  Mr.  Justice  Bradley 
wisely  said,  when  on  this  Bench,  that  illegitimate  and  un- 
constitutional practices  get  their  first  footing  by  silent 
approaches  and  slight  deviations  from  legal  modes  of 
legal  procedure.  Boyd  v.  United  States,  116  U.  S.  616, 
635,  29  L.  ed.  746,  6  Sup.  Ct.  524.  We  shall  do  well  to 
heed  the  warnings  of  that  great  jurist. 

I  do  not  stop  to  discuss  the  merits  of  the  poHcy  embod- 
ied in  the  Anti-Trust  Act  of  1890;  for,  as  has  been  often 
adjudged,  the  courts,  under  our  constitutional  system 
have  no  rightful  concern  with  the  wisdom  or  policy  of 
legislation  enacted  by  that  branch  of  the  Government 
which  alone  can  make  laws. 

For  the  reasons  stated,  while  concurring  in  the  general 
affirmance  of  the  decree  of  the  Circuit  Court,  I  dissent 
from  that  part  of  the  judgment  of  this  court  which  directs 
the  modification  of  the  decree  of  the  Circuit  Court,  as 
well  as  from  those  parts  of  the  opinion  which,  in  effect, 
assert  authority,  in  this  court,  to  insert  words  in  the  Anti- 
Trust  Act  which  Congress  did  not  put  there,  and  which, 
being  inserted.  Congress  is  made  to  declare,  as  part  of  the 
public  policy  of  the  country,  what  it  has  not  chosen  to 
declare. 


668 


APPENDIX  A 


UNITED   STATES   OF   AMERICA   v.   AMERICAN 
TOBACCO   COMPANY 

AMERICAN    TOBACCO    COMPANY    v.    UNITED 
STATES    OF  AMERICA 

(221  U.  S.  106,  55  L.  ed. ,  31  Sup.  Ct.  632) 

APPEALS  FROM  THE  CIRCUIT  COURT  OF  THE  UNITED  STATES 
FOR   THE    SOUTHERN    DISTRICT   OF   NEW   YORK 

Nos.  118,  119.  Argued  January  3,  4,  5,  6,  1910;  restored  to  docket  for  re- 
argument  April  11,  1910;  reargued  January  9,  10,  11,  12,  1911. — Decided 
May  29,  1911. 

Headnotes 

Headnotes  are  official;  L.  ed.  and  Sup.  Ct.  citations  are  not  in 
original 

Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup.  Ct. 

502,  followed  and  reaffirmed  as  to  the  construction  to  be  given  to  the 
Anti-Trust  Act  of  July  2,  1890,  chap.  647,  26  Stat.  209;  and  held  that  the 
combination  in  this  case  is  one  in  restraint  of  trade  and  an  attempt  to 
monopolize  the  business  of  tobacco  in  interstate  commerce  within  the 
prohibitions  of  the  act. 

In  order  to  meet  such  a  situation  as  is  presented  by  the  record  in  this  case 
and  to  afford  the  relief  for  the  evils  to  be  overcome,  the  Anti-Trust  Act 
of  1890  must  be  given  a  more  comprehensive  application  than  affixed  to 
it  in  any  previous  decision. 

In  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L.  ed. ,  31  Sup. 

Ct.  502,  the  words  "restraint  of  trade"  as  used  in  §  1  of  the  Anti-Trust 
Act  were  properly  construed  by  the  resort  to  reason;  the  doctrine  stated 
in  that  case  was  in  accord  with  all  previou.s  decisions  of  this  court,  de- 
spite the  contrary  view  at  (imos  erroneously  attributed  to  the  expres- 
sions in  United  States  v.  Trans-Missouri  Freight  Association,  166  U.  S. 
290,  41  L.  ed.  1007,  17  Sup.  Ct.  540,  and  United  States  v.  Joint  Traffic 
Association,  171  U.  S.  505,  43  L.  ed.  259,  19  Sup.  Ct.  25. 

The  Anti-Trust  Act  must  have  a  reasonable  construction  as  there  can 
scarcely  be  any  agreement  or  contract  among  business  men  that  does  not 
directly  or  indirectly  affect  and  possibly  restrain  commerce.  United 
States  V.  Joint  1>affic  Association,  171  U.  S.  505,  56S,  43  L.  ed.  259,  19 
Sup.  Ct.  25. 

The  words  "restraint  of  trade"  at  common  law,  and  in  the  law  of  this 
country  at  the  time  of  the  adoption  of  the  .^nti-Trust  Act,  only  em- 
braced acts,  contracts,  agreements  or  combinations  which  operated 
to  the  prejudice  of  the  public  interests  by  unduly  restricting  competi- 
tion or  by  unduly  obstructing  due  course  of  trade,  and  Congress  intended 

669 


APPENDIX   A 

that  those  words  as  used  in  that  act  should  have  a  like  significance;  and 
the  ruUng  in  Standard  Oil  Co.  v.  United  States,  221  U.  S.  1,  55  L. 
ed. ,  31  Sup.  Ct.  502,  to  this  effect  is  re-expressed  and  reaffirmed. 

The  pubhc  policy  manifested  by  the  Anti-Trust  Act  is  expressed  in  such 
general  language  that  it  embraces  every  conceivable  act  which  can  pos- 
sibly come  within  the  spirit  of  its  prohibitions,  and  that  policy  cannot 
be  frustrated  by  resort  to  disguise  or  subterfuge  of  any  kind. 

The  record  in  this  case  discloses  a  combination  on  the  part  of  the  defend- 
ants with  the  purpose  of  acquiring  dominion  and  control  of  interstate 
commerce  in  tobacco  by  methods  and  manners  clearly  within  the  pro- 
hibition of  the  Anti-Trust  Act;  and  the  subject-matters  of  the  combina- 
tion and  the  combination  itself  are  not  excluded  from  the  scope  of  the 
act  as  being  matters  of  intrastate  commerce  and  subject  to  State  control. 

In  this  case  the  combination  in  all  its  aspects  both  as  to  stock  ownership, 
and  as  to  the  corporations  independently,  including  foreign  corporations 
to  the  extent  that  they  became  co-operators  in  the  combination,  come 
within  the  prohibition  of  the  first  and  second  sections  of  the  Anti-Trust 
Act. 

In  giving  relief  against  an  unlawful  combination  under  the  Anti-Trust  Act 
the  court  should  give  complete  and  efficacious  effect  to  the  prohibitions 
of  the  statute;  accomplish  this  result  with  as  little  injury  as  possible  to 
the  interest  of  the  general  pubhc ;  and  have  a  proper  regard  for  the  vested 
property  interests  innocently  acquired. 

In  this  case  the  combination  in  and  of  itself,  and  also  all  of  its  constituent 
elements,  are  decreed  to  be  illegal,  and  the  court  below  is  directed  to 
hear  the  parties  and  ascertain  and  determine  a  plan  or  method  of  dis- 
solution and  of  recreating  a  condition  in  harmony  with  law,  to  be  carried 
out  within  a  reasonable  period  (in  this  case  not  to  exceed  eight  months), 
and,  if  necessary,  to  effectuate  this  result  either  by  injunction  or  receiver- 
ship. 

Pending  the  achievement  of  the  result  decreed  all  parties  to  the  combina- 
tion in  this  case  should  be  restrained  and  enjoined  from  enlarging  the 
power  of  the  continuation  by  any  means  or  device  whatever. 

Where  a  case  is  remanded,  as  this  one  is,  to  the  lower  court  with  directions 

'  to  grant  the  relief  in  a  different  manner  from  that  decreed  by  it,  the 
proper  course  is  not  to  modify  and  affirm,  but  to  reverse  and  remand 
with  directions  to  enter  a  decree  in  conformity  with  the  opinion  and  to 
carry  out  the  directions  of  this  court  with  costs  to  defendants. 

164  Fed.  Rep.  700,  reversed  and  remanded  with  directions. 

The  Attorney  General  and  Mr.  James  C.  McReynolds, 
for  the  United  States. 

Mr.  John  G.  Johnson,  Mr.  DeLancey  Nicoll  and  Mr. 
Junius  Parker,  with  whom  Mr.  William  J.  Wallace  and 
Mr.  W.  W.  Fuller  were  on  the  brief,  Mr.  William  M.  Ivins 
also  fihng  a  brief,  for  the  American  Tobacco  Company 
and  all  the  other  defendants  except  the  Imperial  Tobacco 
670 


APPENDIX   A 

Company  (of  Great  Britain  and  Ireland),  Limited,  United 
Cigar  Stores  Company  and  R.  P.  Richardson,  Jr.,  &  Co., 
Inc. 

Mr.  William  B.  Hornbloircr,  with  whom  Mr.  John  Pick- 
rell,  Mr.  William  W.  Miller,  and  Mr.  Morgan  M.  Mann, 
were  on  the  brief  for  appellee,  the  Imperial  Tobacco  Com- 
pany. 

Mr.  Sol  M.  Stroock,  for  the  United  Cigar  Stores  Com- 
pany. 

Mr.  Charles  R.  Carruth,  Mr.  Charles  J.  McDermott,  Mr. 
C.  B.  Watson,  Mr.  James  T.  Morehead  and  Mr.  A.  J. 
Burton  for  R.  P.  Richardson,  Jr.,  &  Company,  Inc.,  ap- 
pellee, submitted. 

Mr.  W.  Bourke  Cockran,  by  leave  of  the  court,  submitted 
a  brief  as  amicus  curios. 

Mr.  Thomas  Thacher  and  Mr.  J.  Parker  Kirlin,  by  leave 
of  the  court,  submitted  a  brief  as  amid  curice  on  certain 
questions  common  to  this  case  and  other  pending  causes. 

Mr.  Chief  Justice  White  dehvered  the  opinion  of  the 
court. 

Mr.  Justice  Harlan  concurred  in  part  and  dissented 
in  part. 


671 


INDEX 

[References  are  to  Sections] 

A 
ACTION, 

by  individual  under  Sherman  Anti-Trust  Act;  injury  to  "business 

or  property" 160 

for  injunction;  Sherman  Anti-Trust  Act 161 

right  of  creditor;  Sherman  Anti-Trust  Act 162 

right  of  stockholder;  Sherman  Anti-Trust  Act 162 

right  of  member  of  combination;  Sherman  Anti-Trust  Act 163 

by  municipality;  Sherman  Anti-Trust  Act 164 

by  receiver;  Sherman  Anti-Trust  Act 166 

Sherman  Anti-Trust  Act;  time  of  entering  into  combination  as 

affecting  right  to  recover 167 

See  Damages;  Injunction;  Parties;  Pleading;  Procedure;  Remedies. 

ACTUAL  DAMAGES, 

must  be  established — Sherman  Anti-Trust  Act 188 

ACTUS  CONTRA  ACTUM 61 

ADMISSIBILITY, 

of  evidence.     See  Evidence. 

ADVERSE  POSSESSION, 

statute  prohibiting  acquisition  of  railroad  lands  by,  grants  no 
special  privilege,  etc 313 

AGENT, 

of  corporation  and  corporation  cannot  form  unlawful  combination  124 

charging  of  in  indictment;  Sherman  Anti-Trust  Act 179 

car  service  association  merely  agent  of  several  railroads 399 

of  seller  and  purchaser;  contracts  between;  violation  State  stat- 
ute   407 

and  principal;  contracts  between;  violation  State  statute 408 

agreement  for  withdrawal  of;  cotton  seed  oil  manufacturers 416 

of  insurance  companies — agreements  as  to  rates 421 

"AGGREGATE," 

"monopolize "  S3Tionymous  with 50 

AGRICULTURAL  PRODUCTS, 

exception  in  statute  as  to 376 

43  673 


674  INDEX 

[References  are  to  Sections] 

ALABAMA, 

Constitution;  legislative  duty  as  to  monopolies,  combinations, 
etc.,  to  control  articles  of  necessity,  etc.,  or  to  prevent  com- 
petition    240 

Constitution  continued;  effect  upon  competition;  meaning  of 
" unreasonably  "  and  "reasonable  competition " 241 

ALLEGATIONS.    See  Complaint;  Indictment;  Pleading. 

AMENDMENTS, 

to  Wilson  Tariff  Act 14 

to  charter  of  gas  company;  right  to  lay  pipes;  monopoly 274 

ANSWER,  See  Pleading. 

ANTI-TRUST  ACTS.    See  Sherman  Anti-Trust  Act;  Statutes;  Wil- 
son Tariff  Act. 

APPEAL, 

to  United  States  Supreme  Court;  Anti-Trust  cases note,     14 

AREA, 

covered;   reasonableness  as  to  of  contract  in  restraint  of  trade. . . .   108 

ARKANSAS, 

Constitution;  monopolies  prohibited 242 

"ARRANGEMENT," 

construed 357 

ARTIFICIAL  LIGHT, 

not  part  of  essential  functions  of  State  to  provide 268 

ASSETS, 

of  holding  corporation;  distribution  of;  right  to  return  of  shares  193 
of  corporations;   purchase  of ;   violation  State  statutes 393 

ASSIGNMENT, 

of  right  to  manufacture  by  owners  of  letters  patent 136 

ASSOCIATION, 

defined note,     13 

of  cattle  dealers;   violation;  Sherman  Anti-Trust  Act 149 

of  producers  of  coal  and  coke;   Sherman  Anti-Trust  Act 154 

regulation  of;    Alabama  Constitution 240 

where  by-laws  of  show  illegality 384 

by-laws  of  as  evidence 487 

ATTORNEY  GENERAL, 

assistant  to  authorized;  enforcing  trust  and  interstate  commerce 
laws  note,     14 


INDEX  675 

(References  are  to  Sectiona) 

ATTORNEY  GENERAL— Cotdinued. 

certificate  of;    Anti-Trust  ca«ea note,     14 

suit  by  for  inj unction;   Sherman  Anti-Trust  Act 101 

ATTORNEY'S  FEE, 

recovery  of  under  Sherman  Anti-Trust  Act 13 

AVERMENTS.    See  Complaint;  Indictment;  Pleading. 


BAKERIES, 

pooling  of note,  10, 46 

BANANA  TRADE, 

conspiracy  affecting note,  1 17 

BANK, 

charters;  waiver  of  sovereignty note,  275 

deposits  and  checks;  police  power note,  271 

BIDS, 

contract  by  city  for  electric  lights  without  advertising  for  bids 298 

BILL  OF  RIGHTS.    See  Ck)n8titutional  Law. 

BLACKLIST, 

defined 30 

BLUESTONE, 

agreements  between  producers  of 417 

BOARD, 

of  education ;  parish  board ;  act  as  to  held  special  act 266 

of  waterworks;  act  as  to  not  special  act 266 

of  trade;  contracts  as  to  quotations;  Sherman  Anti-Trust  Act 150 

BOOKS, 

combinations  of  holders  of  copyrights 133 

of  defendants  as  evidence;  violation  Sherman  Anti-Trust  Act.      .    182 
of  corporations;  officers  cannot  refuse  to  produce;  violation  Sher- 
man Anti-Trust  Act 186 

requiring  production  of ;  State  statutes 494 

See  School  Books. 

BOOMS, 

when  not  a  monopoly 295 


676  INDEX 

[References  are  to  Sections] 

BOROUGH, 

exclusive  contract  with  water  company;  impairment  contract  ob- 
ligation    225 

BOYCOTT, 

defined  and  considered 30 

essential  elements  of 32 

origin  of  practice note,  33 

secondary  boycott  defined 34 

and  strike  distinguished 43 

See  Labor  or  Trade  Unions. 

BOYCOTTING, 

defined  and  considered 33 

BREACH, 

of  contract  collateral  to  illegal  agreement;  Sherman  Anti-Trust 

Act 155,  156 

of  contract  by  municipality  not  an  act  impairing  obligation  of 

contract 216 

BREWERS, 

agreements  between  not  to  sell  to  one  indebted;  to  raise  price. . . .  413 

BRICKLAYERS'  UNION, 

and  mason  and  builders'  association;  agreements  between 414 

BRIDGES, 

exclusive  grant  or  privilege;  impairment  of  contract  obligation. . .  219 

removal  of;  police  power note,  271 

when  grant  exclusive  to  certain  extent 296 

when  not  a  monopoly 296 

Charles  River  Bridge  case 296 

exclusive  right  to  take  toll  at,  not  monopoly note,  296 

when  contract  by  city,  as  owner  of  ferry  franchise,  with  bridge 

company  creates  no  monopoly 297 

See  Toll  Bridges. 

BROKERS, 

action  by  member  of  combination  against  ticket  brokers;  Sherman 
Anti-Trust  Act 163 

BUILDING  AND  LOAN, 

associations;  statutes  as  to  held  constitutional 264 

BURDEN  OF  PROOF, 

Sherman  Anti-Trust  Act 184 

illegality  of  contract;  partnership  accounting 489 

Sec  Evidence. 


INDEX  677 

(References  are  to  Sections] 

BUSINESS, 

size  of  not  necessarily  illegal;  monopoly 79 

sale  of;  contract  not  to  engivge  in note,  88 

covenant  not  to  carry  on ;  rejusonableness  of  for  court 103 

contract  for  purchfise  of;  validity  dependent  on  reasonableness.  .  .  106 

conducted  by  means  of  larj^e  number  of  stores 12(} 

size  or  extent  of  not  alone  test  of  violations;  Sherman  Anti-Trust 

Act   120 

good  will;  purchase  of;  violations;  Sherman  Anti-Trust  Act 130 

exception  in  statute  as  to  sale  of  good  will  of 376 

and  good  will;  sale  of;  contracts  not  to  engage  in  competition 409 

and  good  will;  sale  of;  contracts  not  to  engage  in  competition;  ex- 
ception in  statute 410 

and  good  will;  sale  of;  laundry  not  a  manufacturing  establishment  411 

agreement  to  refrain  from  entering  into 412 

"BUSINESS  OR  PROPERTY," 

injur>'  to;  Sherman  Anti-Trust  Act;  when  individual  may  sue  ....  160 

BY-LAWS, 

of  association  showing  illegality 384 

and  rules  of  association;  cattle  owners,  buyers  and  sellers 415 

of  association  or  corporation  as  evidence 487 


CANAL.    See  Navigable  Canal. 

franchise  for,  held  not  to  preclude  railroad  franchise 70 

franchise  as  to  held  not  special  act 266 

CAPITAL  STOCK, 

of  railroad  company;  condemnation  of;  when  no  exclusive  privilege 
granted 313 

CARRIER, 

newspaper  publishers;  contracts  between 424 

See  Common  Carrier;  Freights;  Interstate  Commerce  Act;  Pool- 
ing of  Freights;  Railroads. 

CAR  SERVICE, 

association  merely  agent  of  several  railroads;  violation  State  stat- 
utes   399 

CAST-IRON  PIPES, 

combination  of  manufacturers  of;  Sherman  Anti-Trust  Act 143 

CATTLE, 

owners,  buyers  and  sellers;  associations  of;  by-laws  and  rules 415 


678  INDEX 

[References  are  to  SectionB] 

CATTLE  DEALERS, 

association  of;  violations;  Sherman  Anti-Trust  Act 149 

CERTIFICATE, 

of  foreign  insurance  company;  revocation  of 449 

CHARLES  RIVER  BRIDGE.    See  Bridges. 

CHARTER, 

of  corporation  a  contract note,     21 

monopoly  as  essential  feature  of 70,  71 

grants  of,  strictly  construed   71 

when  grant  of  exclusive 72,  73 

when  grant  of  is  not  exclusive 74 

for  railroad;  impairment  of  contract  obligation;  provision  against 

competing  lines 221 

of  fire  insurance  company;  act  as  to  held  special  act   266 

of  gas  company ;  amendment  to ;  right  to  lay  gas  pipes ;  monopoly .  274 

from  mere  grant  of  a  monopoly  not  imphed 275 

articles  of  association  substitute  for 275 

bank  charters;  waiver  of  sovereignty note,  275 

statute  as  to  forfeiture  of 374 

permitting  consolidation  of  corporations 392 

annulment  of;  violation  State  law 445 

appUcation  to  annul;  granting  of  in  discretion  of  court 446 

CIRCUIT  COURTS, 

anti-trust  cases  given  precedence  in note,     14 

summoning  parties;  Sherman  Anti-Trust  Act 169,  170 

CIRCULARS.    See  Labor  or  Trade  Unions. 

CITIZEN, 

when  may  sue  under  Sherman  Anti-Trust  Act 160 

cannot  sue  for  injunction  under  Sherman  Anti-Trust  Act 161 

CITY.    See  MunicipaHty. 

CIVIL  CONSPIRACY, 

defined  4 

CLASS  LEGISLATION.    See  Constitutional  Law. 

CLOSED  SHOP, 

defined  37 

COAL, 

legally  capable  of  being  engrossed 5 

right  of  company  to  fix  prices  of;  Sherman  Anti-Trust  Act 154 

companies;  contracts  between;  Sherman  Anti-Trust  Act 154 


INDEX  679 

[Referencefl  are  to  Sections] 

CX)AL  OIL, 

agreement;  purchaaer  of  and  agent  of  aeller 407 

COKE, 

contracts  between  producers  of  coal  and  coke;  Sherman  Anti- 
Trust  Act 154 

COLLATERAL, 

where  restraint  is;  Sherman  Anti-Trust  Act 82 

contract  collateral  to  illegal  agreement;  Sherman  Anti-Trust  Act 

155, 156 

COLLUSION, 

conspiracy  synonymous  with note,      4 

COLONIAL  ACT, 

of  Massachusetts  of  1641  construed note,  276 

COMBINATION, 

defined  1 

word  not  possessed  of  accurate  legal  meaning 1 

construed 358 

of  insurance  companies  to  fix  rates note,     12 

holding  corporations 29 

and  monopolies;  distinctions 48 

distinguished  from  sale 55 

and  conspiracy  sjTionymous;  Sherman  Anti-Trust  Act 56 

See  Interstate  Commerce  Act;  Pooling  of  Freights;  Labor  or  Trade 

Unions;  Monopolies;  Particular  Combinations;  PooUng;  Sher>. 

man  Anti-Trust  Act;  Statutes;  Trade;  Trust, 
twofold  remedy  against  unlawful ;  Sherman  Anti-Trust  Act.    See 

"Appendix  A." 

COMMERCE, 

defined  and  considered 16 

with  foreign  nations  defined 16 

telephone  an  instrument  of note,  16 

electric  light  an  article  of note,  16 

intercourse  by  telegraph  is note,  16 

business  of  carrier  as  part  of note,  16 

power  to  regulate  applies  to  what note,  lb 

intercourse  through  mails  as note,  16 

insurance  contracts  and  policies note,  16 

intrastate  commerce  defined 17 

internal  commerce  defined note,  17 

wholly  witliin  State;  Congress  no  jurisdiction  over 77 

interstate  or  foreign;  direct  and  necessary  effect  upon  competi- 
tion; Sherman  Anti-Trust  Act SO,  81 


680  INDEX 

[References  are  to  Sections] 

COMMERCE— Continued. 

power  of  Congress  as  to 110,  111 

purpose  of  Sherman  Anti-Trust  Act 113 

Sherman  Anti-Trust  Act  not  inconsistent  with  Interstate  Com- 
merce  Act 114,  201 

in  Sherman  Anti-Trust  Act  construed 115 

not  synonymous  with  "trade";  Sherman  Anti-Trust  Act 115 

clause  of  Federal  Constitution;  power  of  Congress 205 

purpose  of  vestment  in  Congress  of  power  to  regulate 206 

regulation  of;  extent  of  interference  with  private  contracts  or  com- 
binations; interstate  and  intrastate  commerce 207 

clause;  power  of  Congress  under  to  restrict  liberty  to  or  freedom 

of  contract 233 

jurisdiction  of  Congress  over 270 

Federal  and  State  powers  as  to  distinguished 270 

Post  Roads  Act  prohibits  State  monopolies  in  commercial  inter- 
course by  telegraph 292 

interstate  transactions  of  telegraph  companies 318 

COMMISSION  MERCHANTS, 

association  of;  Sherman  Anti-Tnxst  Act 149 

COMMODITIES, 

defined  18 

corporate  franchise  as note,     18 

combinations  to  control  prices  of;  monopolies 65,  66 

contracts  restraining  competition  in  generally 89,  90 

See  Commodity. 

COMMODITY, 

defined  18 

insurance  as note,  18 

corporate  franchise  as note,  18 

does  not  include  personal  services note,  18 

telegraph  service  is  not 435 

construed 359 

See  Commodities. 

COMMON  CARRIER, 

agreement  to  maintain  rates;  injunction;  Sherman  Anti-Trust 

Act note,      8 

business  of  as  part  of  trade  or  commerce;  interstate  commerce 

note,     16 

regulation  of;  Alabama  Constitution 240 

violation  by;  Sherman  Anti-Trust  Act 151 

contracts  between  owners  of  vessels;  Sherman  Anti-Trust  Act.  ...    152 
combinations  to  share  earnings  prohibited;  Washington  Constitu- 
tion   261 

interstate  commerce  act;  pooling  of  freights 194,  201 


INDEX  681 

(References  arc  to  Sections] 

COMMON   CAmUER—ConUnued. 

contracts  between;  consolidation  of  railroad  companies;  parallel 

and  comiH'tinK  lines t 395 

See  Freights;  Interstate  Commerce  Act;  Pooling  of  Freights;  Railroads. 

COMMON  LAW, 

conspiracy  defined note,       3 

actionable  conspiracy  at 4 

conspiracy  to  commit  offense  against  United  States  not  felony  at 

note,    64 

personal  service  not  subject  of  monopoly  at 69 

contracts  in  restraint  of  trade;  when  valid  and  invalid 83 

English  statute  as  to  monopolies  declaratory  of note,  276 

patent  whether  a  monopoh'  in  old  sense  of 282,  283 

right  and  statutory  right  as  to  foj)yriglits  distinguished 287 

protects  property  in  trade-marks 288 

exclusive  contract  between  railroad  and  telegraph  company;  mo- 
nopoly   293 

effect  upon  interstate  transactions  of  telegraph  companies 318 

See  Contracts  in  Restraint  of  Trade, 
monopolies  unlawful  at.    See  "Appendix  A." 

COMMUNICATION, 

through  mails  as  commerce note,     16 

COMPETENCY, 

of  evidence.    See  Evidence. 

COMPETING  LINE, 

defined  and  considered 19 

provision  in  railroad  charter  as  to;  impairment  of  contract  obliga- 
tion   221 

COMPETITION, 

defined  2 

"  the  life  of  trade  " note,  2 

contracts  void  which  tend  to  prevent 65 

restraint  of  and  monopoly  distinguished 68 

not  every  contract  illegal  which  tends  to  restrict 68 

what  degree  of  restraint  of  essential;  monopoly 68 

direct  and  necessary  effect  upon;  interstate  or  foreign  commerce; 

Sherman  Anti-Trust  Act 80,  81 

in  commodities;  contracts  restraining;  generally 89 

public  policy  favors note,  89 

contracts  preventing  void note,  90 

contract  between  public  service  corporations  to  stifle  held  void ...  92 

degree  of;  contracts  in  restraint  of  trade 99,  100 

what  degree  of  permissible;  contracts  in  restraint  of  trade 101 

Sherman  Anti-Trust  Act  enacted  to  foster 112 

natural  effect  of 125 


682  INDEX 

[References  are  to  Sections) 

COMPETITION— Cowii/iued. 

monopolies  to  control  prohibited;  Alabama  Constitution 240,  241 

monopolies  to  control  prohibited;  South  Dakota  Constitution.  .  .  .  255 
combinations  to  control  prohibited;  Washington  Constitution ....  259 

combinations  to  control  prohibited;  Wyoming  Constitution 262 

power  of  Congress  to  prohibit  restraints  upon  competition;  rail- 
road corporations 267 

unfair  competition;  when  cannot  be  predicated  solely  on  use  of 

trade-name 289 

city  ordinance  as  to  union  label  on  city  printing,  etc. ;  when  a  mo- 
nopoly   322 

contracts  not  to  engage  in;  sale  of  business  and  good  will 409 

contracts  not  to  engage  in.     See  Business;  Good  Will, 
contracts  to  restrain;  pubHc  policy,  etc.    See  "Appendix  A." 

COMPLAINT, 

Sherman  Anti-Trust  Act;  sufficiency  of;  general  rules 173 

under  Sherman  Anti-Trust  Act;  sufficiency  of;  rules  in  force  in 

State  where  action  brought;  Practice  Act 174 

Sherman  Anti-Trust  Act;  sufficiency  of;  particular  cases 175 

Sherman  Anti-Trust  Act;  duplicity 176 

Sherman  Anti-Trust  Act;  joinder  of  defendants;  election 177 

to  recover  penalty 481 

in  action  to  restrain;  New  York 478 

See  Pleading. 

"CONCENTRATE," 

"monopoHze"  synonymous  with 50 

CONCLUSIONS  OF  LAW, 

pleading 470 

CONDEMNATION, 

under  Sherman  Anti-Trust  Act 13 

of  water  supply;  no  exclusive  privilege  beyond  recall note,  275 

of  capital  stock.    See  Railroads. 

CONDITION, 

of  sale  not  to  sell  goods  of  any  other  person;  statute  prohibiting. .  371 

in  patent  licenses;  Sherman  Anti-Trust  Act 135 

in  Ucenses;  particular  ones;  patents;  Sherman  Anti-Trust  Act. . . .  136 

CONDUITS, 

in  city  streets;  statutory  grant  to  telephone  company;  no  exclusive 
right  317 

CONGRESS, 

no  jurisdiction  over  commerce  wholly  within  State 77 

power  of  generally;  Sherman  Anti-Trust  Act 110 


INDEX  683 

[References  are  to  Sectiona] 

CONGRESS— Continue//. 

power  to  regulate  commerce;  what  it  includes Ill 

competent  for  it  to  vest  jurisdiction  under  Sherman  Anti-Tru.st 

Act Ill 

purpose  in  passing  Sherman  Anti-Trust  Act 112 

power  to  confer  jurisdiction  to  summon  parties 169 

acts  of  supreme  law  of  land;  appUcation  to  combinations,  trusts, 

etc 203 

constitutional  vestment  of  powers  in 204 

power  of ;  commerce  clause  of  Constitution 205 

purpose  of  vestment  in  Congress  of  power  to  regulate  commerce. .  206 
regulation  of  commerce;  extent  of  interference  with  private  con- 
tracts or  combinations;  interstate  and  intrastate  commerce.  . .  .  207 

obligation  of  contract  clause  not  a  limitation  on 208 

Fifth  Amendment  to  Federal  Constitution  a  limitation  on  power  227 
of  power  of  under  commerce  clause  to  restrict  hberty  to  or  free- 
dom of  contract 233 

Fourteenth  Amendment;  equal  protection  of  the  laws;  power  of 

Congress  and  of  States 238 

power  of  to  prohibit  restraints  upon  competition;  raikoad  corpora- 
tions    267 

inactive;  subject  of  interstate  commerce;  power  of  States 270 

jurisdiction  of  over  commerce 270 

supremacy  of  over  State  laws note,  270 

power  of;  territorial  legislation 368 

See  Post  Roads  Act;  Statutes. 
debates  in;  Sherman  Anti-Trust  Act.    See  "Appendix  A." 

CONNIVANCE, 

conspiracy  synonymous  with  note,       4 

CONSIDERATION, 

of  contract  in  restraint  of  trade 104 

CONSOLIDATION, 

of  parallel  and  competing  lines  of  railroad  prohibited 369 

of  corporations;  transfer  of  property  to  one 390 

of  corporations;  statute  or  charter  permitting 392 

parallel  and  competing  lines  of  railroad;  violation  State  statutes .  . .  395 

street  railways;  violation  State  statute 397 

of  gas  companies;  violations  State  statute 418 

of  railroads.    See  Railroads. 

CONSOLIDATION  OF  CORPORATIONS.    See  Corporationfl. 

CONSPIRACY, 

defined 3,  20 

defined  and  considered note,  57 

at  common  law  defined note,  3 

persons  injun^l  l>y  have  action  at  law  for 4 


684  INDEX 

[References  are  to  Sections] 

CONSPIRACY— Continued. 

Bynonymous  with  collusion  or  connivance note,  4 

corporations  amenable  for note,  13 

in  restraint  of  trade  defined 20 

boycott  as 30 

and  combination  synonymous;  Sherman  Anti-Trust  Act 56 

in  restraint  of  trade  and  contract  in  restraint  of  trade  distinguished  57 
means  substantially  same  as  contract;  Sherman  Anti-Trust  Act 

note,  57 

exclusive  combination  not  necessarily  a  conspiracy 59 

combination  of  ship  owners  held  not 59 

nature  elements  essentials,  or  test  of 59-64 

combination  or  confederation  and  unlawful  design  or  means  em- 
ployed   60 

what  essential  to  offense  of 60 

motive  or  intention 61 

gravamen  of  offense  of 62 

gist  of  offense  of note,  62 

overt  acts;  New  York 63 

to  commit  offense  against  or  to  defraud  United  States;  overt  acts  64 
against  United  States;  when  overt  act  may  be  done  anywhere; 

when  crime  complete note,  64 

to  commit  offense  against  United  States  not  felony  at  common  law 

note,  64 

to  defraud  United  States;  overt  act;  indictment note,  64 

test  or  essentials  of  generally;  Sherman  Anti-Trust  Act 84 

Sherman  Anti-Trust  Act;  test  or  essentials  of;  overt  acts 85 

to  do  acts  in  another  jurisdiction 85 

may  have  continuance;  Sherman  Anti-Trust  Act 119 

indictment  charging;  denial  under  general  issue;  Sherman  Anti- 
Trust  Act 180 

See  Indictment;  Sherman  Anti-Trust  Act. 

CONSPIRATOR.     See  Conspiracy. 

CONSTITUTION, 

of  State  cannot  impair  obligation  of  a  contract 209 

of  State  not  a  contract 209 

of  Alabama;  legislative  duty  as  to  monopolies,  combinations,  etc., 

to  control  articles  of  necessity,  etc.,  or  to  prevent  competition. .  240 
of  Alabama  continued;  effect  upon  competition;  meaning  of  "un- 
reasonably" and  "reasonable  competition" 241 

of  Arkansas;  monopolies  prohibited 242 

of  Idaho;  combinations  to  control  prices,  regulate  production,  etc., 

prohibited;  duty  of  legislature 243 

of  Kentucky;  legislative  duty  as  to  trusts,  combinations,  etc.,  to 

control  prices 244 

of  Louisiana;  combinations,  etc.,  to  control  prices  unlawful;  duty 

of  legislature 245 

of  Maryland ;  monopolies  prohibited 240 


INDEX  685 

[References  are  to  Sections] 

CONSTITUTION— Con<inw€d. 

of  Minnesota;  combinations  to  control  food  products  a  criminal 
conspiracy;  duty  of  legislature 247 

of  Mississippi;  duty  of  legislature  to  prevent  trusts,  combinations, 
etc 248 

of  Montana;  combinations,  trusts,  etc.,  to  fix  prices  or  regulate 
production;  duty  of  legislature 249 

of  Montana  continued;  necessity  of  showing  intent 250 

of  Montana  continued;  meaning  of  "trust"  therein 251 

of  North  Carolina;  monopolies  prohibited 252 

of  North  Dakota;  combinations  to  control  prices,  cost  of  ex- 
change or  transportation  prohii)itod;  franchises  forfeited 253 

of  Oklahoma;  monopolies  prohibited;  duty  of  legislature  as  to 
combinations,  monopolies,  etc 254 

of  South  Dakota;  monopoUes  and  trusts  prohibited;  combinations 
to  control  prices,  production,  transportation  or  to  prevent  com- 
petition prohibited;  duty  of  legislature 255 

of  Tennessee;  monopolies  prohibited 256 

of  Texas;  monopolies  prohibited 257 

of  Utah ;  combinat  ions  to  control  prices,  cost  of  exchange  or  trans- 
portation prohibited;  duty  of  legislature 258 

of  Washington;  monopolies  and  trusts  prohibited;  combinations 
to  control  prices,  production,  transportation  or  to  prevent  com- 
petition prohibited;  duty  of  legislature 259 

of  Washington  continued;  its  jirovisions  not  self-executing 260 

of  Washington  continued;  combinations  of  common  carriers  to 
share  earnings  prohibited 261 

of  Wyoming;  monopohcs  prohibited;  combinations  to  prevent 
competition,  control  production  or  prices,  etc.,  prohibited.  .  .  .   262 

provisions  prohibiting  granting  special  or  exclusive  privileges, 
immunities  or  franchises,  etc 263,  264 

provisions  prohibiting  creation  of  corporation  by  special  act, 
etc 265,  266 

of  States  and  United  States;  legislative  powers  under 269,  270 

of  State;  ordinances  of  municipality  must  not  conflict  with 279 

of  States.     See  Constitutional  Law;  State. 

of  United  States.     See  Constitutional  law;  Federal  Constitution. 

CONSTITUTIONAL  LAW, 

Federal  Constitution;  preliminary  statement 202 

Constitution   and  laws  of  United   States  supreme  law  of  land; 

application  to  combinations,  trusts,  etc 203 

constitutional  vestment  of  powers  in  Congress 204 

commerce  clause  of  Constitution;  powers  of  Congress 205 

purpose  of  vestment  in  Congress  of  ix)wer  to  regulate  commerce .  .   206 
regulation  of  couunerce;  extent  of  interference  with  private  con- 
tracts or  combinations;  interstate  and  intrastate  commerce.  .  .  .   207 

obligation  of  contract  clause  not  a  limitation  on  Congress 208 

impairment  of  obligation  of  contracts;  whether  State  Constitution 
a"law" •••  209 


686  INDEX 

[References  are  to  Sections] 

CONSTITUTIONAL  hAW— Continued. 

impairment  of  obligation  of  contracts;  whether  "law"  appUes 

only  to  State  legislative  enactments 210 

impairment  of  obUgation  of  contracts;  whether  municipal  or- 
dinance a  "law" 211 

constitutionality  Sherman  Anti-Trust  Act Ill 

impairment  of  obUgation  of  contracts;  whether  municipal  or- 
dinance a  "  law  " 211 

)bligation  of  contract  clause  refers  to  subsequently  enacted  law  of 

State 213 

subsequently  enacted  statute  changing  remedy  or  procedure;  im- 
pairment of  obligation  clause 214 

nature  of  laws  prohibited  by  obligation  of  contracts  clause 215 

nature  of  contracts  embraced  by  obligation  of  contracts  clause; 

between  what  parties 216 

nature  of  contracts;  obligation  of  contracts  clause  embraces  im- 
plied and  express  contracts 217 

obligation  of  contracts;  legal  and  legislative  contracts;  construc- 
tion of  contract;  authority  of  Federal  Supreme  Court 218 

bridges;  exclusive  grant  or  privilege;  impairment  of  contract  ob- 
Ugation   219 

exclusive  grant;  ferry;  impairment  contract  obligation 220 

railroad  charter;  provision  against  competing  hues;  impairment 

of  contract  obligation 221 

telephone  company's  exclusive  grant;  impairment  of  contract  ob- 
ligation   222 

electric  lighting;  exclusive  grant  or  privilege;  impairment  of  con- 
tract obligation 223 

exclusive  right  to  supply  gas;  impairment  of  contract  obhgation .  .  224 
water  companies;  exclusive  contracts,  grants  or  privileges;  im- 
pairment of  contract  obUgation 225 

obUgation  of  contract 225 

powers  reserved  to  the  States 226 

Federal  Constitution ;  Fifth  Amendment  generally 227 

what  first  eight  articles  of  Federal  Constitution  refer  to 227 

Federal  Constitution;  Fourteenth  Amendment;  generally 228 

Fourteenth  Amendment  to  Federal  Constitution;  no  State  to 

abridge  privileges  or  immunities 229 

Fourteenth  Amendment;  due  process  clause;  Fifth  Amendment. .  230 
Fourteenth  Amendment;  Fifth  Amendment;  Uberty  to  or  freedom 

of  contract;  generally 231 

liberty  to  or  freedom  of  contract  continued;  power  of  government 

to  restrict,  regulate  or  control 232 

Uberty  to  or  freedom  of  contract  continued;  power  of  Congress 

under  commerce  clause  to  restrict 233 

liberty  to  or  freedom  of  contract  continued;  police  power  of  States  234 
Uberty  to  or  freedom  of  contract  continued;  Standard  Oil  Com- 
pany's case 235 

liberty  tx>  or  freedom  of  contract  continued;    States  statutes 
prohibiting  combination,  etc.;  instances 236 


INDEX  687 

[ReferencPB  arc  to  Sectional 

CONSTITUTIONAL   hk^—Conlimwd. 

Fourteenth  Amendment;  equal  protection  of  the  laws 237 

Fourteenth  Amendment;  equal  protection  of  the  laws;  power  of 

Congress  and  of  States 238 

creation  of  monopolies;  State  Constitutions  prohibiting  monop- 
olies; generally 239 

State  Constitutions 23<>-2G7 

Alabama  Constitution;  legislative  duty  as  to  monopolies,  combin- 
ations, etc.,  to  control  articles  of  necessity,  etc.,  or  to  prevent 

competition 240 

Arkansas  Constitution;  monopoliea  prohibited 242 

Idaho  Constitution;  combinations  to  control  prices,  regulate  pro- 
duction, etc.,  prohibited;  duty  of  legislature 243 

Alabama  Constitution ;  legislative  duty  as  to  trusts,  combinations, 

etc.,  to  control  prices 244 

Louisiana  Constitution;  combinations,  etc.,  to  control  prices  un- 
lawful ;  duty  of  legislature 245 

Maryland  Constitution;  monopolies  prohibited 246 

Minnesota  Constitution;  combinations  to  control  food  products 

a  criminal  conspiracy;  duty  of  legislature 247 

Mississippi  Constitution;  duty  of  legislature  to  prevent  trusts, 

combinations,  etc 248 

Montana  Constitution;  combinations,  trusts,  etc.,  to  fix  prices  or 

regulate  production  prohibited;  duty  of  legislature 249 

Montana  Constitution  continued;  necessity  of  showing  intent.  .  .  .  250 

Montana  Constitution;  meaning  of  "trust"  therein 251 

North  Carolina  Constitution;  monopohes  prohibited 252 

North  Dakota  Constitution;  combinations  to  control  prices,  cost 

of  exchange  or  transportation  prohibited ;  franchises  forfeited .  .   253 
Oklahoma  Constitution;  monopolies  prohibited;  duty  of  legisla- 
ture as  to  combinations,  monopolies,  etc 254 

South  Dakota  Constitution;  monopolies  and  trusts  prohibited; 
combinations  to  control  prices,  production,  transportation  or  to 

prevent  competition  prohibited;  duty  of  legislature 255 

Tennessee  Constitution;  monopolies  prohibited 256 

Texas  Constitution ;  monopolies  prohibited 257 

Utah  Constitution;  combinations  to  control  prices,  cost  of  ex- 
change or  transportation  prohibited;  duty  of  legislature 258 

Washington  Constitution;  monopolies  and  trusts  prohibited;  com- 
binations to  control  prices,  production,  transportation  or  to 

prevent  competition  prohibited;  duty  of  legislature 259 

Washington  Constitution   continued;  its  provisions  not  self-exe- 

cuting ""'-' 

Washington  Constitution  continued;  combinations  of  common 

carriers  to  share  earnings  prohibited -61 

Wyoming  Constitution;  monopolies  prohibited;  combinations  to 
prevent  competition,  control  production  or  prices,  etc.,  pro- 
hibited  •    •  262 

constitutional  provisions  prohibiting  granting  special  or  exclusive 
privileges,  immunities  or  franchises 263,  264 


688  INDEX 

[References  are  to  Sections] 

CONSTITUTIONAL  hkVi— Continued. 

constitutional  provisions  prohibiting  creation  of  corporation  by 

special  act,  etc 265,  266 

Federal  and  State  legislative  powers  distinguished 270 

Federal  and  State  legislative  powers  distinguished;  interstate  and 

intrastate  commerce 270 

patent  system  rests  on  Federal  Constitution  and  Acts  of  Congress  282 
street  railways;  contracts  with  municipality;  special  privilege  or 

immunity;  monopoly 294 

special  privilege  or  immunity;  municipal  contracts  generally 294 

Massachusetts;  exclusive  privileges note,  296 

when  ferries  would  be  a  monopoly 300 

when  statute  would  be  unconstitutional  as  granting  monopoly  as 

to  ferry 300 

Kentucky  Bill  of  Rights  not  violated;  grant  of  exclusive  right  to 

supply  gas 303 

irrigation  monopoly  or  privilege  not  "special"  within  prohibition 

of  Constitution 309 

when  no  exclusive  privilege  granted  by  statute  authorizing  con- 
demnation of  capital  stock  of  railroad 313 

when  no  special  privilege  granted  by  statute  as  to  acquisition  of 

railroad  lands 313 

prohibiting  enactment  of  special,  etc.,  laws;  street  railway  grants.   316 
city's  power  to  grant  exclusive  franchise  to  street  railway  com- 
pany; special  privileges,  etc 316 

grants  of  special  privileges  or  immunities  to  telephone  companies .   317 

toll  road ;  when  not  a  monopoly 320 

due  process;  contract  with  State;  water  company 333 

special  privileges  when  not  granted  as  to  public  waterways 334 

State  statutes  generally 344 

State  statutes;  due  process  of  law;  hberty  of  contract 345,  346 

State  statutes;  class  legislation 346 

State  statutes;  discrimination 347 

constitutional  provision  requiring  legislature  to  enact  laws  con- 
strued   348 

contract  made  prior  to  passage  of  act  does  not  render  it  uncon- 
stitutional   349 

State  statutes;  construction;  general  rules 350 

State  statutes;  as  to  intent  of  legislature 351 

where  part  of  State  statute  unconstitutional 352 

as  to  title  and  body  of  State  statute 353 

rule  as  to  statutes  in  pari  materia 354,  355 

State  statutes;  rule  as  to  additional  and  descriptive  words 356 

constitutional  provision  prohibiting  consolidation  of  parallel  and 

competing  lines  of  railroad 369 

statute  as  to  examination  of  witnesses  before  trial 496 

CONSTRUCTION, 

of  grants  to  municipal  corporations 294 

of  statute  as  to  electric  lighting 299 


INDEX  689 

(References  are  to  Sections] 

CONSTRUCTION— Continued. 

of  Btatutea.     See  Constitutional  Law;  Statutes. 

of  Sherman  Anti-Trust  Act.     See  Sherman  Anti  Trust  Act. 

of  Sherman  Anti-Trust  Act  in  light  of  reason.     See  "Appendix  A. " 

of  "person"  in  Sherman  Anti-Trust  Act.    See  "Appendix  A." 

CONTEMPT, 

of  court;  same  act  may  be  crime  and Ill 

CONTINGENT  DAMAGES, 

not  a  basis  for  judgment;  Sherman  Anti-Trust  Act 188 

CONTINUANCE, 

conspiracy  under  Sherman  Anti-Tnist  Act  may  have 119 

CONTRACT, 

defined  and   considered 21 

in  restraint  of  trade  defined 23 

and  conspiracy  mean  substantially  same;  Sherman  Anti-Trust 

Act note,  57 

in  restraint  of  trade;  analogous  to  monopolize 58 

tending  to  prevent  competition  void 65 

nature  of  condemned  by  Sherman  Anti-Trust  Act note,  80 

not  to  engage  in  business 88 

test  of  legality  of  contract  under  Sherman  Anti-Trust  Act 120 

essentials  of  to  constitute;  violations  Sherman  Anti-Trust  Act.  .  124 

violations  Sherman  Anti-Trust  Act;  what  constitute;  generally. .  125 

entered  into  before  passage  of  Sherman  Anti-Trust  Act 127 

between  holders  of  copyrights;  violations;  Sherman  Anti-Trust 

Act 133 

between  owners  of  patents;  Sherman  Anti-Trust  Act 134 

as  to  proprietary  medicines;  Sherman  Anti-Trust  Act 138 

between  manufacturers;  generally;  Sherman  Anti-Trust  Act.  . . .  140 

as  to  manufacturers  within  a  State 141 

as  to  quotations;  board  of  trade;  Sherman  Anti-Trust  Act 150 

between  common  carriers;  Sherman  Anti-Trust  Act 151 

between  owners  of  vessels;  Sherman  Anti-Trust  Act 152 

as  to  mining;  Sherman  Anti-Trust  Act 153 

between  coal  companies;  Sherman  Anti-Trust  Act 154 

with  combination;  voluntary  purchaser;  illegality  of  combination 

no  defense;  Sherman  Anti-Trust  Act 155,  156 

with   combination;  when  illegality  of  combination   a  defense; 

Sherman  Anti-Trust  Act 157 

for  pooling  freights;  action  on 197 

Federal  Constitution;  regulation  of  commerce;  extent  of  inter- 
ference with  private  contracts 207 

impairment  of  obligation  of;  whether  State  Constitution  a  "law"  209 

State  Constitution  cannot  impair  obligation  of 209 

impairment  of  obligation  of;  whether  "law"  apphes  only  to  State 

legislative  enactments 210 

44 


690  INDEX 

[References  are  to  Sections) 

CONTRACT— Con^inwed. 

impairment  of  obligation  of;  whether  municipal  ordinance  a  "law"  211 
impairment  of  obligation  of;   word  "law"  does  not  apply  to  ju- 
dicial decisions,  etc 212 

clause  of  Federal  Constitution  refers  to  subsequently  enacted  law 

of  State 213 

impairment  of  obhgation  clause;  subsequently  enacted  statute 

changing  remedy  or  mode  of  procedure 214 

nature  of  laws  prohibited  by  obhgation  of  contracts  clause 215 

ultra  vires  not  protected  by  obligation  of  contracts  clause 216 

breach  of  by  municipahty  not  an  act  impairing  obligation  of  con- 
tract   216 

prohibited  by  statute  not  protected  by  obligation  of  contracts 

clause 216 

nature  of  embraced  by  obhgation  of  contracts  clause;  between 

what  parties 216 

imphed  and  express  embraced  by  obligation  of  contracts  clause . .  217 
obhgation  of;  legal  and  legislative  contracts;  construction  of  con- 

'    tract;  authority  of  Federal  Supreme  Court 218 

obhgation;  impairment  of;  bridges;  exclusive  grant  or  privilege. .  219 

obhgation;  impairment  of;  exclusive  grant;  ferry 220 

obligation;  impairment  of;  railroad  charter;  provision  against 

competing  lines 221 

obhgation;  impairment  of;  telephone  company's  exclusive  grant.  222 
obhgation;  impairment  of;  exclusive  grant  or  privilege;  electric 

hghting 223 

obligation;  impairment  of;  exclusive  right  to  supply  gas 224 

exclusive  contracts;  water  companies;  impairment  contract  obhga- 
tion   225 

obligation  of;  constitutional  law 225 

liberty  to  or  freedom  of;  generally;   Fourteenth  Amendment; 

Fifth  Amendment 231 

liberty  to  or  freedom  of  construed  power  of  government  to  restrict, 

regulate  or  control 232 

hberty  to  or  freedom  of  continued;  power  of  Congress  under  com- 
merce clause  to  restrict 233 

liberty  to  or  freedom  of  continued;  police  power  of  States 234 

liberty  to  or  freedom  of  continued;  Standard   Oil   Company's 

case 235 

liberty  to  or  freedom  of  continued;  State  statutes  prohibiting 

combinations,  etc. ;  instances 236 

with  States  or  municipalities;  construction  of 275 

power  of  municipality  to  make  contracts  tending  to  create  monop)- 

oly 280 

whether  patent  a  monopoly  or  contract 282,  283 

municipality;  constitutional  law;  special  privilege,  etc.;  monopoly  294 
by  city  as  owner  of  ferry  franchise  with  bridge  company,  when  it 

creates  no  monopoly 297 

with  city  for  electric  lighting;  when  not  void  for  exclusiveness .  .  .   298 
power  of  city  as  to  electric  lighting;  exclusive  right 298 


INDEX  691 

[References  are  to  Sectional 

CONTRACT— Con/tnued. 

effect  of  duration  of,  on  grant  or  contract  as  to  electric  lighting  by 

city 298 

by  municipality  with  grantee  of  exclusive  gas  privilege 304 

and  grants  of  exclusive  privilege  or  monopoly;  when  void  as  to 

gas  supply 306 

for  market  house  by  city  or  town;  monopoly 310 

providing  for  exclusive  use  of  certain  text-books  in  schools 314 

by  city  with  telephone  company  for  exclusive  right  for  period  of 

years 317 

exclusive  right  of  State  under  contract  with  telegraph  company . .  318 

award  of  by  city  printing  to  specified  class;  a  monopoly 323 

city  cannot  contract  away  its  legislative  powers 328 

by  city  as  to  water  supply;  instances  of  valid  and  void  contracts; 

exclusive  rights;   monopoly 329,  330 

when  no  defense  that  it  creates  monopoly ;  water  supply 331 

with  State;  water  company;  constitutional  law;  due  process 333 

between  employer  and  employees;  combination  to  induce  breaking 

of 437 

in  restraint  of  trade.     See  Contracts  in  Restraint  of  Trade;  Re- 
straint of  Trade, 
in  violation  of  State  statute.    See  Exclusive  Contract;  Exclusive 

Grants;  Labor  or  Trade  Unions;  Licenses;  Sherman  Anti-Trust 

Act;  State  Statutes;  Violations, 
obligation  of.     See  Constitutional  Law. 

to  restrain  competition,  etc.;  pubUc  policy.    See  "Appendix  A," 
liberty  or  freedom  of.   See  "Appendix  A. " 

CONTRACTS  IN  RESTRAINT  OF  TRADE, 

defined 23 

distinction  between  State  Anti-Trust  Act  and 52 

distinction  between  contracts  per  se  in  restraint  of  trade  and  con- 
tracts which  tend  to  destroy  competition  and  create  monopolies  53 
distinctions;  conspiracy  in  restraint  of  trade  and  contracts  in  re- 
straint of  trade 57 

analagous  to  "monopolize" 58 

intrastate  and  interstate;  Sherman  Anti-Trust  Act 77,  80,  81,  82 

reasonable  and  unreasonable  restraints;  Sherman  Anti-Trust  Act  83 

pubUc  policy  as  test ;  generally 86 

nature  essentials  or  test 86-109 

pubhc  poHcy  as  test;  general  and  partial  restraint  of  trade 88 

when  enforceable note,  88 

public  policy  as  test;  contracts  tending  to  create  monopolies;  use- 
ful commodities 89 

not  tested  by  prices  that  result 89 

public  policy  as  test;  contracts  affecting  articles  of  prime  necessity  90 

what  contracts  not  void  as  against  public  policy 91 

public  policy  tost;  public  service  corporations 92,  93 

effect  of  changed  conditions  as  to  trade,  commerce,  etc.;  public 

policy;  Engli.sh  courts 94 


692  INDEX 

[References  are  to  Sections] 

CONTIL\CT   IN   RESTRAINT  OF  TRADE— Continue. 

effect  of  changed  conditions  as  to  trade,  commerce,  etc.;  public 

policy ;  Federal  courts 95 

effect  of  changed  conditions  as  to  trade,  commerce,  etc.;  public 

policy ;  State  courts 96 

extent  of  illegahty  of;  new  rule 97 

restraint  need  not  be  complete  nor  amount  to  a  criminal  offense. .  97 

effect  of  State  statute  upon  illegality  of 98 

test  of  legality  of;  Sherman  Anti-Trust  Act 120 

essentials  of  in  order  to  constitute  violations  Sherman  Anti-Trust 

Act 124 

purpose  of  law  in  prohibiting 99,  100 

restraint  of  trade;  monopolies;  degree  of  competition 99,  100 

restraint  need  not  be  complete  nor  effect  a  monopoly ; .  100 

contract  in  effect  transferring  good  will  and  custom 101 

what  degree  of  competition  permissible 101 

circumstances  are  to  be  considered  in  determining  legality  of  re- 
straint   102 

doctrine  of  common  law 102 

whether  contract  is  in  restraint  of  trade  is  question  for  court ....  103 
where  contract  is  one  of  a  system  of  contracts;  reasonable  and 

unreasonable  restraints 107 

reasonableness  as  to  territory  or  area  covered 108 

test  of  reasonableness;  fair  protection  to  covenanter 109 

power  of  Congress;  generally;  Sherman  Anti-Tmst  Act Ill 

consideration  of 104 

motive 105 

reasonable  and  unreasonable  restraints  generally 106 

and  conspiracy  in  restraint  of  trade  distinguished 57 

See  Constitutional  Law;  Sherman  Anti-Trust  Act;  State 
Constitutions. 

"CONVENIENCE," 

construed 359 

COPPER, 

contracts  between  miners  and  refiners;  Sherman  Anti-Trust  Act..  153 

COPYRIGHTS, 

contracts  between  holders  of;  violations;  Sherman  Anti-Trust  Act  133 
suit  for  infringement  of;  illegality  of  combination  as  defense; 

Sherman  Anti-Trust  Act 159 

source  of;  exclusive  right  or  monopoly 285 

law  as  to  secures  exclusive  right  or  monopoly :  .  .  .   286 

purpose  of  law  as  to 286 

statutory  and  common-law  right  distinguished;  exclusive  property  287 

CORPORATIONS, 

to  what  extent  persons note,     13 

whether  word  "person "  includes 363 


INDEX  693 

[References  are  to  Sections] 

CORPORATIONS— Con^t«  tied. 

arc  persons  withiu  Sherman  Anti-Trust  Act 114 

a  person  within  moaning  of  equal  protection  clause  of  Federal 

Constitution note,  237 

amenable  for  conspiracy note,     13 

fraucluse  of  as  commodity note,     18 

charter  of  or  contract note,     21 

character  of  franchise  to 70 

charters  and  franchises  of  strictly  construed 71 

contracts  in  restraint  of  trade;  public  service  corporations;  public 

policy  test 92 

and  agent  of  cannot  form  unlawful  combination 124 

violations  by;  stockhohiors  not  criminally  liable 128 

holding  majority  of  stock  of  another  corporation;  violation  Sher- 
man Anti-Trust  Act 131 

exchange  of  stores  of  stock-holding  corporation;  violations  Sher- 
man Anti-Trust  Act 132 

State  not  under  Sherman  Anti-Trust  Act 165 

charging  officers,  agents  or  stockholders  of  in  indictment;  Sherman 

Anti-Trust  Act 179 

officers  and  employees  of  cannot  refuse  to  testify;  violation  Sher- 
man Anti-Trust  Act 186 

cannot  refuse  to  produce  books;   violation  Sherman  Anti-Trust 

Act 186 

distribution  of  assets  of  holding  corporation;  right  to  return  of 

shares 193 

county  not  one note,  263 

constitutional  provisions  prohibiting  the  creation  of  by  special  act 

265,  266 

power  of  creating  is  one  appertaining  to  sovereignty 272 

may  exist  by  prescription 272 

can  only  exercise  powers  granted 272 

private  corporations  exist  by  legislative  grant note,  272 

State  legislative  power  to  grant  exclusive  privileges  to 274 

municipality  not  invested  with  power  to  create 278 

delegation  by  legislature  of  power  to  create 278 

franchises  conferred  for  entire  body  of  corporators 280 

consolidation  of;  exclusive  privileges;  monopoly 335 

poUce  power  of  State;  fimitations  in  Federal  Constitution;  Four- 
teenth Amendment 340 

police   power  of   State  over  foreign   corporations;   Fourteenth 

Amendment 341 

statute  as  to  forfeiture  of  charter  of 374 

by-laws  of  as  evidence 487 

foreign  corporation  subject  to  State  Anti-Trust  Laws 388 

consolidation  of  several;  transfer  of  property  to  one;  violation 

State  statutes 390 

each  obtaining  interest  in  the  other;  \'iolation  State  statutes 391 

where  statute  or  charter  pi-rmits  consoliilation 392 

purchase  of  assets  of;  violation  State  statutes 393 


694  INDEX 

[References  are  to  Sectional 

CORPORATIONS— Continued. 

purchase  by  mining  company  of  stock;  violation  State  statute. . .  394 

composed  of  crushed  granite  dealers;  agreements 417 

officers  and  agents;  indictment  of 440 

annulment  of  charter;  forfeiture  of  franchise;  right  of  stockholder 

to  enforce 445 

undertaking  by  to  induce  employees  to  trade  with  another 438 

granting  of  appUcation  to  annul  charter  is  in  discretion  of  court .  .  446 

foreign  corporation;  ouster  of;  when  court  no  discretion 447 

foreign  corporation;  nature  of  right  to  transact  business;  ouster  of  448 
foreign  insurance  company;  authority  of  insurance  commissioner 

to  revoke  certificate 449 

proceeding  by  information  to  forfeit  franchise  of;  pleading 477 

no  defense  that  corporation  a  foreign  one 455 

requiring  production  of  books  and  documents  of;  State  statutes. .  494 
See  Foreign  Corporations. 

COTTON  SEED  OIL, 

manufacturers;  agreements;  withdrawal  of  agent  by  one 416 

COUNTY, 

not  a  corporation note,  263 

COURTS, 

jurisdiction  under  Sherman  Anti-Trust  Act 13 

jurisdiction;  generally;  Sherman  Anti-Trust  Act 168 

jurisdiction  of  under  amendments  to  Wilson  Tariff  Act 14 

question  for;  whether  contract  is  in  restraint  of  trade 103 

question  for;  reasonableness  of  covenant  not  to  carry  on  business.  103 
"combination  in  the  form  of  trust"  synonymous  with  "pooling"  51 
jurisdiction  under  Sherman  Anti-Trust  Act;  competent  for  Con- 
gress to  confer Ill 

same  act  may  be  crime  and  contempt  of Ill 

power  of  as  to  witnesses;  violation  Sherman  Anti-Trust  Act.  ...  186 

as  to  statutes  enacted  in  exercise  of  police  power note,  271 

word  "  law  "  does  not  apply  to  decisions  of  impairment  of  obli- 
gation of  contracts 212 

construed 360 

granting  of  application  to  annul  charter  is  in  discretion  of 446 

ouster  of  foreign  corporation ;  when  no  discretion 447 

order  by  requiring  production  of  books  and  documents;  State 

statutes 494 

See  Federal  Supreme  court;  United  States  Supreme  Court 
cannot  inflict  unauthorized  penalties.     See  "Appendix  A." 
jurisdiction  of  Federal  Circuit  Court.     See  "Appendix  A." 

COVENANT, 

not  to  carry  on  business;  reasonableness  of  for  court 103 

motive  of  covenantee  not  test  of  validity 105 


INDEX  696 

[References  are  to  Sections] 

COVENANT— Continued. 

in  lease  by  city  of  its  gas  works  not  to  interfere  with  lessee's  ex- 
clusive right 305 

COVENANTER, 

fair  protection  to;  contract  in  restraint  of  trade;  test  of  reasonable- 
ness     109 

CREDIT, 

by-laws  of  association  as  to 384 

CREDITOR, 

right  to  sue  under  Sherman  Anti-Trust  Act 162 

CRIME, 

same  act  may  be  crime  and  contempt  of  court Ill 

CRIMINAL  CONSPIRACY, 

defined note,      3 


DAMAGES, 

under  Sherman  Anti-Trust  Act 13 

amendments  to  Wilson  Tariff  Act 14 

Sherman  Anti-Trust  Act;  right  of  stockholder 162 

Sherman  Anti-Trust  Act;  sufficiency  of  complaint  or  petition; 

general  rules 173 

Sherman  Anti-Trust  Act;  how  sufficiency  of  pleading  determined  174 

Sherman  Anti-Trust  Act;  burden  of  proof 184 

speculative,  remote  or  contingent  not  basis  for  a  judgment;  Sher- 
man Anti-Trust  Act 188 

actual  must  be  established;  Sherman  Anti-Trust  Act 188 

from  individual  member  of  combination;  Sherman  Anti-Trust 

Act 188 

recovery  of  generally;  Sherman  Anti-Trust  Act 188 

Sherman  Anti-Trust  Act;  not  an  action  for  penalty 189 

Sherman  Anti-Trust  Act;  nature  of  action  for;  jury  trial 189 

action  for  a  civil  remedy;  statute  of  limitations;  Sherman  Anti- 
Trust  Act 190 

action  for;  Sherman  Anti-Triist  Act;  where  payment  of  higher 

price  compelled 191 

cannot  be  set  off;  Sherman  Anti-Trust  Act 192 

statutes  as  to  construed 2CG 

action  for  caused  by  conspiracy note,     63 

action  for;  person  injured  by  conspiracy 452 

erroneous  exclusion  of  evidence  as  to  intent  to  injure 492 


696  INDEX 

[References  are  to  Sections] 

DAMNUM  ABSQUE  INJURIA, 

ferry  franchise  not  exclusive;  grant  to  other  ferries 74 

DAMS, 

navigable  waters;  police  power note,  271 

DEAL, 

or  traflBc  synonymous note,    26 

DECISIONS, 

of  courts;  word  "law"  does  not  apply  to;  impairment  of  obliga- 
tion of  contracts 212 

DECLARATION, 

Sherman  Anti-Trust  Act;  sufficiency  of;  general  rules 173 

See  Complaint;  Petition;  Pleading. 

DECLARATIONS, 

of  parties  as  evidence 482,  485 

DEFENDANTS, 

joinder  of 471 

joinder  of;  complaint;  Sherman  Anti-Trust  Act;  election 177 

service  of  notice  on  under  Sherman  Anti-Trust  Act.    See  "Ap- 
pendix A." 

DEFENSE, 

that  lease  a  monopoly;  suit  on 68 

generally;  violations  of  Sherman  Anti-Trust  Act 129 

combination  of  labor  unions 139 

contract  with  combination;  voluntary  purchaser;  illegality  of  com- 
bination no  defense;  Sherman  Anti-Trust  Act 155,  156 

when  illegality  of  combination  is;  contract  with;  Sherman  Anti- 
Trust  Act 157 

illegality  of  combination  as;  suit  for  infringement  of  trade-marks; 

Sherman  Anti-Trust  Act 159 

illegality  of  combination  as;  suit  for  infringement  of  patent;  Sher- 
man Anti-Trust  Act 158 

illegality  of  combination  as;  suit  for  infringement  of  copyright; 

Sherman  Anti-Trust  Act 159 

when  no  defense  that  contract  creates  monopoly;  water  supply.  .  331 

to  suit  for  injunction  by  person  injured 450 

to  action  by  party  to  illegal  contract  or  combination 453 

that  corporation  a  foreign  one  not 455 

that  price  not  raised  is  not 456 

that  complete  monopoly  not  obtained  is  not 457 

motives  of  those  inst  igating  suit  are  immaterial 458 

good  motives  or  intent  no  defense  where  statute  violated 459 

illegality  of  contract  or  combination  as;  independent  of  statute; 
collateral  contract 4G0 


INDEX  697 

[Referoncos  arc  to  Sections] 

DEFENSE— Cmlinued. 

illegality  of  combination  or  contract  aa;  where  permitted  by 

statute 461 

illegality  of  combination  or  contract  as  continued;  instances 462 

illegality  of  combination  or  contract  as;  action  for  rent 463 

illegality  of  cuml)inatiou  or  contract  as;  contract  made  prior  to 

statute 464 

illegality  of  combination  or  contract  as;  where  statute  prescribes 

no  mode  of  procedure  for  determining  illegality 465 

that  law  docs  not  favor  increased  sale  of  article;  combination  to 

raise  price 466 

illegality  of  association  as  defense  to  action  by  for  penalty 467 

that  member  of  illegal  combination;  party  seeking  to  enforce  for- 
feiture; pleading 480 

DEFINITION, 

"arrangement " 357 

association note,  13 

blacklist 30 

boycott 31,  32 

boycotting 33 

civil  conspiracy 4 

closed  shop 37 

combination 1>  358 

commerce 1" 

commerce  with  foreign  nations 16 

commodities 1^ 

commodity 18,  359 

competing  hne 1" 

competition 2 

conspiracy 3,  -0 

conspiracy  in  restraint  of  trade 20 

"convenience" 359 

contract 21 

contract  in  restraint  of  trade 23 

"court" 360 

due  process note,  230 

engrossing '^ 

exclusive  right  or  privilege  defined " 

forestaUing '_ 

freights 1^"^ 

holding  corporation -^ 

in  restraint  of  trade  or  commerce 24 

intercourse note,     It) 

internal   commerce note,     1 1 


interstate  commerce, 
intrastate  oommorce. 


16 
17 


labor  organization "*'^ 

labor  union 

legal  .strike 4- 


698  INDEX 

[References  are  to  Sections] 

DEFINITION— Continued. 

monopoliflt 9 

monopolize 22 

"monopolize."    See  "Appendix  A." 

monopoly;  Sherman  Anti-Trust  Act 22 

monopoly 8,   66,  362 

open  shop 40 

parallel  Une 19 

"person" 363 

"person."    See  "Appendix  A." 

"person"  or  "persons;"  Sherman  Anti-Trust  Act 13 

picket 35 

police  power 271 

pooling 10 

regrating 11 

restraint 24 

restraint  of  trade 24 

secondary  boycott 34 

strike 41,  43 

"To  monopolize."   See  "Appendix  A." 

trade 25,  365 

trade  and  manufacture note,    25 

trade  union 38,  44 

trading  or  mercantile  business note,     25 

traffic 26 

transportation 27 

transportation  within  the  State 28 

trust 12,  29 

union  shop 45 

DELEGATED  POWER, 

grant  of  exclusive  right  to  ferry;  municipal  ordinance 301 

DELEGATION, 

of  legislative  powers  to  municipality 278 

DELEGATION  OF  POWER, 

as  to  control  of  streets 299 

control  of  streets  by  city;  street  railways;  exclusive  grants 316 

DENIAL, 

imder  general  issue;  indictment  charging  conspiracy;  Sherman 
Anti-Trust  Act 180 

DINGLEY  ACT, 

provisions  of  as  to  trusts 14 

DISCRIMINATION, 

prevention  of;  police  power  of  State 338 


INDEX  609 

[References  are  to  Sectional 

DISCRIMINATION— C'o/i/i;iu«(i. 

in  prices  for  petroleum;  State  prohibiting 372 

in  rates;  remedy  for  in  Misaiasippi 441 

"DISPENSARY  SYSTEM," 

not  a  monopoly 308 

DISSOLUTION.     Sec  Partners;  Partnership. 

DISTINCTIONS  AND  SYNONYMS, 

generally 46-54 

distinctions;  monopolies  resulting  from  grant  or  contract 46 

distinctions;  monopolies  and  engrossing 47 

distinctions;  monopolies  and  combinations 48 

distinctions;  exclusive  privileges  and  monopoly 49 

"monopolize"  used  in  statute  synonymous  with  "aggregate"  or 

"concentrate" 50 

"combination  in  the  form  of  trust"  used  in  statute  synonymous 

with  "pooling" 51 

distinction  between  State  anti-trust  statute  and  contracts  in  re- 
straint of  trade 52 

distinction  between  contracts  per  se  in  restraint  of  trade  and  con- 
tracts which  tend  to  destroy  competition  and  create  monopolies     53 

distinctions;  combination  and  sale;  Sherman  Anti-Trust  Act 55 

"combination"  and  "conspiracy"  synonymous;  Sherman  Anti- 
Trust  Act 56 

"to  monopolize";  power  to  raise  prices  or  exclude  competition  dis- 
tinguished      67 

monopoly  and  restraint  of  competition  distinguished 68 

DISTRICT  ATTORNEYS, 

suits  by  under  Sherman  Anti-Trust  Act 161 

DISTRICT  COURT, 

summoning  parties;  Sherman  Anti-Tnist  Act 169,  170 

DOCUiMENTS, 

as  evidence;  violation  Sherman  Anti-Trust  Act 186 

requiring  production  of;  State  statutes 494 

DOMESTIC  COMMERCE.    See  Intrastate  Commerce. 

DONNELLY  ANTI-TRUST  ACT, 

New  York 377 

DOOR  CHECKS, 

patented;  combination  of;  manufacturers 134 

DRUGS, 

contracts  as  to  proprietary  medicines 138 


700  INDEX 

[References  are  to  Sections] 

DUE  PROCESS, 

defined note,  230 

clause;  regulations  by  State  of  fire  insurance  companies 230 

clause;  history  of note,  230 

clause;  Fourteenth  Amendment;  exclusive  privilege  to  supply 

water  note,  230 

Fourteenth  Amendment;  Fifth  Amendment 230,  234 

State  statutes  as  depriving  of 345 

See  Constitutional  Law. 

DUPLICITY, 

complaint  under  Sherman  Anti-Trust  Act 176 

DURATION  OF  GRANT.    See  Contracts;  Exclusive  Privilege. 


E 

EARNINGS, 

combinations  of  common  carriers  to  share  prohibited;  Washing- 
ton Constitution 261 

pooling  of ;  Interstate  Commerce  Act.  See  Interstate  Commerce 
Act;  Pooling  of  freights. 

EFFECT, 

necessity  of  averring;  charging  offense 473 

ELECTION, 

joinder  of  defendants;  complaint;  Sherman  Anti-Trust  Act 177 

ELECTRIC  CURRENT, 

ordinance  granting  exclusive  right  to  supply 225 

ELECTRIC  LIGHT, 

an  article  of  commerce note,     16 

company  excluded;  when  contract;  contract  void  as  monopoly. . .  306 
ordinance  granting  exclusive  right  for 225 

ELECTRIC  LIGHTING, 

powers  of  cities  and  towns  as  to 298,  299 

right  vested  in  city  excludes  lighting  by  private  corporation 299 

exclusive  grant  or  privilege;  impairment  of  contract  obligation. .  .   223 
exclusive  right;  contract  power  of  city  as  to 298 

ELECTRIC  LIGHT  PLANT, 

ordinance  granting  right  to  erect;  subsequent  erection  of  plant 
by  city;  impairment  contract 217 

EMPLOYEES, 

of  corporations  cannot  refuse  to  testify;  violation  Sherman  Anti- 
Trust  Act 186 


INDEX  701 

[References  are  to  Sectionfl] 

EMPLOYEES— Con^uiucd. 

combination  to  induce  to  break  contract  with  employer 437 

undertaking  by  corporation  to  induce  to  trade  with  another 438 

EMPLOYERS, 

combination  to  induce  employees  to  break  contract  with 437 

ENACTMENTS.     See  Congress;  Constitutional  Law;  Ordinances; 
Sherman  Anti-Trust  Act;  Statutes. 

ENGLAND.    See  Statutes. 

ENGLISH, 

statute  as  to  monopolies  declaratory  of  common  law note,  276 

ENGROSSING, 

defined  5 

old  offense  no  longer  known  to  law;  an  offense  at  common  law  in 

Rhode  Island note,      5 

and  monopolies;  distinctions 47 

EQUAL  PROTECTION  CLAUSE, 

Fourteenth  Amendment 237 

EQUITY, 

may  enjoin  violations  of  Sherman  Anti-Trust  Act 116 

restraining  order;  jurisdiction  to  issue;  Sherman  Anti-Trust  Act .  .    168 

bill  in  not  construed  as  an  indictment 173 

rule  that  he  who  seeks  equity  must  do  equity  applied;  contract  to 

supply  water 225 

when  no  adequate  remedy  at  law;  enforcing  exclusive  water  con- 
tract  .■■••■• 225 

power  of  to  impose  terms  as  condit  ion  for  dismissing  bill 225 

See  Injunction. 

EVIDENCE, 

exemptions  from  testifying;  perjuries  excepted ;  enforcing  trust  and 

interstate  commerce  laws note,     14 

hooks  of  defendants  as;  violat  ion  Sherman  Anti-Trust  Act 182 

admis.sibility  and  weight  of;  Sherman  Anti-Trust  Act 182 

of  acts  and  transactions;  violation;  Sherman  Anti-Trust  Act 182 

letter  jis;  violation  Sherman  Anti-Trust  Act 182 

as  to  intent;  when  essential;  violation  Sherman  Anti-Trust  Act.  .  .    183 

burden  of  proof;  Sherman  Anti-Trust  Act 184 

presumption  in  respect  to  combination;  Sherman  Anti-Trust  Act  185 
documents;  witnesses;  power  of  court;  Sherman  Anti-Trust  Act. .   186 

presumptions  as  to  source  of  franchise 272 

presumption  as  to  intent ;  violation  of  State  statutes 379 

presumption  as  to  legality  of  contract 380 


702  INDEX 

(References  are  to  Sections] 

EWIDENCEr-Continued. 

proof  of  illegality;  evidence  of  circumstances  in  connection  with 

making  of  contract;  acts  of  parties;  declarations 482 

as  to  intent 483 

positive  evidence  as  to  forming  of  conspiracy  and  of  purpose  not 

necessary  484 

letters  as  evidence  of  conspiracy;  statements  of  parties 485 

combination  to  raise  prices;  evidence  to  show  reason  for  increase; 

rebuttal  of 486 

by-laws  of  association  or  corporation  as 487 

presumption  as  to  innocence 488 

burden  of  proof;  illegality  of  contract;  partnership  accounting. . .  489 

sufficiency  of;  proof  of  conspiracy  to  raise  prices 490 

sufficiency  of;  time  of  entering  into  conspiracy 491 

damages;  conspiracy;  erroneous  exclusion  of  evidence  as  to  intent 

to  injure 492 

of  disloyalty  as  tending  to  prove  nonexistence  of  trust 493 

requiring  production  of  books  or  documents 494 

compelUng  witnesses  to  testify;  immunity  statutes 495 

taking  of  testimony  before  trial;  examination  of  witnesses;  consti- 
tutionality of  statute 496 

EXAMINATION, 

of  witness  before  grand  jury  a  "proceeding;"  Sherman  Anti-Trust 
Act  187 

EXCEPTION, 

in  statute  as  to  labor  organizations note,  346 

in  statute  as  to  agricultural  products  or  live  stock 376 

in  statute  as  to  sale  of  good  will  of  business 376 

in  statute;  contracts  on  sale  of  business  and  good  will 410 

See  Statutes. 

EXCHANGE, 

of  shares  of  stock-holding  corporation ;  violations  Sherman  Anti- 
Trust  Act 132 

of  cattle  dealers;  Sherman  Anti-Trust  Act 149 

EXCLUSIVE, 

derivation  of  word 6 

EXCLUSIVE  COMBINATION, 

not  necessarily  a  conspiracy 59 

EXCLUSIVE  CONTRACT, 

between  telephone  and  telegraph  company  void 92 

to  supply  water;  when  no  breach 225 

water  supply;  when  no  adequate  remedy  at  law  for  enforcing. . . .  225 

monopoly;  railroad  right  of  way;  telegraph  line 293 

sale  of  by-product  distinguished  from  sale  of  entire  output 404 

See  Contracts;  Exclusive  Franchise;  Exclusive  Grant;  Exclusive 
Privilege;  Exclusive  Rights. 


INDEX  703 

[References  are  to  iSections] 

EXCLUSIVE  FRANCHISE, 

to  gas  company;  legislature  doea  not  part  with  police  power 271 

instances  of  grants  of note,       6 

EXCLUSIVE  GRANT, 

when  charter  or  francliise  is 72,  73 

when  f rancliiso  or  charter  is  not 74 

bridges;  impairment  of  contract  obligation 219 

ferry;  impairment  of  contract  obligation 220 

to  telephone  company;  impairment  of  contract  obligation 222 

to  supply  gas;  impairment  of  contract  obligation 224 

water  com{)anies;  impairment  contract  obligation 225 

constitutional  provision  prohibiting 263,  264 

to  water  company ;  not  special  act 266 

contract  to  supply  water;  legislative  grant;  obUgation  of  contract; 

power  of  city  to  construct  plant note,  275 

or  contracts;  monopolies;  generally 294 

or  contracts;  electric  hghting 298,  299 

patents 282,  283 

of  right  to  use  end  of  wharf  for  ferry  purposes 302 

by  State  to  supply  gas  to  municipaUty 303 

to  street  railways  by  city 316 

telephone  companies 317 

to  telegraph  companies  by  State  restricted  by  Post  Roads  Act ....  318 

to  erect,  etc.,  toll  bridges 319 

for  ferries 319 

by  State  for  toll;  wharf 321 

See  Exclusive  Contract;  Exclusive  Franchise;  Exclusive  Privilege; 
Exclusive  Rights. 

EXCLUSIVE  PRIVILEGE, 

defined  6 

to  printing  company;  statute  granting  construed note,      8 

ordinance  granting  to  waterworks  company note,       8 

and  monopoly ;  distinctions 49 

right  to  8up{)ly  light  or  heat;  statute  granting  construed 71 

what  essential  to  power  to  grant 71 

must  be  no  doubt  as  to  validity 71 

franchises  strictly  construed 71 

when  charter  or  franchise  confers 72,  73 

when  charter  or  franchise  does  not  confer 74 

when  not  conferred  by  contract ;  restraint  of  trade 99 

bridges;  impairment  of  contract  obligation 219 

power  of  municipality  to  grant  must  be  expressly  conferred ;  mo- 
nopoly    294 

implied  power  of  municipality  to  grant ;  monopoly 294 

ferries 300 

to  make  and  vend  gas;  police  power 303 

by  city;  grant  to  supply  gas  for  term  of  years;  contract  with 
grantee 304 


704  INDEX 

[References  are  to  Sections] 

EXCLUSIVE  PRIVILEGE— Con^wued. 

grant  by  city  of,  or  monopoly  to  supply  gas 304 

grants  of  and  contracts  as  to  gas  supply;  when  void;  monopoly . .  .  306 

constitutional  provisions  prohibiting  granting  of 263,  264 

power  to  grant note,  274 

of  supplying  water;  obligation  of  contract;  municipal  corporation 

note,  275 

grant  of  by  municipality 280 

patents 282,  283 

or  right ;  copyrights 285,  286,  287 

of  right  to  take  toll  at  ferry  or  bridge  not  a  monopoly 296 

to  run  omnibuses;  when  a  monopoly 312 

when  not  granted  by  statute  authorizing  condemnation  of  capital 

stock  of  other  railroads 313 

monopoly;  school  text-book  statutes  as  to  uniform  series;  contracts  314 

a  monopoly;  power  of  State  to  grant,  to  water  company 327 

a  monopoly ;  power  of  city  to  grant,  to  water  company 328 

monopoly ;  consoUdation  of  corporations 335 

See  Exclusive  Contract;  Exclusive  Franchise;  Exclusive  Grants; 
Exclusive  Rights. 

EXCLUSIVE  PROPERTY .   See  Exclusive  Contract ;  Exclusive  Fran- 
chise; Exclusive  Privilege;  Exclusive  Rights;  Copyright  Patents. 

EXCLUSIVE  RIGHT, 

defined  6 

not  conferred  by  franchise  to  canal  company 70 

to  public  franchises  not  favored 71 

to  supply  gas;  franchise  a  contract 72 

when  charter  or  franchise  grants 72,  73 

when  charter  or  franchise  does  not  confer 74 

monopoly;  Sherman  Anti-Trust  Act 78 

as  to  patents 282-284 

as  to  copyrights 286,  287 

as  to  trade-marks  and  trade-names 288-290 

electric  Ughting;  contract  for  by  city;  when  not  void  for  exclusive- 

ness 298 

electric  lighting;  contract  power  of  city  as  to 298 

of  telephone  company  under  contract  with  city  for  term  of  years. .  317 

in  city  street;  when  telephone  company  has  no;  conduits 317 

ferries 300 

to  ferry;  municipal  ordinance;  delegated  authority 301 

covenant  by  city  in  lease  of  its  gas  works  not  to  interfere  with 

lessee 305 

no  monopoly;  municipal  lease  to  private  corporation  to  supply 

gas 305 

contract  with  town  giving  exclusive  right  to  gas  company  when 

void  as  monopoly 306 

to  supply  gas;  purchasers  of 307 


INDEX  705 

[References  are  to  Sections] 

as  to  slaughter-house  or  market-house;  monopoly  by  city  or  vil- 
lage    315 

to  occupation  of  wharf;  pubUc  use 321 

of  State  under  contract  with  telegraph  company 318 

to  control  waterway  and  collect  tolls  not  a  monopoly 334 

contracts  between  railroad  company  and  express  or  transfer  com- 
panies    398 

contracts  between  vendor  and  purchaser;  when  violation  of  State 

statute 402 

contracts  between  vendor  and  purchaser;  when  not  violation  State 

statute 403 

to  sell  goods  on  certain  premises;  contracts  giving 405 

See  Exclusive  Contract;  Exclusive  Franchise;  Exclusive  Grants; 
Exclusive  Privilege. 

EXECUTED  CONTRACT, 

defined  21 

See  Contracts. 

EXEMPTIONS, 

from  testifying;  perjuries  excepted;  enforcing  trust  and  interstate 

commerce   laws note,     1  1 

from  taxation;  insurance  companies;  statutes  construed. . .  note,  27 n 

of  railroad  from  taxation note,  264 

of  witnesses.    See  Evidence;  Witnesses. 

EXPRESS, 

wagons;  combination  of  individuals  driving 126 

company  and  railroad  company;  contracts;  exclusive  right 398 

company  Uability  as  transportation  company note,     27 

EXTENT, 

or  size  of  business  not  alone  test  of  violation  of  Sherman  Anti- 
Trust  Act 126 


F 

FARES, 

contracts  between  railroads  as  to;  Sherman  Anti-Trust  Act 151 

of  street  railway;  regulation  as  to  not  special  act 266 

See  Railroads. 

FARMERS, 

organizations  of;  Sherman  .Anti-Trust  Act 139 

statutes  as  to  pooling  by  of  farm  products 375 

FARM  PRODUCTS, 

statutes  as  to  pooling  of 376 

See  State  Statutes;  Statutes. 

45 


706  INDEX 

[References  are  to  Sections] 

FEDERAL, 

and  State  legislative  powers  distinguished 269 

and  State  legislative  powers  distinguished;  interstate  and  intra- 
state commerce 270 

government  has  no  inherent  powers  of  sovereignty 266 

FEDERAL  CONSTITUTION, 

preliminarj'  statement 202 

and  laws  supreme  law  of  land;  appUcation  to  combinations,  trusts, 

etc 203 

constitutional  vestment  of  powers  in  Congress 204 

commerce  clause  of;  powers  of  Congress 205 

purpose  of  vestment  in  Congress  of  power  to  regulate  commerce .  .   206 

obligation  of  contract  clause  not  a  limitation  on  Congress 208 

regulation  of  commerce;  extent  of  interference  with  private  con- 
tracts or  combinations;  interstate  and  intrastate  commerce. . .  .  207 
impairment  of  obligation  of  contracts;  whether  State  Constitution 

a  law 209 

impairment  of  obligation  of  contracts;  whether  "law"  applies 

only  to  State  legislative  enactments 210 

exclusive  grant;  ferry;  impairment  of  contract  obhgation 220 

railroad  charter;  provision  against  competing  lines;  impairment 

of  contract  obligation 221 

telephone  company's  exclusive  grant;  impairment  of  contract 

obhgation 222 

electric  Ughting;  exclusive  grant  for;  impairment  of  contract 

obhgation 223 

exclusive  right  to  supply  gas;  impairment  of  contract  obhga- 
tion   224 

water  companies;  exclusive  contracts,  grants  or  privileges;  im- 
pairment of  contract  obligation 225 

powers  reserved  to  the  State 226 

purpose  of  Tenth  Amendment 226 

Fifth  Amendment;  generally 227 

what  powers  first  eight  articles  refer  to 227 

what  privileges  and  immunities  of  citizens  include note,  227 

Fourteenth  Amendment;  generally 228 

Fourteenth  Amendment;  no  State  to  abridge  privileges  or  im- 
munities  229 

impairment  of  obligation  of  contracts;  whether  municipal  or- 
dinance a  "  law  " 211 

impairment  of  obligation  of  contracts;  word  "law"  does  not  apply 

to  judicial  decisions 212 

obligation  of  contract  clause  refers  to  subsequently  enacted  law  of 

State 213 

subsequently  enacted  statute  changing  remedy  or  mode  of  pro- 
cedure; impairment  of  obligation  clause 214 

nature  of  laws  prohibited  by  obligation  of  contracts  clause 215 

nature  of  contracts  embraced  by  obligation  of  contracts  clause; 
between  what  parties 216 


INDEX  707 

[References  are  to  Sectionfl] 

FEDERAL  CONSTITUTION— Con/inutt/. 

nature  of  contractH;  obligation  of  contracts  clause  embraces  im- 
plied and  express  contracts 217 

obligation  of  contracts;  legal  and  legislative  contracts;  construc- 
tion of  contract;  authority  of  Federal  Supreme  court 218 

bridges;  exclusive  grant  or  {jrivilege;  impairment  of  contract  obli- 
gation    219 

Fourteenth  Amendment;  due  process  clause;  I'ifth  Amendment.  .230 

Fourteenth  Amendment;  Fifth  Amendment;  liljortj-  to  or  freedom 
of  contract;  generally 231 

liberty  to  or  freedom  of  contract  continued;  power  of  government 
to  restrict,  regulate  or  control 232 

liberty  to  or  freedom  of  contract  continued;  power  of  Congress 
under  commerce  clause  to  restrict 233 

liberty  to  or  freedom  of  contract  continued;  police  power  of  States  234 

liberty  to  or  freedom  of  contract  continued;  Standard  Oil  Com- 
pany's case 235 

liberty  to  or  freedom  of  contract  continued;  State  statutes  pro- 
hibiting combinations,  etc.;  instances 236 

Fourteenth  Amendment;  equal  protection  of  the  laws 237 

Fourteenth  Amendment;  equal  protection  of  the  laws;  power  of 
Congress  and  of  States 238 

limitations  on  police  power  of  State;  corporations 340 

See  Constitutional  Law. 

FEDERAL  COURTS.    See  Courts;  Circuit  Court;  Federal  Supreme 
Court;  United  States  Circuit  Courts;  United  States  Supreme  Court. 

FEDERAL  LEGISLATION, 

patents,  copyrights,  trade-marks  and  Post  Roads  Act 282-293 

See  Sherman  Anti-Trust  Act;  Wilson  Act. 

FEDERAL  SUPREME  COURT, 

authority  of;  obligation  of  contracts;  legal  and  legislative  con- 
tracts; construction  of  contract 21S 

question  for  where  State  court  has  decided  as  to  violation  of  an 

anti-trust  statute 230 

See  United  States  Supreme  Court. 

FERRIES, 

are  merely  licenses 300 

not  monopolies  but  may  be  exclusive 300 

when  grant  of  exclusive  right  exists;  when  municipal  ordinance 

not  necessary;  delegated  authority 301 

exclusive  privilege  to note,      6 

franchise  not  exclusive;  damnum  absque  injuria 74 

exclusive  grants 319 

exclusive  grant;  impairment  of  contract  obligation 220 

company  and  statute  as  to  acquiring  additional  slips  constitutional  264 


708  INDEX 

(References  are  to  Sections] 

FERRIES— Continued. 

when  contract  by  citj',  as  owner  of  ferry  franchise  with  bridge 

company  creates  no  monopoly 297 

grant  of  exclusive  right  to  take  toll  not  a  monopolj' note,  296 

owner  of;  when  cannot  change  location  and  claim  same  exclusive 

right 300 

exclusive  right  to  use  end  of  wharf  for  ferry  purposes 302 

FIFTH  AMENDMENT, 

P'ederal  Constitution;  generally 227 

what  privileges  and  immunities  of  citizens  include note,  227 

due  process  clause note,  230 

liberty  to  or  freedom  of  contract;  generally 231-236 

See  Constitutional  Law. 

FINE, 

statutes  as  to 374 

statutes  providing  for 442 

See  Penalty. 

FIRE  INSURANCE, 

companies;  statutes  regulating;  due  process  of  law 230 

company ;  act  as  to  charter  held  special  act 266 

regulating  business  of;  poUce  power 271 

FOOD  PRODUCTS, 

combinations  as  to;  Minnesota  Constitution 247 

FOREIGN  CARRIERS, 

regulations  as  to;  Interstate  Commerce  Act note,  200 

See  Common  Carriers;  Railroads. 

FOREIGN  COMMERCE, 

direct  and  necessary  effect  upon  competition  in;  Sherman  Anti- 
Trust  Act 80,  81 

fair  regulation  of  business;  indirect  or  incidental  effect  upon  com- 
petition in;  Sherman  Anti-Trust  Act 82 

power  of  Congress  over 205 

purpose  of  vestment  in  Congress  of  power  to  regulate 206 

See  Commerce;  Congress. 

FOREIGN  CORPORATIONS, 

statute  as  to  revocation  of  certificate  does  not  violate  Fourteenth 

Amendment 229 

police  power  of  State;  Fourteenth  Amendment 341 

subject  to  State  Anti-Trust  Laws 388 

ouster  of;  when  court  no  discretion 447 

nature  of  right  to  transact  business;  ouster  of 448 

authority  of   insurance   commissioner  to  revoke  certificate  of 

foreign  insurance  company 449 

no  defense  that  corporation  is 455 

See  Corporations. 


INDEX  709 

[Roferences  are  to  Sections] 

FOREIGN  COUNTRIES, 

Sherman  Anti-Trust  Act  does  not  extend  to  acts  done  in 117 

that  combinations  were  formed  in  is  immaterial;  Sherman  Anti- 
Trust  Act 129 

FOREIGN  NATIONS, 

commerce  with  defined 16 

FORESTALLING, 

defined 7 

an  ofTense  no  longer  known  to  law note,  5 

derivation  of  word 7 

FORFEITURE, 

of  license  under  Texas  Anti-Trust  Act note,  8 

under  Sherman  Anti-Tnist  Act 13 

amendments  to  Wilson  Tariff  Act 14 

of  charter  of  corporation;  statute  as  to 374 

of  franchise;  violation  State  law 445 

See  Charter;  Franchise;  Pleading;  Remedies. 

FOURTEENTH  AMENDMENT, 

to  Federal  Constitution;  prohibitory  on  States  only 228 

to  Federal  Constitution ;  generally 228 

no  State  to  abridge  privileges  or  immunities 229 

statute  for  revoking  certificate  of  foreign  corporation  does  not 

violate 229 

due  process  clause;  Fifth  Amendment 230 

liberty  to  or  freedom  of  contract;  generally 231-236 

statute   prohibiting   combinations   of   insurance   companies  not 

violative  of 236 

equal  protection  of  the  laws;  power  of  Congress  and  of  States ....  238 

statute  void;  violation  of note,  249 

does  not  deprive  State  of  police  power note,  271 

limitations  on  police  power  of  State;  corporations 340 

police  power  of  State  over  foreign  corporations 341 

State  statutes  as  violating 345 

statutes  as  to  insurance  combinations 370 

statute  as  to  pooling  of  farm  products  does  not  violate 375 

See  Constitutional  Law;  State  Statutes;  Statutes. 

FRANCHISE. 

of  corporation  as  commodity note,     18 

to  private  corporation ;  character  of 70 

monopoly  as  essential  feature  of 70,  71 

grants  of  strictly  construed 71 

to  a  contract;  exclusive  right  to  supply  gas 72 

when  grant  of  exclusive 72,  73 

when  grant  of  is  not  exclusive 74 

not  exclusive  for  ferry;  damnum  absque  injuria 74 

by  municipality  to  water  company  exclusive 225 


710  INDEX 

[References  are  to  Sections] 

FRANCHISE— Con<wucc/. 

forfeited;  North  Dakota  Constitution 253 

constitutional  provisions  prohibiting  granting  exclusive...   263,  264 

held  not  special  act 266 

to  gas  company  exclusive;  legislature  does  not  part  with  police 

power 271 

presumption  aa  to  source  of 272 

sovereign  power  of  State  is  source  of  grant  of 272 

test  of  legislative  power  to  grant 273 

grants  of  where  public  interested;  construction  of 275 

alienation  of;   ultra  vires  agreement;  breach  of  duty  to  public 

note,  275 

mimicipal  corporations  held  to  strict  exercise  of 277 

municipality  not  invested  with  powers  to  grant 278 

conferred  for  entire  body  of  corporators 280 

forfeiture  of;  violation  State  law 445 

proceeding  by  information  to  forfeit;  pleading 477 

See  Exclusive  Franchise;  Exclusive  Grants;  Grants. 

FRATERNAL  BENEFIT  SOCIETY, 

act  as  to  not  special  act 266 

See  Constitutional  Law;  Contracts. 

FREEDOM  OF  CONTRACT.     See  "Appendix  A." 
See  Constitutional  Law;  Contracts. 

FREIGHTS, 

defined 195 

combination  of  ship  owners  to  keep  up  rate  of 59 

pooling  of  prohibited;  Interstate  Commerce  Act 194 

when  railroads  may  pool 195 

in  marine  policies;  meaning  of note,  195 

pooling  of;  nature  and  scope  of  Interstate  Commerce  Act 196 

action  on  contract  for  pooling  of 197 

what  constitutes  pooling  of;  under  Interstate  Commerce  Act 197 

what  does  not  constitute  pooling  of;  Interstate  Commerce  Act. . .  198 
of  ocean  or  water  Unes;  pooling  of  not  within  Interstate  Commerce 

Act 199 

combinations  to  prevent  continuous  carriage  of  to  destination 

prohibited  by  Interstate  Commerce  Act 200 

what  constitutes  continuous  shipment note,  200 

See  Railroads. 

FRESH  MEAT, 

violations  by  dealers  in;  Sherman  Anti-Trust  Act 148 

G 

GAS, 

companies;  construction  of  grants  to 71 

exclusive  right  to  supply ;  franchise  a  contract 72 


INDEX  711 

[References  are  to  Sectional 
GAS — Continued. 

statute  restrictmg  interstate  commerce  in  natural  gas  construefj 

note,  200 

exclusive  right  to  supply;  impairment  of  contract  obligation 224 

companies;  act  as  to  formation  of  held  constitutional 264 

company;  exclusive  franchise  to;  legislature  does  not  part  with 

police  power 271 

pipes;  right  to  lay;  amendment  to  corporate  charter;  monopoly .  .  .   274 
municipal  gas  works;  ordinance  not  a  contract;  power  to  revoke 

note,  275 
mimicipal  contracts  as  to,  conferring  special  privilege,  etc.,  or 

monopoly;  constitutional  law 294 

company  precluded  from  doing  gas  lighting  business  where  an- 
other company  empowered  to  do  electric  lighting 299 

grant  by  State  of  exclusive  privilege  or  monopoly;  police  power.  .   303 

grant  by  municipality  of  exclusive  privilege  or  monopoly 304 

municipal  lease  to  private  corporation  to  sujjply  gas;  exclusive 

right ;  no  monopoly 305 

lease  of  exclusive  right  to  supply  gas  made  by  city  in  its  business 

capacity 305 

lease  by  city  of  its  gas  works  with  covenant  not  to  interfere  with 

lessee's  exclusive  right 305 

contract  with  town  as  to  gas  excluding  other  gas  and  electric  Ught 

companies  when  void  as  monoijoly 306 

grants  and  contracts;  when  void  as  exclusive  or  as  monopoly.  .  . .   306 

purchasers  of  exclusive  rights 307 

companies;  consolidation  of;  agreements  between 41S 

companies  consohdation  of 335 

GENERAL  ISSUE, 

denial  under;  indictment  charging  conspiracy;  Sherman  Anti- 
Trust  Act 180 

See  Pleading. 

GOODS, 

when  illegality  of  combination  a  defense  to  action  for  price  of; 

Sherman  Anti-Trust  Act 157 

when  illegality  of  combination  no  defense  to  action  for  price  of; 

Sherman  Anti-Trust  Act 155,  156 

See  Defenses. 

GOOD  WILL, 

and  custom;  contract  transferring 101 

and  business;  purchase  of;  violations  Sherman  .Vnti-Trust  Act.  . .  130 

exception  in  statute  as  to  sale  of 370 

and  business;  sale  of;  contracts  not  to  engage  in  competition 409 

and  business;  sale  of;  contracts  not  to  engage  in;  exception  in 

business 410 

and  business;  sale  of;  laundry  not  a  manufacturing  establishment  41  i 


712  INDEX 

[References  are  to  Sections] 

GRAIN, 

warehouse  act;  police  power note,  271 

agreements  limiting  right  to  buy 419 

GRAND  JURY, 

examination  of  witness  before  is  a  "proceeding";  Sherman  Anti- 
Trust  Act 187 

See  Witnesses. 

GRANITE, 

agreement  between  crushed  granite  dealers 417 

GRANTS, 

to  municipal  corporations;  strict  construction 294 

to  construct  navigable  canal;  when  no  monopoly 311 

by  city  of  exclusive  privilege  to  run  omnibuses;  when  a  monopoly  312 
See  Exclusive  Franchise;  Exclusive  Grant;  Exclusive  Privilege; 
Exclusive  Right. 

GRATES, 

association  dealing  in;  Sherman  Anti-Trust  Act 146 


H 

HAIR, 

contract  to  instruct  in  treatment  of;  to  use  only  certain  remedies . .  439 

HEALTH, 

police  power  as  to  public  health note,  271 

See  PoUce  Power. 

HOLDING  CORPORATION, 

defined  29 

exchange  of  shares  of  stock;  violations  Sherman  Anti-Trust  Act. .   132 

distribution  of  assets  of;  right  to  return  of  shares 193 

See  Corporations. 

HOSPITAL, 

State  hospital;  act  as  to  not  special  act 266 


I 

ICE, 

companies;  agreements  between 420 

IDAHO, 

Constitution;  combinations  to  control  price,  regulate  production, 
etc.,  prohibited;  duty  of  legislature 243 


INDEX  713 

[References  are  to  SectionB] 

ILLEGALITY, 

of  combination  no  defense  to  contract  with;  voluntary  purchaser; 
Sherman  Anti-Trust  Act 155,  156 

of  combination;  when  defense  to  contract  with;  Sherman  Anti- 
Trust  Act 157 

of  combinat  ion  as  defense  to  suit  for  infringement  of  patent ;  Sher- 
man Anti-Trust  Act 158 

of  combination  as  defense  to  suit  for  infringement  of  trade-mark 

or  copyright;  Sherman  Anti-Trust  Act 159 

See  Defenses;  State  Statutes. 

IMMUNITIES, 

constitutional  provisions  prohibiting  granting  of 263,  264 

statutes;  compelling  witnesses  to  testify 495 

of  citizens.    See  Fourteenth  Amendment. 

IMPAIRMENT, 

of  obhgation  of  contracts.    See  Constitutional  Law;  Contracts; 
Federal  Constitution. 

IMPLIED  POWERS, 

of  municipality 277 

See  Mimicipality. 

IMPORT  TRADE, 

trusts  in  restraint  of;  amendments  to  Wilson  Tariff  Act 14 

IMPRISONMENT, 

statutes  as  to 374 

statutes  providing  for 442 

INDIAN  TRIBES, 

commerce  with  defined note,     16 

INDICTMENT, 

fact  of  conspiring  must  be  charged  against  all  conspirators;  doing 

of  overt  acts note,     64 

overt  act;  conspiracy  to  defraud  United  States note,     64 

Sherman  Anti-Trust  Act ;  allegation  of  purpose note,     80 

conspiracy  must  be  sufficiently  charged note,     64 

denial  of  allegation  as  to  conspiracy  and  continuance  of;  Sherman 

Anti-Trust  Act 85 

Sherman  Anti-Trust  Act;  allegation  of  time  of  formation  of  com- 
bination     178 

suflBciency  of;  general  rules;  Sherman  Anti-Trust  Act 178 

sufficiency  of;  Sherman  Anti-Tru.st  Act;  charging  officers,  agents  or 

stockholders 179 

charging  conspiracy;  denial  under  general  issue;  Sherman  Anti- 
Trust  Act ' 180 

prima  facie  evidence  of  probable  cause 181 


714  INDEX 

[References  are  to  Sections] 

INDICTMENT— Continued. 

not  conclusive;  Sherman  Anti-Trust  Act;  removal  proceeding. . . .   181 

rule  as  to  certainty 468 

in  language  of  statute  sufficient 469 

averring  purpose  or  effect 473 

averring  terms  of  agreement;  particular  articles  subject  of 474 

averments  as  to  conspiracy  and  object  to  be  effected 475 

conspiracy;  averring  names  of  persons  to  be  injured 476 

of  conspirators  may  be  either  joint  or  several 440 

of  corporations,  officers  and  agents 440 

necessity  of  averring  acts  to  be  in  restraint  of  trade 479 

See  Information;  Pleading. 

INDIVIDUAL, 

when  may  sue  under  Sherman  Anti-Trust  Act;  injury  to  "business 

or  property" 160 

cannot  sue  for  injunction;  Sherman  Anti-Trust  Act 161 

only  remedy  under  Sherman  Anti-Trust  Act  is  for  damages 161 

See  Parties. 

IXFORMATION, 

in  language  of  statute  sufficient 469 

joinder  of  defendants 471 

not  necessary  to  allege  combination  is  in  position  to  control  market  472 
conspiracy;  means  by  which  to  be  effectuated  need  not  be  charged  475 

to  forfeit  corporate  franchise 477 

of  patent;  suit  by  combination;  illegality  of  combination  as  de- 
fense; Sherman  Anti-Trust  Act 158 

of  copyright;  suit  for;  illegaUty  of  combination  as  defense;  Sher- 
man Anti-Trust  Act 159 

of  trade-marks;  suit  for;  illegaUty  of  combination  as  defense;  Sher- 
man Anti-Trust  Act 159 

See  Indictment;  Pleading. 

INJUNCTION, 

carriers'  agreement ;  to  maintain  rates note,  8 

exclusive  grant  to  slaughter-house note,  8 

against  continuance  of  alleged  conspiracy note,  63 

against  violations  of  Sherman  Anti-Trust  Act 116 

under  Sherman  Anti-Trust  Act;  what  sufficient  to  show 80 

individual  cannot  sue  for  under  Sherman  Anti-Trust  Act 161 

suit  by  attorney-general ;  Sherman  Anti-Trust  Act 161 

when  none  to  protect  rights  of  member  of  combination;  Sherman 

Anti-Trust  Act 163 

mortgagee  as  party  to  obligation  of  contract 225 

when  not  granted  to  enforce  exclusive  contract  to  supply  water. .  225 
bill;  intent  of,  to  extend  monopoly  or  trade-mark  or  trade-name; 

loss  of  right  to  individual  appropriation 290 

to  restrain  telegraph  company  from  erecting  lines  on  railroad  right 

of  way note,  293 


INDEX  715 

[References  are  to  Sectionsl 

INJUNCTION— Con/mwe.i. 

suit  for  by  person  injured;  defense 450 

against  acts  done  after  combination  declared  unlaw'ful 454 

See  Labor  or  Trade  Unions. 

INNOCENCE, 

presumption  as  to 488 

IN  PARI  MATERIA, 

rule  as  to  statutes 354,  355 

See  State  Statutes;  Statutes. 

INSTRUCTION, 

in  treatment  of  scalp  and  hair;  contract  as  to;  to  use  only  certain 

remedies 439 

INSURANCE, 

making  of  contract  of  an  incident  of  commercial  intercourse  note,  16 

as  commodity. note,  18 

meaning  of  "freight"  in  marine  policies note,  195 

State  regulations  of  fire  insurance  companies;  due  process  of  law .  .  230 
companies;  statute  prohibiting  combinations;  not  violation  of 

Fourteenth  Amendment 236 

companies;  prohibitory  statutes  as  to  held  constitutional 264 

act  as  to  charter  of  fire  insurance  company  held  special  act 266 

fire  insurance;  police  power;  regulation 271 

foreign  insurance;  pohce  power  as  to note,  271 

companies;  exemption  from  taxation;  statutes  construed.  .  .note,  275 
combination  to  fix  or  hmit  the  price  or  premium  to  be  paid  for  in- 
suring property  prohibited 370 

companies;  combination  of  to  fix  rates note,  12 

companies  or  agents  of;  agreements  to  fix  rates 421 

foreign  insurance  company;  authority  of  insurance  commissioner 

to  revoke  certificate 449 

INSURANCE  COMMISSIONER, 

authority  of  to  revoke  certificate  of  foreign  insurance  company . . .  449 

INTENT, 

as  element  or  essential  of  offense  of  conspiracy 61 

monopolies;  motive;  "to  monopoUze"  power  to  raise  prices  or  ex- 
clude competition  distinguished 67 

allegation  of  purpose;  indictment;  Sherman  Anti-Trust  Act. note,  SO 

contracts  in  restraint  of  trade 105 

evidence  as  to;  when  essential;  violation  Sherman  Anti-Trust  Act  183 

necessity  of  allowing;  under  terms  of  Montana  Constitution 250 

expressed  in  grant  as  affecting  construction 275 

of  legislature;  construction  of  State  statutes 351 

as  affecting  vioUition  of  State  statutes;  presumption  as  to 379 

motives  of  those  instigating  suit  are  immaterial 458 


716  INDEX 

[References  are  to  Sections] 

INTENT— Continued. 

good,  no  defense  where  statute  violated 459 

necessity  of  averring;  charging  offense 473 

evidence  as  to 483 

positive  evidence  as  to  purpose  of  conspiracy  not  necessary 484 

to  injure;  erroneous  exclusion  of  evidence  as  to 492 

See  Motive. 

INTERCOURSE, 

through  mails  is  commerce note,     16 

by  telegraph  is  commerce note,     16 

includes  means  by  which  trade  carried  on note,     16 

See  Commerce. 

INTERSTATE  COMMERCE, 

defined  and  considered 16 

railroad  equipment  instrument  of note,     16 

telephone  an  instrument  of note,     16 

what  included  in  transaction note,     16 

sending  liquors  from  one  State  to  another note,     16 

transportation  as  test  of note,     16 

intercourse  by  telegraph  is note,     16 

when  it  begins note,     16 

restraint  under  Sherman  Anti-Trust  Act  refers  to 77 

or  foreign  commerce;  direct  and  necessary  effect  upon  competition; 

Sherman  Anti-Trust  Act 80,  81 

power  of  Congress;  generally;  Sherman  Anti-Trust  Act 110 

test  of  legality  of  contract  or  combination  affecting 120 

attempt  to  monopolize;  where  chief  object  is  to  increase  trade ....   121 
attempt  to  monopoUze;  where  separate  parts  of  scheme  lawful. . .   122 

what  term  includes 123 

power  of  Congress  over;  commerce  clause  of  Constitution 205 

purpose  of  vestment  in  Congress  of  power  to  regulate 206 

in  oil  and  natural  gas;  statutes  restricting  construed note,  206 

regulation  of;  extent  of  interference  with  private  contracts  or 

combinations 207 

power  of  Congress  to  restrict  contracts  in  regard  to 233 

power  of  Congress  to  prohibit  restraints  upon  competition;  rail- 
road competition 267 

Federal  and  State  legislative  powers  distinguished 270 

contract  or  combination  involving;  not  subject  to  State  Anti-Trust 
Laws 385 

INTERSTATE  COMMERCE  ACT, 

not  inconsistent  with  Sherman  Anti-Trust  Act 114 

pooling  of  freights  or  division  of  earnings  prohibited 194 

pooling  of  freights;  freights  defined 195 

when  railroads  may  pool  freights 195 

pooUng  of  freights;  nature  and  scope  of  statute 196 

what  constitutes  "pooling  of  freights" 197 


INDEX  717 

[References  are  to  Sectional 

INTERSTATE  COMMERCE  ACT— Continued. 

what  does  not  constitute  pooling  of  freights 198 

poohng  of  ocean  or  water  freights  not  within  Interstate  Commerce 

Act Hi9 

combinations  to  prevent  continuous  carriage  of  freight  to  destina- 
tion prohibited 200 

persons  damaged  by  violation  may  make  complaint  to  commission 

or  sue  personally note,  200 

what  constitutes  continuous  shipment note,  200 

liability  of  carrier  for  violation  of note,  200 

penalty  for  violation note,  200 

not  inconsistent  with  Sherman  Auli-Trust  Act 201 

enforcing  trusts  and;  exemptions  from  tc^stifying;  perjuries  ex- 
cepted  note,     14 

See  Commerce;  Sherman  Anti-Trust  Act. 

INTERSTATE  COMMERCE  COMMISSION, 

pooling  of  ocean  or  water  freights  not  within  jurisdiction  of 199 

See  Interstate  Commerce  Act. 

INTIMIDATION.    See  Labor  or  Trade  Unions. 

INTOXICATING  LIQUORS, 

"Dispensary  System"  not  a  mono{X)ly 308 

INTRASTATE  COMMERCE, 

defined 17 

Congress  no  jurisdiction  over  combinations  affecting  only 77 

Federal  and  State  legislative  powers  distinguished 270 

See  Commerce;  Constitutional  Law;  Federal  Constitution;  Stat- 
utes. 

IRON  PIPES, 

combination;  manufacturers  of;  Sherman  Anti-Trust  Act 143 

IRRIGATION, 

monopoly  or  privilege  not  "special"  within  constitutional  pro- 
hibition   309 


J 

JOBBERS, 

combination  of 1'*'^ 

contracts  between  manufacturer  and 140 

and  manufacturers  of  tobacco;  combination  of;  Sherman  Anti- 
TruBt  Act l-*-^ 

JOB  PRINTING, 

establishment  and  newspapers;  contracts  between 423 


718  INDEX 

[References  are  to  Sections] 

JOINDER, 

of  defendants;  complaint;  Sherman  Anti-Trust  Act;  election 177 

of  defendants 471 

See  Parties;  Pleading. 


JUDGMENT, 

extent  of;  Sherman  Anti-Trust  Act 172 


JUDICIAL  DECISIONS, 

word  "law"  does  not  apply  to;  impairment  of  obligation  of  con- 
tracts   212 

"JUDICIAL  LEGISLATION" 83a 

See  "Appendix  A";  Courts. 

JUDICIARY  ACT, 

not  restrictive  of  right  to  summon  parties;  Sherman  Anti-Trust 

Act 170 

See  Courts. 

JURISDICTION, 

under  amendments  to  Wilson  Tariff  Act 14 

under  Sherman  Anti-Trust  Act 13 

of  courts  under  Sherman  Anti-Trust  Act;  competent  for  Congress 

to  confer m 

of  courts;  generally;  Sherman  Anti-Trust  Act 168 

summoning  of  parties;  Sherman  Anti-Trust  Act 169 

summoning  parties;  not  restricted  by  Judiciary  Act;  Sherman 

Anti-Trust  Act 170 

exercise  of  not  discretionary;  summoning  of  parties;  Sherman 

Anti-Trust  Act 171 

under  Sherman  Anti-Trust  Act;  extent  of  judgment 172 

of  interstate  commerce  commission;  pooling  of  ocean  or  water 

freights  not  within 199 

of  Congress  over  commerce 270 

of  Federal  Circuit  Court.    See  "Appendix  A." 
See  Courts. 


JURY  TRIAL, 

action  for  damages;  Sherman  Anti-Trust  Act 189 


K 

KENTUCKY, 

Constitution;  legislative  duty  as  to  trusts,  combinations,  etc.,  to 
control  prices 244 


INDEX  719 

[References  are  to  Sectionfl] 
L 

LABEL.    See  Labor  or  Trade  Unions;  I'nion  Label. 

LABOR.    See  Labor  or  Trade  Unions;  Union  Labor. 

LABOR  COMBINATIONS, 

within  prohibition  of  Sherman  Anti-Trust  Act 76 

See  Labor  or  Trade  Unions. 

LABOR  ORGANIZATION, 

defined 38 

exception  in  statute  as  to note,  346 

See  Labor  or  Trade  Unions. 

LABOR  OR  TRADE  UNIONS, 

conspiracy   defined note,       3 

boycott  defined 31 

essential  elements  of  boycott 32 

boycotting  defined 33 

secondary  boycott  defined 34 

picket  defined 35 

picketing  defined 36 

closed  shop  defined 37 

defined  and  considered 38 

lockout  defined 39 

open  shop  defined 40 

strike  defined 41 

legal  strike  defined 42 

boycott  and  strike  distinguished 43 

union  shop  defined 45 

acts  and  combinations  of;  Sherman  Anti-Trust  Act 139 

city  requirement  as  to  employment  only  of  members  of 323 

right  of  workingmen  to  organize 497 

right  of  workingmen  to  organize;  expressions  of  courts 498 

presumption  as  to  being  law-abiding  body 499 

right  to  organize  extends  to  labor  whether  physical  or  intellectual .   500 

right  of  workingmen  to  strike 501 

right  to  strike;  hmitations  on 502 

picketing;  legality  of;  general  rule 503 

picketing;  decisions  holding  unlawful 504 

picketing ;  when  unlawful 505 

picketing;  whether  lawful  depends  on  facts  and  circumstances; 

rule  as  supported  by  authority 506 

picketing;  no  injunction  to  protect 507 

picketing ;  ordinance  as  to  valid 508 

right  to  strike;  refusal  to  work  with  non-union  man;  Massachu- 
setts rule 509 

right  to  strike;  refusal  to  work  with  non-union  man;  Pennsylvania 
rule 510 


720  INDEX 

[References  are  to  Sections] 

LABOR  OR  TRADE  VNIONS— Continued. 

right  to  strike;  refusal  to  work  with  non-union  man;  New  York 

decisions 511 

right  to  strike;  refusal  to  work  with  non-union  man;  other  de- 
cisions   512 

right  to  strike;  refusal  to  work  with  non-union  man;  conclusion. .  513 

use  of  persuasion  by  strikers 514 

use  of  persuasion;  employees  under  contract 515 

use  of  violence,  threats  or  intimidation  by  strikers 516 

threats;  intimidation;  what  constitute 517 

boycotts  generally 518 

boycott  circulars;  when  held  legal 519 

boycott  circulars;  when  held  illegal 520 

boycott  circulars;  constitutional  provision  as  to  freedom  of  speech  521 

contracts  between  employer  and  employee 522 

contracts  between  employer  and  employee  continued 523 

officers;  power  of  trade  unions,  board  of  directors  or  committee  to 

contract 524 

injunction  to  restrain  strike 502,  516 

injunction;  picketing 503,  505,  507 

injunction;  strike;  refusal  to  work  with  non-union  men 510,  511 

injunction;  strike;  use  of  persuasion  to  induce 515 

injunction;  boycott 518 

injunction;  boycott  circulars 519,  520 

injunction;   contracts  between  employer  and   employee;   labor 

unions 522 

injunction;  sufficiency  of  complaint  for  threatened  injury  to  per- 
sons or  property;  New  York  Code 525 

injunction;  parties;  process;  service 526 

injunction;  right  to  in  New  York 527 

injunction;  to  restrain  payment  of  strike  benefits;  specific  per- 
formance   528 

injunction;  evidence  of  unlawful  acts  of  members  during  strike. . .  529 

injunction;  no  defense  that  act  a  crime 530 

injunction;  question  of  law  and  fact 531 

prehminary  injunction;  when  vacated  as  to  union  but  permitted 
to  stand  as  to  individual  members  but  not  so  as  to  prevent 

peaceful  picketing 532 

injunction;  contempt;  nature  of  proceeding 533 

constitutional  law;  Congress  no  power  to  make  it  a  criminal 
offense  for  carrier  to  discharge  employee  because  member  of 

labor  union;  Fifth  Amendment;  contract;  Interstate  Commerce  534 
statute  prohibiting  discharge  of  employee  because  member  of 

union 635 

statute  as  to  becoming  member  of  labor  union;  condition  of  em- 
ployment   536 

statute  prohibiting  granting  of  injunction  against  union 537 

statute  as  to  suits  against  unincorporated  associations 538 

statute  as  to  labels  and  stamps 539 

legality  of  union  as  affected  by  Constitution  of  union 540 


INDEX  721 

[References  are  to  Sections] 

LANDS, 

of  railroad  company;  acquisition  of;  not  a  special  privilege 313 

LAUNDRY, 

not  a  manufacturing  establishment 411 

LAW, 

question  of  for  court;  whether  contract  is  in  restraint  of  trade ....  103 
whether  State  Constitution  a  "law";  impairment  of  obligation  of 

contracts 209 

whether  word  applies  only  to  legislative  enactments;  impairment 

of  obligation  of  contracts 211 

whether  municipal  ordinance  a  law;  impairment  of  obhgation  of 

contracts 211 

word  does  not  apply  to  judicial  decisions;  impairment  of  obUga- 

tion  of  contracts 212 

when  no  adequate  remedy  at;  enforcing  exclusive  water  contract . .  225 

"LAW  OF  THE  LAND," 

construed 203 

LEASE, 

stipulation  in  claimed  to  be  in  restraint  of  trade note,     12 

suit  on ;  defense  that  a  monopoly  and  void 68 

by  city  of  its  g:is  works  with  covenant  not  to  interfere  with  lessee's 

exclusive  right 305 

by  municipahty  in  business  capacity  of  exclusive  right  to  supply 

gas 305 

by  city  to  private  corporation  to  supply  gas;  exclusive  right;  no 

monopoly 305 

LEGAL  STRIKE, 

defined 42 

See  Labor  or  Trade  Unions. 

LEGISLATION.     See  Congress;   Judicial  legislation;   Legislature; 
State  Statutes;  Statutes. 

LEGISLATIVE, 

powers  of  States  generally 268 

powers;  Federal  and  State  distinguished 269 

powers;  Federal  and  State  distinguished;  interstate  and  intrastate 

commerce 270 

power;  police  power;  definitions  and  general  principles;  monop- 

oUes  may  be  prohibited,  etc 271 

grant;  private  corporations  exist  by note,  272 

power  to  grant  franchise;  test  of 273 

power  of  State  to  grant  monopohes 274 

46 


722  INDEX 

[References  are  to  Sections] 

LEGISLATIVE— Coniin  ued. 

power  to  prohibit  combinations,   monopolies,  etc.;  Anti-Trust 

Laws 276 

powers;  delegation  of  to  municipality 278 

LEGISLATIVE  DISCRETION, 

nonjudicial  interference 296 

See  Legislature;  Statutes. 

LEGISLATIVE  POWERS, 

cannot  be  abdicated;  contract  for  market  house  with  city  pre- 
cluding others 310 

See  Legislature;  Statutes. 

LEGISLATURE, 

of  State;  powers  of  generally 268 

powers  of;  Federal  and  State  distinguished 269 

powers  of;  Federal  and  State  distinguished;  interstate  and  intra- 
state commerce 270 

police  powers  of 271 

private  corporations  exist  by  grant note,  272 

power  of  to  grant  franchise;  test  of 273 

power  of  to  grant  monopolies 274 

powers  which  it  may  delegate  to  municipality 278 

cannot  delegate  power  not  possessed  by  it 278 

grant  of  exclusive  right  to  use  end  of  wharf  for  ferry  purposes ....  302 
in  granting  exclusive  right  or  monopoly  to  supply  gas,  etc.,  does 

not  part  with  police  power 303 

See  State  Statutes. 
power  and  duty  of.     See  Constitutions, 
exclusive  grants  by.     See  Exclusive  Grants, 
enactments  of.    See  State  Statutes;  Statutes. 

LETTER, 

as  evidence;  violation  Sherman  Anti-Trust  Act 182 

as  evidence  of  conspiracy 485 

See  Evidence. 

LIABILITY, 

of  purchaser  from  combination;  statute  relieving  from 373 

LIBERTY, 

life,  liberty  and  property;  meaning  of  in  Fourteenth  Amendment.  231 
See  Constitutional  Law;  Fourteenth  Amendment. 

LIBERTY  TO  CONTRACT.     See  "Appendix  A." 

See  Contracts. 

LICENSE, 

case  under  Texas  Anti-Trust  Act  to  forfeit note,       8 

condition  in;  patents;  Sherman  Anti-Trust  Act 135 


INDEX  723 

(References  are  to  Sectiona] 

LICENSE— Continwd. 

patents;  particular  conditions  in;  Sherman  Anti-Trust  Act 136 

patents;  right  to  modify  terma  of 137 

ferry  as;  not  monopolies 300 

LIFE, 

liberty  and  property;  meaning  of;  Fourteenth  Amendment .  .note,  231 
See  Constitutional  Law;  Fourteenth  /Amendment. 

LIGHTING, 

not  part  of  eesential  functions  of  State  to  provide  for 268 

See  Electric  Lighting;  Gas. 

"LIGHT  OF  REASON"  DECISIONS, 

Sherman  Anti-Trust  Act 83a 

Sherman  Anti-Trust  Act.    See  "  Appendix  A. " 83a 

LIMITATIONS, 

plea  of  statute  of;  indictment  under  Sherman  Anti-Trust  Act ....   180 

statute  of;  action  for  damages;  Sherman  Anti-Trust  Act 190 

See  Statutes. 

LIQUID  DOOR  CHECKS, 

patented;  combination  of  manufacturers 134 

LIQUORICE  PASTE, 

combinations;  manufacturers  of;  Sherman  Anti-Trust  Act 145 

LIQUORS, 

sending  of  from  one  State  to  another  embraced  in  interstate  com- 
merce  note,     16 

See  Intoxicating  Liquors. 


LITIGATION, 

under  Sherman  Anti-Trust  Act 13 

See  Sherman  Anti-Trust  Act. 

LIVE  STOCK, 

exception  in  statute  as  to 376 

LOCKOUT, 

defined 39 


LOGS  AND  LOGGING, 

boom  when  not  a  monopoly 295 

LOUISIANA, 

Constitution;  combinations,  etc.,  to  control  prices  unlawful;  duty 
of  legislature 245 


724  INDEX 

[References  are  to  Sectionsl 

LUMBER, 

dealers;  agreements  between 422 


M 

MACHINES, 

patented ;  combinations  of  manufacturers 134 

See  Patents. 

MAGNITUDE, 

of  business  not  necessarily  illegal;  monopoly 79 

MAILS, 

intercourse  through  as  commerce note,     16 

MANTELS, 

association  dealing  in;  Sherman  Anti-Trust  Act 146 

MANUFACTURERS, 

combination  of;  patented  machines 134 

contracts  as  to;  Sherman  Anti-Trust  Act 140 

contracts  as  to  within  a  State 141 

contracts  of  generally;  Sherman  Anti-Trust  Act 140 

of  shingles;  combinations;  Sherman  Anti-Trust  Act 142 

of  iron  pipes;  combinations;  Sherman  Anti-Trust  Act 143 

and  jobbers;  tobacco;  combination  of;  Sherman  Anti-Trust  Act. .  144 

of  liquorice  paste;  combination;  Sherman  Anti-Trust  Act 145 

of  tiles,  mantels  and  grates;  association;  Sherman  Anti-Trust  Act  146 

refiners  of  sugar;  violations;  Sherman  Anti-Trust  Act 147 

and  purchaser;  proprietary  medicines;  contracts  as  to  sale  price  of  401 

of  cotton  seed  oil;  agreement  for  withdrawal  of  agent 416 

of  salt ;  agreements  between ;  violation  State  statute 433 

liquid  door  checks  patented;  combination  of 134 

MANUFACTURING, 

contracts  generally;  Sherman  Anti-Trust  Act 140 

within  a  State;  contracts  as  to 141 

MARKET  HOUSE, 

contract  for  by  city  or  town;  monopoly 310 

or  slaughterhouse;  where  city  or  village  cannot  create  monopoly. .  315 

MARYLAND, 

Constitution;  monopolies  prohibited 246 

MASON  AND  BUILDERS, 

association  and  bricklayers'  union;  agreements  between 414 


INDEX  725 

[References  are  to  Sections] 

MASTER  PLUMBERS, 

association  held  unlawful 384 

and  dealers  in  plumbers'  supplies;  agreements  between 429 

MATCHES, 

corporation  to  control  manufacture  or  sale 89 

MEASURE  OF  DAMAGES.     Sec  Damages. 

MEAT, 

agreements  between  packing  companies  to  control  price  of;  viola- 
tion State  statutes 425 

violations  by  dealers  in;  Sherman  Anti-Truat  Act 148 

MEDICINES, 

contracts  as  to  proprietary  medicines;  Sherman  Anti-Trust  Act. .   138 

MERGER.     See  Consolidation. 

of  street  railways;  violation  State  statute 397 

MINES.     See  Mining. 

MINING, 

contracts  as  to;   Sherman  Anti-Trust  Act 153 

contracts  between  coal  companies;  Sherman  Anti-Trust  Act 15-1 

corporation;  purchase  by  of  stock  in  another 394 

MINNESOTA, 

Constitution;  combinations  to  control  food  products  a  criminal 
conspiracy ;  duty  of  legislature 247 

MISDEMEANOR, 

under  Sherman  Anti-Trust  Act 13 


MISSISSIPPI, 

Constitution;  duty  of  legislature  to  prevent  trusts,  combinations. 


etc. 


248 


MODIFICATION, 

of  terras  of  patent  licenses 137 

MONOPOLIES, 

defined 66 

under  Sherman  Anti-Trust  Act  defined 22 

construed 362 

what  involved  in  meaning  of '° 

denounced  by  Sherman  Auti-Trust  Act;  what  is 77 

idea  of  not  confined  to  grunt.s  of  i)rivilcKes 40 

resulting  from  iirant  or  contrart;  distinctions 46 

and  engrossing;  distinctions 47 


720  INDEX 

[References  are  to  Sections] 

MONOPOLIES— Con/inueJ. 

and  combinations;  distinctions 48 

and  exclusive  privileges;  distinctions 49 

"monopolize"  used  in  statute  synonymous  with  "aggregate"  or 

"concentrate" 50 

nature  essentials  or  test  of 65-74 

what  idea  of  includes;  creation  of 65 

restraint  of  competition;  control  of  productions;  commodities  and 

prices 65,  66 

"to  monopolize";  power  to  raise  prices  or  exclude  competition 

distinguished ;  motive 67 

what  degree  of  restraint  of  competition  essential 68 

and  restraint  of  competition  distinguished 68 

effect  of  personal  service  or  occupation 69 

as  essential  features  of  charters  or  franchises;  whether  such  grant 

exclusive  in  nature 70,  71 

not  favorites  with  courts  or  people note,     71 

when  grants  of  charters  or  franchises  are  exclusive 72,  73 

when  grants  of  charters  or  franchises  are  not  exclusive 74 

and  unlawful  restraint;  Sherman  Anti-Trust  Act;  what  is  em- 
braced generally 75 

exclusive  right;  Sherman  Anti-Trust  Act 78 

size  or  magnitude  of  business;  Sherman  Anti-Trust  Act 79 

inseparable  consequences  of note,     89 

object  of  patent  laws 135 

statute  prohibiting  does  not  abridge  privileges  or  immunities  of 

citizens 229 

how  created 239 

may  be  prohibited,  etc.;  police  power 271 

grant  of;  sovereign  power  or  State  is  source  of  grant  or  franchise  272 

legislative  power  to  grant 274 

cannot  be  implied  from  mere  grant;  public  grants  of  franchises, 

privileges,  etc. ;  construction  against  grantee 275 

legislative  power  to  prohibit 276 

municipality  no  power  to  create 278 

power  of  municipality  to  create  or  to  make  contracts  tending  to 

create 280 

statute  of  in  England 282 

unlawful  at  common  law.     See  "Appendix  A." 
See  Sherman  Anti-Trust  Act. 


MONOPOLIST, 

defined 9 


MONOPOLIZE, 

defined 22 

synonymous  with  "aggregate"  or  "concentrate" 50 

contract  in  restraint  of  trade  analagous  to 58 

Sherman  Anti-Trust  Act;  what  monopoly  must  affect 123 


INDEX  727 

[References  are  to  Sections] 

MONOPOLIZE— Con/inw«/. 

"to  monopolize"  construed.     See  "Appendix  A." 
"attempts  to  monopolize";  origin  of.     See  "Appendix  A." 

MONTANA, 

Constitution;  combinations,  trusts,  etc.,  to  fix  prices  or  regulate 

production;  duty  of  legislature 249 

Constitution  continued;  neccs-sity  of  showing  intent 250 

Constitution  continued;  meaning  of  "trust"  therein 251 

MORTGAGEE, 

as  party  to  injunction;  obligation  of  contracts 225 

MOTIVE, 

as  element  or  essential  of  offense  of  conspiracy 61 

monopolies;  "to  monopolize"  power  to  raise  prices  or  exclude 

competition  distinguished 67 

contracts  in  restraint  of  trade 105 

of  those  instigating  suit  are  immaterial 458 

good  no  defense  where  statute  violated 459 

See  Intent. 

MUNICIPAL  CORPORATION.     See  MunicipaUty. 

MUNICIPALITY, 

a  "person";  Sherman  Anti-Trust  Act 164 

breach  of  contract  by  not  an  act  impairing  obligation  of  contract  216 
exclusive  grant  for  electric  lighting  void;  not  protected  by  obliga- 
tion of  contract  clause 223 

exclusive  contract  by  borough  with  water  company;  impairment 

contract  obUgation 225 

exclusive  water  franchise 225 

ordinances  granting  rights  to  water  companies;  impairment  con- 
tract obligation 225 

police  power  of;  water  supply 225 

powers  granted  to  as  to  sewage  constitutional 264 

contract  with;  construction  of 275 

rule  as  to  powers  of 277 

held  to  strict  exercise  of  franchises 277 

implied  powers  of 277 

has  two  classes  of  powers 277 

no  power  to  create  monopoly 278 

a  creature  of  the  State 278 

delegation  of  legislative  powers  to 278 

police  power  may  be  delegated  to .  . 278 

not  invested  with  powers  to  grant  franchises 278 

not  invested  with  power  to  create  corporations 278 

power  conferred  u]X)n  to  pass  ordinances 278 

powers  which  legislature  may  delegate 278 

ordinances  of  nmst  not  conflict  with  State  Constitution 279 


728  INDEX 

[References  are  to  Sectional 

MUNICIPALITY— Continued. 

cannot  confer  pecuniary  benefits 280 

power  of  to  create  monopolies  or  to  make  contracts  tending  to 

create  a  monopoly 280 

grant  of  exclusive  privileges  by 280 

power  to  create  or  to  make  contracts  tending  to  create  monopolies; 

may  adopt  rejisonable  regulations 281 

construction  of  grants  to 294 

power  to  grant  exclusive  privilege  must  be  expressly  conferred; 

monopoly 294 

express  or  implied  power  to  grant  exclusive  privilege;  monopoly.  .  294 
contracts  conferring  special  privilege,  etc.,  or  monopoly;  consti- 
tutional law 294 

as  owner  of  ferry  franchise;  contract  by,  with  ferry  company;  no 

monopoly  created 297 

ordinance  authorizing  contract  for  electric  lights  by  city;  validity 

of 298 

contract  power  of;  electric  lighting;  exclusive  rights 298 

control  of  streets;  electric  lighting;  exclusive  grants 298,  299 

power  of  to  furnish  electric  lights 299 

right  vested  in  to  furnish  electric  lights;  exclusive  as  against 

private  corporation 299 

ordinance;  exclusive  ferry  right;  delegated  authority 301 

legislative  grant  of  exclusive  right  to  supply  gas  within 303 

grant  by,  of  exclusive  privilege  or  monopoly  to  supply  gas 304 

contract  for  supply  of  gas  with  grantee  from  city  of  exclusive 

privilege 304 

business  and  governmental  capacity 305 

lease  of  its  gas  works  with  covenant  not  to  interfere  with  lessee's 

exclusive  right 305 

lease  by  to  private  corporation  to  supply  gas;  exclusive  right;  no 

monopoly 305 

acting  in  business  capacity  may  lease  exclusive  right  to  supply  gas  305 

contract  for  market  house;  monopoly 310 

grant  of  exclusive  privilege  to  run  omnibuses;  when  a  monopoly. .  312 
or  village;  when  cannot  create  monopoly  as  to  slaughterhouse  or 

market  house 315 

control  of  streets;  street  railways;  exclusive  grants 316 

telephone  companies;  exclusive  grants  or  contracts 317 

contract  by,   with  telephone  company  for  exclusive  right  for 

period  of  years 317 

grant  by  to  operate  toll  road;  not  a  monopoly 320 

ordinance  requiring  union  label  on  city  printing;  when  a  monopoly  322 
ordinance  requiring  that  only  union  labor  or  union  shops  be  em- 
ployed   323 

power  of  as  to  waterworks  or  water  supply 325 

exclusive  right  of,  and  of  private  corporation  as  to  water  supply 

or  waterworks  distinguished 326 

cannot  contract  away  legislative  powers;  water  supply;  exclusive 

idgiit  or  monopoly 328 


INDEX  729 

(References  are  to  Sections] 

MUNICIPALITY— CWanucJ. 

power  of  city  to  grunt  exclusive  right  or  monopoly  to  water  com- 
pany   ^"^^ 

instancf'8  of  valid  and  void  contracts  by,  as  to  water  supply,  etc.; 

exclusive   rights;   monopoly 329,  330 

no  defense  by  that  contract  creates  monopoly 331 

injunction  restraining;  water  system 332 

legislation  or  contracts  of;  particular  instances 294-335 

See  Ordinances. 

MUNICIPAL  ORDINANCE.    See  Ordinance. 


N 

NATURAL  GAS, 

statute  restricting  interstate  commerce  in  construed note,  206 

NAVIGABLE  CANAL, 

when  no  monopoly 311 

NAVIGATION, 

included  in  term  "  commerce  " 16 

NECESSARIES  OF  LIFE, 

combination  by  sugar  refiners;  Sherman  Anti-Trust  Act 147 

combinations  of  dealers  in  fresh  meat 148 

State  Constitutions  as  to  monopoUes,  etc.,  to  control  same 240,  262 

NECESSITY, 

combinations  as  to  articles  of;  Alabama  Constitution 240 

NEWS, 

association  for  distributing 431 

NEWSPAPERS, 

and  job  printing  establishments;  contracts  between 423 

publisher  and  carriers;  contracts  between 424 

NORMAL  COLLEGE, 

act  as  to  not  special  act 266 


NORTH  CAROLINA, 

Constitution;  monopolies  prohibited. 


252 


NORTH  DAKOTA, 

Constitution;  combination.^  to  control  prices,  cost  of  exchange  or 
transportation  prohibited;  frjvnchises  forfeited 253 


730  INDEX 

[References  are  to  Sections] 

NOTICE, 

service  of  on  defendants  under  Sherman  Anti-Trust  Act.    See 
"Appendix  A." 


O 

OBLIGATION  OF  CONTRACT.    See  Constitutional  Law;  Con- 
tracts; Federal  Constitution. 

OFFENSES.    See  the  particular  offense. 

OFFICERS, 

charging  of  in  indictment;  Sherman  Anti-Trust  Act 179 

of  corporation  cannot  refuse  to  testify;  violation  Sherman  Anti- 
Trust  Act 186 

OIL, 

statute  restricting  interstate  commerce  in  construed note,  206 

OKLAHOMA, 

Constitution;  monopohes  prohibited;  duty  of  legislature  as  to 
combinations,  monopolies,  etc 254 

pMNIBUSES, 

'        grant  of  privilege  to  run  when  a  monopoly 312 

OPEN  SHOP, 

defined 40 

ORDERS, 

requiring  production  of  books  and  papers;  State  statutes 494 

ORDINANCE, 

granting  exclusive  privilege  to  waterworks  company note,       8 

whether  a  "law";  impairment  of  obligation  of  contracts 211 

granting  right  to  erect  electric  light  plant;  subsequent  erection  of 

plant  by  city;  impairment  contract 217 

enforcement  of;  obligation  of  contract 225 

granting  exclusive  right  supplying  electric  current 225 

regulating  water  rates;  obhgation  of  contract note,  225 

not  a  contract ;  gas  works note,  275 

power  conferred  upon  municipality  to  pass 278 

of  municipality  must  not  conflict  with  State  Constitution 279 

granting  privileges;  essentials  to  validity  of 280 

violation  of  law  as  preventing  relief  against 451 

See  Municipahty;  PoUce  Jury. 

OVERT  ACTS, 

conspiracy;  New  York 64 


INDEX  731 

[References  are  to  SectionsJ 
OVERT  ACTS—Contimud. 

conspiracy  to  commit  offense  against  United  States 64 

conspiracy  to  defraud  United  States;  indictment note,     64 

place  of  doing;  conspiracy;  when  crime  complete note,     64 

conspiracy;  Sherman  Anti-Trust  Acts 85 

See  Conspiracy. 


P 

PACKING, 

companies;  agreements  to  control  price  of  meat;  violationa  State 
statutes 425 

PALACE  CAR, 

company;   contract   between   railroad   company   and;    violation 

State  statute 396 

See  Railroads. 

PAPERS, 

requiring  production  of;  State  statutes 494 

See  Evidence;  Witnesses. 

PARALLEL, 

and  competing  lines;  consolidation;  violation  State  statute 395 

defined  and  considered 19 

lines  of  railroad.     See  Railroads. 

PARISH, 

board  of  education;  act  as  to  held  special  act 266 

PARLIAMENT, 

of  Great  Britain;  grant  of  exclusive  privileges  by 274 

PARTIES, 

summoning  of  under  Sherman  Anti-Trust  Act 13 

summoning  of;  amendments  to  Wilson  Tariff  Act 14 

fact  of  conspiring  miust  be  charged  against  all  conspirators;  doing 

of  overt  acts;  indictment note,  64 

summoning  of;  jurisdiction;  Sherman  Anti-Trust  Act 169 

summoning   of;   jurisdiction   not    restricted    by   Judiciary    Act; 

Sherman  Anti-Trust  Act 170 

summoning  of;  exercise  of  jurisdiction  not  discretionary;  Sherman 

Anti-Trust  Act ■■ 1"! 

joinder  of  defendants;  complaint;  election;  Sherman  Anti-Trust 

Act 177 

mortgagee  as  party  to  injunction;  obligation  of  contracts 22.') 

defendant ;  who  subject  to  prosecution  for  violation  State  statute.  440 

joinder  of  defendants 471 

declarations  and  statements  of  as  evidence 482,  485 


732  INDEX 

[References  are  to  Sections] 

PARTNERSHIPS, 

regulation  of;  Alabama  Constitution 240 

dissolution  of;  physicians;  agreement  not  to  practice 428 

accounting;  illegality  of  contract;  burden  of  proof 489 

PATENTS, 

contracts  between  owners  of;  violations;  Sherman  Anti-Trust 

Act 134 

licenses;  conditions  in  generally;  Sherman  Anti-Trust  Act 135 

condition  in  license  as  to  price 136 

licenses;  particular  conditions  in  Sherman  Anti-Trust  Act 136 

right  to  modify  terms  of  licenses 137 

suit  by  combination  for  infringement  of;  illegaUty  of  combination 

as  defense;  Sherman  Anti-Trust  Act 158 

system  rests  on  Federal  Constitution  and  acts  of  Congress 282 

source  and  nature  of;  whether  monopolies  or  contracts.  . . .  282,  283 

police  power  of  States 284 

expiration  of;  use  of  general  name;  loss  of  trade-mark  rights. . . .  291 

as  monopoly  for  public  good note,  296 

contracts  in  respect  to  articles  protected  by;  violations  State 

statutes 426 

PECUNIARY  BENEFITS, 

municipality  cannot  confer 280 

PENALTY, 

violating  Sherman  Anti-Trust  Act 13 

by  amendments  to  Wilson  Tariff  Act 14 

action  for  damages  not  an  action  for  penalty;  Sherman  Anti-Trust 

Act 189 

for  violation  of  Interstate  Commerce  Act note,  200 

duty  of  legislature  to  enforce  laws  by;  Utah  Constitution 257 

statute  as  to 374 

statutes  providing  for 442 

complaint  to  recover 481 

not  authorized  by  law;  Sherman  Anti-Trust  Act.   See  "Appendix 

A." 

PERJURY, 

enforcing  trusts  and  interstate  commerce  laws note,  14 

PERMIT, 

to  do  business;  statute  as  to  revocation  of 374 

PERPETUITIES, 

prohibited;  Oklahoma  Constitution 254 

prohibited ;  Tennessee  Constitution 256 

prohibited;  Texas  Constitution 256 

prohibited;  Wyoming  Constitution 262 


INDEX  733 

[References  are  to  Sectional 

PERSON, 

word  defined  in  Sherman  Anti-Trust  Act 13 

to  what  extent  corporation  is note,     13 

corporations  are  within  Sherman  Anti-Trust  Act 114 

municipal  corporation  a  "person";  Sherman  Anti-Trust  Act.  . .  .    164 

State  not  under  Sherman  Anti-Trust  Act 165 

corporation   is;   within   meaning  of  equal   protection   clause  of 

Federal  Constitution note,  237 

construed;  whether  corporations  included 363 

in  Anti-Trust  Act,  1890,  construed.    See  "Appendix  A." 

PERSONAL  SERVICES, 

not  commodity •. note,     18 

not  subject  of  monopoly  at  common  law 69 

PERSUASION, 

use  of  by  strikers.    See  Labor  or  Trade  Unions. 

PETITION, 

Sherman  Anti-Trust  Act;  sufficiency  of;  general  rules 173 

See  Pleading. 

PETROLEUM, 

combination  of  refiners  of 132 

PHYSICIANS, 

agreements  between  as  to  schedule  of  prices 427 

dissolution  of  partnership;  agreement  not  to  practice 428 

PICKET, 

defined 35 

See  Picketing. 

PICKETING, 

defined  and  considered 36 

when  lawful  and  unlawful 36 

See  Labor  or  Trade  Unions. 

PIPES, 

combination  of  manufacturers  of;  Sherman  Anti-Trust  Act 143 

PLAYS, 

not  commodities • 436 

PLEA, 

denial    under   general   issue;    indictment   charging    conspiracy; 

Sherman  Anti-Tru.st  Act 180 

statute  of  limitations;  indictment  under  Sherman  Anti-Trust  Act  ISO 


734  INDEX 

[References  are  to  Sections] 

PLEADING, 

bill  multifarious;  action  for  damages;  Sherman  Anti-Trust  Act. .   162 
Sherman  Anti-Trust  Act;  suflBciency  of  complaint  or  petition; 

general  rules 173 

Sherman  Anti-Trust  Act;  sufficiency  of  complaint;  rules  in  force 

in  State  where  action  brought;  Practice  Act 174 

Sherman  Anti-Trust  Act;  sufficiency  of  complaint;  duplicity 176 

Sherman  Anti-Trust  Act;  sufficiency  of  complaint;  joinder  of  de- 
fendants; election 177 

indictment;  Sherman  Anti-Trust  Act;  sufficiency  of;  general  rules  178 
indictment;  Sherman  Anti-Trust  Act;  charging  officers,  agents  or 

stockholders 179 

indictment  charging  conspiracy;  Sherman  Anti-Trust  Act;  denial 

under  general  issue 180 

indictment  not  conclusive;  removal  proceeding 181 

rule  as  to  certainty;  indictment 468 

general  rule;  indictment  or  information  in  language  of  statute 

sufficient 469 

rule  as  to  legal  conclusions 470 

joinder  of  defendants 471 

not  necessary  to  allege  combination  is  in  position  to  control  market  472 

necessity  of  averring  intent,  purpose  or  effect 473 

averring  terms  of  agreement;  particular  articles  subject  of 474 

conspiracy;  means  by  which  to  be  effectuated  need  not  be  charged  475 

conspiracy;  averring  names  of  persons  to  be  injured 476 

in  proceeding  by  information  to  forfeit  corporate  franchise 477 

complaint  in  action  to  restrain ;  New  York 478 

necessity  of  averring  acts  to  be  in  restraint  of  trade 479 

rule  as  to  party  seeking  to  enforce  forfeiture;  defense  that  member 

of  illegal  combination 480 

complaint  to  recover  penalty 481 

allegations  of  facts  prior  to  passage  of  Sherman  Anti-Trust  Act. 

(see  "Appendix  A"). 

See  Complaint;  Indictment. 

PLEDGE, 

of  stock;  pleading  combination;  Sherman  Anti-Trust  Act 175 

PLUMBERS, 

supplies;  agreements  between  master  plumbers  and  dealers  in 429 

POLICE  JURY, 

ordinance  authorizing  toll  road;  not  a  monopoly 320 

POLICE  POWER, 

defined 271 

of  municipahty ;  water  supply 225 

of  States;  liberty  to  or  freedom  of  contract 234 

when  must  yield  to  Congress 271 

business  of  fire  insurance 271 


INDEX  735 

[Rcfprences  are  to  Sections] 

POLICE   POWER— Continued. 

not  parted  with  by  grant  of  exclufiivc  right  to  supply  gaa,  etc 303 

cannot  be  contracted  away 271 

of  States;  power  of  Federal  courts note,  271 

is  broad  and  jjlonary note,  271 

distinction  as  to  extent  of;  State  and  interstate  commerce,  .note,  271 

may  be  delegated  to  municipality 278 

property  under  letters  patent  within  control  of 284 

legislature  does  not  part  with;  exclusive  franchise  to  gas  company  271 

of  State;  restraining  right  of  contract;  generally 336 

of  State;  as  to  contracts  and  combinations  in  restraint  of  trade; 

generally 337 

of  State;  prevention  of  discrimination 338 

of  State;  prohibiting  giving  of  rebate 339 

of    State;    corporations;    Umitations    in    Federal    Constitution; 

Fourteenth  Amendment 340 

of  State;  foreign  corporations;  Fourteenth  Amendment 341 

of  State  to  provide  mode  and  means  of  procedure  to  enforce 

statutes;  power  of  Supreme  Court  of  United  States 342 

legislature  as  affected  by  constitutional  provision  requiring  pass- 
age of  laws 343 

combination  to  fix  or  limit  the  price  or  premium  to  be  paid  for 

insuring  property  prohibited 370 

statute  prohibiting  condition  of  sale  not  to  sell  goods  of  any  other 
person 371 

POLICIES, 

of  insurance  as  articles  of  commerce note,     16 

of  marine  insurance;  meaning  of  "freight"  in note,  195 

POOLING, 

defined 10 

contracts  between  competing  corporations  void 10 

of   bakeries note,  10,  note,  46 

term  "combination  in  the  form  of  trust  "  synonymous  with 51 

arrangement  for  division  of  west  boimd  immigrant  traffic,  .note,  194 

of  farm  products;  statutes  as  to 375 

See  Combinations. 

POOLING  OF  FREIGHTS, 

a  division  of  earnings  prohibited;  Interstate  Commerce  Act 194 

freights  defined l^*^ 

when  there  may  be  by  railroads 195 

nature  and  scope  of  Interstate  Commerce  Act 196 

what  constitutes;  Interstate  Commerce  Act 197 

what  does  not  constitute;  Interstate  Commerce  Act 198 

of  ocean  or  water  lines  not  within  Interstate  Commerce  Act 199 

action  on  contract  for 19' 

combinations  to  prevent  continuous  carriage  of  freight  to  destina- 
tion prohibited  by  interstate  commerce  act 200 

See  Freight;  Interstate  Commerce  Act;  PooHng  of  Freights. 


736  INDEX 

[References  are  to  Sections] 

POST  ROADS  ACT, 

prohibits  State  monopolies  in  commercial  intercourse  by  telegraph  292 

whether  includes  telephone  companies 292 

exclusive  contract  between  railroad  and  telegraph  company;  mo- 
nopoly   293 

does  not  build  up  or  foster  monopoly note,  293 

restrictions  of  upon  State;  telegraph  companies 318 

telegraph  companies;  exclusive  grants  by  State 318 

POWERS, 

reserved  to  the  States;  Tenth  Amendment  to  Federal  Constitution  226 
of  Federal  Government;  Fifth  Amendment  to  Federal  Constitu- 
tion; generally 227 

of  municipality;  as  to  control  of  streets;  delegation  of  power  298,  299 
of  municipal  corporations.     See  Municipality;  Congress;  Legis- 
lature; State. 

PRACTICE, 

agreement  not  to;  physicians;  dissolution  of  partnership 428 

upon  remanding  case.     See  "Appendix  A." 

PRACTICE  ACT, 

procedure  under  Sherman  Anti-Trust  Act 174 

PREMISES, 

exclusive  right  to  sell  goods  on 405 

agreements  restraining  purchaser  from  certain  use  of 406 

PRESCRIPTION, 

few  rights  founded  on  in  this  country 272 

corporation  may  exist  by 272 

PRESUMPTION, 

in  respect  to  combination;  Sherman  Anti-Trust  Act 185 

as  to  soiu-ce  of  franchise 272 

as  to  intent;  violation  of  State  statutes 379 

as  to  legality  of  contract 380 

as  to  innocence 488 

as  to  labor  union  being  a  law-abiding  body 499 

See  Evidence. 

PRICE, 

condition  in  patent  license  as  to 136 

proprietary  medicines;  contracts  as  to 138 

of  shinglea;  combination  of  manufacturers 142 

combinations  as  to;  manufacturers 140 

liquorice  paste;  combinations;  Sherman  Anti-Trust  Act 145 

of  meat;  combination  by  dealers;  Sherman  Anti-Trust  Act 148 

of  coal;  right  of  company  to  fix;  Sherman  Anti-Trust  Act 154 

for  petroleum;  statute  prohibiting  discrimination  in  prices  for.  . .  372 
State  Constitutions  prohibiting  combinations  to  control 240-262 


INDEX  737 

[References  arc  to  Sections] 

PRINCIPAL  AND  AGENT, 

contracts  between;  violation  State  statute 408 

PRINTING, 

award  of  city  printing  to  specified  class;  a  monopoly 323 

See  Union  Label. 

PRINTING  COMPANY, 

statute  construed  aa  exclusive  grant  to note,       8 

PRIVATE  CORPORATION, 

character  of  franchise  to 70 

exists  by  legislative  grant note,  272 

See  Corporations;  Franchise. 

PRIVILEGES  AND  IMMUNITIES, 

of  citizens.    See  Fourteenth  Amendment. 

PROBABLE  CAUSE, 

indictment,  prima  facie  evidence  of 181 

PROCEDURE, 

under  Sherman  Anti-Trust  Act 13 

under  amendments  to  Wilson  Tariff  Act 14 

action  under  Sherman  Anti-Trust  Act;  Practice  Act 174 

subsequent  statute  changing  mode  of;  impairment  of  obligation 

of  contract 214 

power  of  State  to  provide  mode  and  means  of  to  enforce  statutes; 

power  of  Supreme  Court  of  United  States 342 

See  Pleadings. 

PROCEEDING, 

examination  of  witness  before  grand  jury  a  "proceeding";  Sher- 
man Anti-Trust  Act 187 

PROCEEDINGS.  See  Procedure. 

PROCESS, 

imder  Sherman  Anti-Trust  Act 13 

to  compel  attendance  of  witnesses;  Sherman  Anti-Trust  Act.  .  .  .   169 
service  of  notice  under  Sherman  Anti-Trust  Act.  See  "Appendix 
A." 

See  Procedure. 

PRODUCTION, 

contracts  to  control;  monopolies 65-66 

contracts  for  limitation  of 89 

PROOF, 

burden  of;  Sherman  Anti-Trust  Act 184 

Sec  Burden  of  Proof;  Evidence. 

47 


738  INDEX 

[References  are  to  Sections] 

PROPERTY, 

due  process  of  law 230 

life,  liberty  and  property;  meaning  of  in  Fourteenth  Amendment  231 
See  Fourteenth  Amendment. 

PROPRIETARY  MEDICINES, 

contracts  as  to;  Sherman  Anti-Trust  Act 138 

contracts  between  manufacturer  and  purchaser  as  to  sale  price  of  401 

PUBLIC  IMPROVEMENT, 

when  navigable  canal  no  monopoly 311 

PUBLIC  POLICY, 

combinations  against  which  tend  to  create  monopoly 65 

as  test  generally;  contracts  in  restraint  of  trade 86 

determined  by  Constitution,  laws  and  judicial  decisions,  .note,     86 
as  test;  contracts  in  restraint  of  trade;  degree  of  injury  to  pubUc.     87 
as  test;  contracts  in  restraint  of  trade;  general  and  partial  re- 
straint      88 

as  test;  contracts  in  restraint  of  trade;  tending  to  create  monop- 
olies; useful  commodities 89 

favors  competition  in  trade note,     89 

as  test;  contracts  in  restraint  of  trade;  affecting  prime  articles  of 

necessity 90 

what  contracts  in  restraint  of  trade  not  void  as  against 91 

as  test;  contracts  in  restraint  of  trade;  public  service  corporations 

92,  93 
effect  of  changed  conditions  as  to  trade,  commerce,  etc.;  contracts 

in  restraint  of  trade;  Enghsh  courts 94 

effect  of  changed  conditions  as  to  trade,  commerce,  etc. ;  contracts 

in  restraint  of  trade;  Federal  courts 95 

effect  of  changed  conditions  as  to  trade,  commerce,  etc.;  contracts 

in  restraint  of  trade;  State  courts 96 

contracts  against  may  be  prohibited 232 

exclusive   contract   between   railroad   and   telegraph   company; 

monopoly 293 

lease  by  city  of  its  gas  works;  exclusive  right;  monopoly 305 

as  to  illegal  contract  to  restrain  competition,  etc.  See  "Appen- 
dix A." 

See  PoHce  Power. 

PUBLIC  SERVICE, 

corporations;  public  policy  as  test;  contracts  in  restraint  of  trade 

92,  93 
exclusive  contract  between  telephone  and  telegraph  company 

void 92 

subject  to  exercise  of  poUce  power note,  271 

PUBLIC  UTILITIES, 

municipal  contracts  as  to,  conferring  special  privileges,  etc.,  or 
monopoly;  constitutional  law 294 


INDEX  739 

[References  arc  to  SectionsJ 
PUBLIC  WATERWAYS.     See  Waterways. 

PUBLISHERS, 

combination  of  holders  of  copyrights 133 

of  newspapers  and  job  printing  establishments;  contracts  between  423 

of  newspapers  and  carriers;  contracts  between 424 

agreements  between;  price  at  retail;  not  to  sell  to  certain  claas.  .   430 

PUNISHMENT, 

statutes  as  to 374 

statutes  providing  for 442 

See  Penalty. 

PURCHASE, 

of  good  will  and  business;  violations  Sherman  Anti-Trust  Act.  .   130 

PURCHASERS.     See  Vendee;  Vendor. 

PURPOSE, 

of  Sherman  Anti-Trust  Act 112 

necessity  of  averring;  charging  offense 473 

of  conspiracy;  positive  evidence  as  to  not  necessary 484 

See  Intent;  Motive. 


Q 

QUESTIONS  FOR  COURT, 

whether  contract  is  in  restraint  of  trade 103 

reasonableness  of  covenant  not  to  carry  on  business 103 

QUOTATIONS, 

contracts  as  to;  board  of  trade;  Sherman  Anti-Trust  Act 150 


R 

RAILROAD, 

equipment  instrument  of  interstate  commerce note,  16 

competing  line  defined 19 

holding  corporations;  combination  in  restraint  of  trade 29 

consolidation  of  competing  lines;  Sherman  Anti-Trust  Act 81 

companies;  when  may  combine 93 

companies;  exclusive  right  by  to  telegraph  company 93 

companies;  combination  to  better  termiinal  faciUties;  Sherman 

Anti-Trust  Act 151 

companies;  combination  of  stockholders  to  obtain   control  of; 

Sherman  Anti-Trust  .\ct 132 

companies;  purchase  by  one  of  stock  of  another;  Sherman  Anti- 
Trust  Act 151 


740  INDEX 

[References  are  to  Sections! 

RAILROAD— Continued. 

companies;  violations  Sherman  Anti-Trust  Act 151 

companies;  suit  against  by  attorney  general;  not  interference 

with  control  of  States 161 

pooling  of  freights;  Interstate  Commerce  Act 194-201 

when  may  pool  freights 195 

charter;  provision  against  competing  lines;  impairment  of  con- 
tract obligation 221 

company;  grant  of  rights  to;  constitutionality 264 

regulation  as  to;  not  special  act 266 

corporations;  power  of  Congress  to  prohibit  restraints  upon  com- 
petition   267 

poHce  power  as  to;  constitutional  limits note,  271 

consolidation  of;  powers  not  directly  contemplated;  revocation; 

vested  rights note,  275 

right  of  way;  telegraph  line;  exclusive  contract;  monopoly 293 

acquisition  of  lands  of;  not  a  special  privilege,  etc 313 

of  capital  stock  of  other  railroads 313 

statute  authorizing  condemnation  of  capital  stock  of  other  rail- 
roads; when  no  exclusive  privilege  granted 313 

consolidation  of 335 

constitutional  provision  prohibiting  consolidation  of  parallel  and 

competing  Unes 369 

consohdation  of  parallel  and  competing  lines;  violation  State 

statutes 395 

contract  between  palace  car  company  and;  violations  State  stat- 
ute   396 

and  express  or  transfer  companies;  contracts;  exclusive  right. . . .  398 
car  service  association  merely  agent  of;  violation  State  statute. .  399 
pooling  of  freights.  See  Freights;  Carriers;  Common  Carriers;  In- 
terstate Commerce  Act;  PooUng. 

RAILWAY.    See  Common  Carriers;  Railroad. 

RATES, 

combination  of  insurance  companies  to  fix note,     12 

of  transportation;  purpose  of  Sherman  Anti-Trust  Act  as  to 112 

for  transportation;  contract  between  railroads;  Sherman  Anti- 
Trust  Act 151 

for  insurance;  statutes  as  to 370 

for  insurance;  agreements  to  fix 421 

discrimination  in;  remedy  for  in  Mississippi 441 

"REAL  VALUE," 

construed 364 

REASONABLE, 

restraint  of  trade.    See  Contracts  in  Restraint  of  Trade;  Restraint 
of  Trade;  Sherman  Anti-Trust  Act. 


i 


INDEX  741 

[References  are  to  Sectione) 

"REASONAHLE  COMPETITION," 

in  Alabama  CoiiHtitulion  construed 241 

REBATE, 

prohibiting  giving  of;  police  power  of  State 339 

Sec  Freights;  Interstate  Commerce  Act;  Pooling  of  Freights. 

REBATING.     See  Freights;  Interstate  Commerce  Act;  Pooling  of 
Freights. 

REBUTTAL, 

of  evidence  to  show  reason  for  increase  of  prices 48G 

See  Evidence. 

RECEIVER, 

right  to  sue  under  Sherman  Anti-Trust  Act lOG 

RECLAMATION  DISTRICT, 

act  as  to  not  special  act 266 

RECOVERY, 

of  damages  under  Sherman  Anti-Trust  Act 13 

See  Damages. 

REFINERS, 

of  sugar;  violations;  Sherman  Anti-Trust  Act 147 

of  copper;  contracts  between;  Sherman  Anti-Trust  Act 153 

REGRATING, 

defined H 

an  offense  no  longer  known  to  law note,      5 

of  commerce.     See  Commerce;  Constitutional  Law;  Federal  Con- 
stitution; Interstate  Commerce;  Intrastate  Commerce. 

RELIGIOUS  SOCIETIES, 

act  incorporating  not  a  special  act 2G6 

REMANDING  CASE.     See  "Appendix  A." 

REMEDY, 

penalty  for  violation  of  Interstate  Commerce  Act note,  200 

persons  damaged  by  violation  Interstate  Commerce  Act  .  .note,  200 
subsequent  statute  changing  impairment  of  obligation  of  contract  214 
when  no  adequate  remedy  at  law;  enforcing  water  contract.  .  .  .  225 

provided  by  statute  are  exclusive 441 

statutes  providing  for  puni.shment;  fine;  imprisonment 442 

liability  where  agreement  legal  when  made;  effect  of  subsequent 

statute '^^^ 

annulment  of  charter;  forfeiture  of  franchise;  right  of  stockholder 

to  enforce •" '^^ 


742  INDEX 

[References  are  to  Sections] 

REMEDY— Co7Uinued. 

application  to  annul  charter;  granting  of  in  discretion  of  court. .  446 

ouster  of  foreign  corporation;  when  court  no  discretion 447 

foreign  corporations;  nature  of  right  to  transact  business;  ouster 

of 448 

suit  for  injunction  by  person  injured;  defense 450 

violation  of  law  as  preventing  relief  against  ordinance;  ceasing 

violations 451 

action  for  damages;  person  injured  by  conspiracy 452 

action  by  party  to  illegal  contract  or  combination 453 

enjoining  acts  after  combination  declared  unlawful 454 

that  corporation  a  foreign  one  is  not  defense 455 

that  price  not  raised  is  no  defense 456 

that  complete  monopoly  not  obtained  is  not  defense 457 

motives  of  those  instigating  suit  are  immaterial 458 

good  motiv^es  or  intent  no  defense  where  statute  violated 459 

illegality   of  combination   as  defense;   independent  of  statute; 

collateral  contract 460 

illegahty  of  combination  or  contract  as  defense;  where  permitted 

by  statute 461 

illegahty  of  combination  or  contract  as  defense  continued;  in- 
stances  462 

illegality  of  combination  or  contract  as  defense;  action  for  rent. .  463 
illegality  of  combination  or  contract  as  defense;  contract  made 

prior  to  statute 464 

illegality  of  combination  or  contract  as  defense;  where  statute 

prescribes  no  mode  of  procedure  for  determining  illegahty ....   465 
combination  to  raise  price;  defense  that  law  does  not  favor  in- 
creased sale  of  article 466 

illegahty  of  association  as  defense  to  action  by,  for  penalty 467 

twofold  under  Sherman  Anti-Trust  Act.     See  "Appendix  A." 
See  Damages;  Defenses. 

REMOTE  DAMAGES, 

not  basis  of  judgment;  Sherman  Anti-Trust  Act 188 

See  Damages. 

REMOVAL  PROCEEDING, 

indictment  not  conclusive;  Sherman  Anti-Trust  Act 181 

RENT, 

action  for;  illegahty  of  combination  or  contract  as  defense 463 

RESTRAINT, 

defined 24 

See  Contracts  in  Restraint  of  Trade;  Sherman  Anti-Trust  Act. 

RESTRAINT  OF  TRADE, 

conspiracy  in  defined 20 

contract  in  defined 23 


INDEX  743 

[RofcrcnccB  are  to  Sections] 

RESTRAINT  OF  TRADE— Cunlinucd. 

defined 24 

holding  corporations 29 

distinction  between  Anti-Trust  statute  and  contracts  in 52 

"restrictions  in  tnide"  in  statute  not  Bynonymoua  with 54 

power  of  CoiiKrcsH  as  to 110 

purjjose  of  Sherman  Anti-Tru«t  Act 1 12,  1 13 

scope  of  Sherman  Anti-Trust  Act 113 

construction  of  Sherman  Anti-Trust  Act;  generally 114 

in  Sherman  Anti-Trust  Act  construed 115 

question  of  reasonableness  or  unreasonableness;  violations  Sher- 
man Anti-Trust  Act 118 

See  Contracts  in  Restraint  of  Trade;  Sherman  Anti-Trust  Act; 

Trade, 
origin  of.     See  "Appendix  A." 

See  Contracts  in  Restraint  of  Trade. 

"RESTRICTIONS  IN  TRADE," 

in  statute  not  synonymous  with  "restraint  of  trade" 64 

See  Contracts  in  Restraint  of  Trade. 

RETAILERS, 

agreements  between  not  to  purchase  from  certain  wholesalers. . . .  432 

REVISION, 

by  United  States  Supreme  Court;  Anti-Trust  cases note,     14 

REVOCATION, 

of  permit  to  do  business;  statute  as  to 374 

RIGHT  OF  WAY, 

of  railroad;  telegraph  line;  exclusive  contract;  monopoly 293 

"RULE  OF  REASON"  DECISION, 

Sherman  Anti-Trust  Act 83a 

Sherman  Anti-Trust  Act.     See  "Appendix  A. " 83a 


S 

SALE, 

combination  distinguished  from 55 

of  good  will  and  biLslness;  violation  of  Sherman  Anti-Trust  Act.  .    130 
contract  of  collateral  to  illegal  agreement;  Shennan  .\iiti-Trust 

Act 155,  l.'jG 

condition  of  not  to  sell  goods  of  any  other  person;  statute  pro- 
hibiting    371 

of  good  will  and  business;  exception  in  statute  a.s  to 37G 

See  Business;  Good  Will;  St.ito  St.itiiifs.-  Vendor. 


744  INDEX 

[References  are  to  Sectionsl 

SALT, 

manufacturers;  agreenients  between;  violation  State  statute. . . .  433 

SCALP, 

contract  to  instruct  in  treatment  of;  to  use  only  certain  remedies  439 

SCHEME, 

when  separate  elements  of  are  lawful;  Sherman  Anti-Trust  Act. .   122 

SCHOOL  DISTRICTS, 

act  as  to  not  special  act 266 

SCHOOL  TEXT-BOOK  STATUTES, 

exclusive  privileges;  monopoly;  contracts 314 

statutes  as  to  uniform  series  of;  exclusive  privileges;  monopohes; 
contracts 314 

SCOPE, 

of  Sherman  Anti-Trust  Act 113 

SECONDARY  BOYCOTT, 

defined 34 

See  Boycott;  Boycotting;  Labor  or  Trade  Unions. 

SEIZIN, 

under  Sherman  Anti-Trust  Act 13 

SET-OFF, 

damages  recoverable  under  Sherman  Anti-Trust  Act  cannot  be . .  192 
See  Damages. 

SEWAGE, 

power  to  municipality  as  to  constitutional 264 

SEWER  PIPE, 

contract  for;  voluntary  piirchaser;  illegality  of  combination  no 
defense;  Sherman  Anti-Trust  Act 156 

SHARES, 

right  to  return  of;  distribution  of  assets  of  holding  corporation. .   193 

SHERMAN  ANTI-TRUST  ACT, 

construction  and  application  of;  control  of  sugar  refineries .  note,  8 

provisions  of 13 

what  essential  to  violation  of 15 

terms  and  definitions  involved  in  meaning  and  application  of .  .  . .  15 

commerce  under  defined  and  considered 16 

interstate  commerce  under  defined  and  considered 16 

word  commerce  in  construfd 16 

intrastate  commerce  defined 17 


INDEX  745 

[References  are  to  Sectionfl] 

SHERMAN  ANTI-TRUST  ACrT—Coniinued. 

commodity  under  defined 18 

competing  lino  under  defined 19 

conspiracy  under  defined 20 

contract  under  defined 21 

monopolize  defined 22 

monopoly  defined 22 

contract  in  restraint  of  trade  defined 23 

in  restraint  of  trade  or  commerce  defined 21 

trade  defined 25 

traffic  under  defined 20 

transportat  ion  under  defined 27 

trust  under  defined 29 

holding  corporation  under  defined 29 

distinctions;  combination  and  sale 55 

"combination"  and  "conspiracy"  synonymous 56 

distinctions;  conspiracy  in  restraint  of  trade  and  contract  in  re- 
straint of  trade 57 

"in  restraint  of  trade"  synonymous  with  "trade  or  commerce".     58 
"conspiracy"  as  used  in  means  substantially  same  as  contract 

note,    57 

"trade"  and  "commerce"  synonymous 58 

"contract  in  restraint  of  trade"  analogous  to  "monopolize". ...     58 

object  of 75 

unlawful  restraints  and  monopolies;  what  is  embraced  generally. .     75 

nature,  essentials  or  test  under 75-85 

labor  combinations  within  prohibition  of 76 

regulation  or  restraint  of  commerce,   intrastate,   interstate  or 

foreign 77 

monopoly;  exclusive  right 78 

monopoly;  size  or  magnitude  of  business 79 

injunction  under;  what  necessary  to  show 80 

direct  and  necessary  effect  upon  competition  in  interstate  and 

foreign  commerce 80,  81 

nature  of  contract  condemned  by note,     80 

allegation  of  purpose  in  indictment note,     80 

consolidation  of  competing  railroads 81 

where  restraint  only  collateral 82 

fair  regulation  of  business;  indirect  or  incidental  efifect  upon  com- 
petition in  interstate  or  foreign  commerce 82 

reasonable  and  unreasonable  restraints 83 

the  "rule  of  reason"  and  "light  of  rea.son"  decisions 83a 

"rule  of  reason"  and  "light  of  reason"  decision.    See  "Appendix 

A." 83a 

reasonable  and  unreasonable  restraints.    See  "Appendi.x  A.".  .  .  .   83a 

test  or  essentials  of  con.spiracy  generally 84 

test  or  essentials  of  conspiracy;  overt  acts 85 

object  of 101 

power  of  Congress;  generally 1 10 

constitutionality  of  act Ill 


746  INDEX 

[References  are  to  Sections] 

SHERMAN  ANTI-TRUST   ACT— Continued. 

competent  for  Congress  to  vest  jurisdiction  under Ill 

purpose  of 112 

scope  of  act 113 

construction  cf  act;  generally 114 

not  inconsistent  with  Interstate  Commerce  Act 114 

what  embraced  by 114 

corporations  are  persons 114 

sections  one  and  two  make  illegal  two  different  things 114 

construction  of  act;  "commerce"  and  "restraint  of  trade"  con- 
strued    115 

equity  may  enjoin  violations  of 116 

construction  of  act;  should  not  be  narrow  or  forced 116 

does  not  extend  to  acts  done  in  foreign  countries 117 

question  of  reasonableness  or  unreasonableness  of  restraint;  vio- 
lations of 118 

conspiracy  under  may  have  continuance 119 

test  of  legality  of  contract  or  combination 120 

where  chief  object  is  to  increase  trade 121 

where  separate  elements  of  scheme  lawful 122 

suit  by  government;  what  necessary  to  show 123 

violations;  what  essential  to  constitute 123 

what  monopoly  must  affect;  "monopolize"  construed 123 

violations;  essentials  of  contracts  in  order  to  constitute 124 

violations;  what  constitute;  generally 125 

violations;  all  facts  and  circumstances  to  be  considered 125 

violations;  size  or  extent  of  business  not  alone  a  test 126 

violations;  combinations  entered  into  before  passage  of  act 127 

violations;  by  combinations;  stockholder  not  criminally  liable.  .  .   128 

defenses;  generally 129 

violations;  purchase  of  business  and  good  will 130 

where  corporation  holds  majority  of  stock  of  another  corporation  131 

exchange  of  shares  of  stock;  holding  corporation 132 

contracts  between  holders  of  copyrights 133 

contracts  between  owners  of  patents 134 

patents;  licenses;  conditions;  generally 135 

patents;  licenses;  particular  conditions 136 

patents;  right  to  modify  terms  of  licenses 137 

proprietary  medicines;  contracts  as  to 138 

acts  and  combinations  of  labor  organizations 139 

manufacturing  and  other  contracts;  generally 140 

contracts  as  to  manufactures  within  a  State 141 

manufacturers  of  shingles 142 

manufacturers  of  iron  pipes 143 

tobacco  manufacturers  and  jobbers 144 

manufacturers  of  liquorice  paste 145 

association  dealing  in  tiles,  mantels  and  grates 146 

sugar  refining  companies 147 

dealers  in  fresh  meat 148 

association  of  cattle  dealers 149 


INDEX  747 

[References  are  to  Sectionel 

SHERMAN  ANTI-TRUST  ACT— C'o/t/utwi. 

by  board  of  trade;  contracts  as  to  quotations 150 

railroad  companies 151 

owners  of  vessels 152 

mining  contracts 153 

contracts  between  coal  companies 154 

contract   with   combination;   voluntary   purchaser;   illegality  of 

combination  no  defense 155,  156 

contract  with  combination;  when  iUegahty  of  combination  a  de- 
fense;      157 

suit  by  combination  for  infringement  of  patent;  illegality  of  com- 
bination as  defense 158 

suit  by  combination  for  infringement  of  trade-mark  or  copyright; 

illegality  of  combination  as  defense 159 

who  may  sue;   when   individual  may;   injury  to   "business  or 

property  " 160 

who  may  sue;  injunction;  right  of  individual;  suit  by  attorney 

general 161 

who  may  sue;  right  of  stockholder;  creditor 162 

who  may  sue;  right  of  member  of  combination 163 

who  may  sue;  municipal  corporation  a  "person" 164 

who  may  sue;  State  not  a  "person"  or  "corporation" 165 

who  may  sue;  right  of  receiver 166 

time  of  entering  into  combination  as  affecting  right  to  recover. . .   167 

jurisdiction  of  courts;  generally 168 

jurisdiction;  parties;  summoning  of 160 

jurisdiction;  parties;  summoning  of;  not  restricted  by  Judiciar>' 

Act 170 

jurisdiction;  exercise  of  not  discretionary;  summoning  parties. . .   171 

jurisdiction;  extent  of  judgment 172 

sufficiency  of  complaint  or  petition;  general  rules 173 

sufficiency  of  complaint;  rules  in  force  in  State  where  action 

brought;  Practice  Act 174 

sufficiency  of  complaint ;  particular  cases 175 

sufficiency  of  complaint;  dupHcity 176 

sufficiency  of  complaint;  joinder  of  defendants;  election 177 

sufficiency  of  indictment;  general  rules 178 

sufficiency  of  indictment;  charging  officers,  agents  or  stockholders  179 

indictment  charging  conspiracy;  denial  under  general  issue 180 

indictment  not  conclusive;  removal  proceeding 181 

evidence;  admissibility  and  weight  of 182 

evidence  as  to  intent ;  when  essential 183 

evidence;  burden  of  proof 184 

evidence;  presumption  in  respect  to  combination 185 

evidence;  document.s;  witnesses;  power  of  court 186 

examination  of  witness  a  "proceeding" 187 

damages;  recover^'  of;  generally 188 

damages;  nature  of  action  for;  jury  trial 189 

action  for  damages;  a  civil  remedy;  statute  of  limitations 190 

action  for  damages;  where  payment  of  higher  price  compelled. . .    191 


748  INDEX 

[References  are  to  Sections] 

SHERMAN   ANTI-TRUST  ACT— Continued. 

damages;  cannot  be  set  off 192 

distribution  of  assets  of  holding  corporation;  right  to  return  of 

shares 193 

Interstate  Commerce  Act  not  inconsistent  with 201 

Congress  power  to  enact  by  virtue  of  commerce  clause  of  Con- 
stitution   205 

statute  as  to  pooling  of  farm  products  does  not  violate 375 

remedy  twofold.     See  "Appendix  A." 

should  be  construed  in  light  of  reason.     See  "Appendix  A." 

service  of  notice  under.     See  "Appendix  A. " 

SHINGLES, 

association;  manufacturers  of;  Sherman  Anti-Trust  Act 142 

SHIPOWNERS, 

combinations  between  to  obtain  monopoly  of  tea  trade 59 

contracts  between;  Sherman  Anti-Trust  Act 152 

See  Steamboat. 

SIZE, 

of  not  necessarily  illegal;  monopoly 79 

or  extent  of  business  not  alone  test  of  violation  of  Sherman  Anti- 
Trust  Act 126 

SLAUGHTERHOUSES, 

exclusive  grant  to note,      8 

or  market  house;  when  city  or  village  cannot  create  monopoly. . .  315 

SOUTH  DAICOTA, 

Constitution;  monopolies  and  trusts  prohibited;  combinations  to 
control  prices,  production,  transportation  or  to  prevent  com- 
petition; duty  of  legislature 255 

SPECIAL  ACTS, 

instances 265,  266 

constitutional  provisions  as  to 265,  266 

See  Statutes. 

SPECIAL  PRIVILEGES  OR  IMMUNITIES.    See  Constitutional 
Law;  Statutes. 

SPECULATIVE  DAMAGES, 

not  recoverable;  Sherman  Anti-Trust  Act 188 

See  Damages. 

STATE, 

not  a  "person"  or  "corporation"  under  Sherman  Anti-Trust  Act  165 

a  "person"  or  "corporation";  Sherman  Anti-Trust  Act 16.5 

Constitutions  prohibiting  monopolies;  generally 239 


INDEX  749 

[References  are  to  Sectional 

STATE— CmUinued. 

ConBtitution  of  Alabama;  legislative  duty  as  to  monopolies,  com- 
binations, etc.,  to  control  articles  of  necessity,  etc.,  or  to  prevent 
competition 240 

Constitution  of  Alabama  ronstruwl;  ofToct  upon  competition; 
meaning;  of  "unreasonably"  and  "reasonable  competition".  .  .   241 

Constitution  of  Arkansas;  monopolies  prohibited 242 

Constitution  of  Idaho;  combinations  to  control  prices,  regulate 
production,  etc.,  prohibited;  duty  of  legislature 243 

Constitution  of  Kentucky;  legislative  duty  as  to  trusts,  combina- 
tions, etc.,  to  control  prices 244 

Constitution  of  Louisiana;  combinations,  etc.,  to  control  prices 
unlawful ;  duty  of  legislature 245 

Constitution  of  Maryland;  monopolies  prohibited 246 

Constitution  of  Minnesota;  coml)inations  to  control  food  products 
a  criminal  conspiracy;  duty  of  legislature 247 

Constitution  of  Mississippi;  duty  of  legislature  to  prevent  trusts, 
combinations,  etc 248 

Constitution  of  Montana;  combinations,  trusts,  etc.  to  fix  prices 
or  regulate  production;  duty  of  legislature 249 

Constitution  of  Montana  continued;  nere.ssity  of  showing  intent  2.5<) 

Constitution  of  Montana  continued;  meaning  of  "Trust"  therein  251 

Constitution  of  North  Carolina;  monopolies  prohibited 252 

Constitution  of  North  Dakota;  combinations  to  control  prices, 
cost  of  exchange  or  transportation  prohibited;  franchises  for- 
feited  ••  2.53 

Constitution  of  Oklahoma;  monopolies  prohibited;  duty  of  legis- 
lature as  to  combinations,  monopolies,  etc 254 

Constitution  of  South  Dakota;  monopolies  and  trusts  prohibited; 
combinations  to  control  prices,  production,  transportation  or 
to  prevent  competition  prohibited;  duty  of  legislature 255 

Constitution  of  Tennessee;  monopolies  proliibited 256 

Constitution  of  Texas;  monopolies  prohibited 257 

Constitution  of  Utah;  combinations  to  control  prices,  cost  of  ex- 
change or  transportation  prohibited 258 

Constitution  of  Washington;  monopolies  and  trusts  prohibited; 
combinations  to  control  prices,  production,  transportation  or 
to  prevent  competition  prohibited;  duty  of  legislature 259 

Constitution  of  Washington  continued;  its  provisions  not  self- 
executing 260 

Constitution  of  Washington  continued;  combinations  of  common 
carriers  to  share  earnings  prohibited 261 

Constitution  of  Wyoming;  monopolies  prohibited;  combinations 
to  prevent  competition,  control  production  or  prices,  etc.,  pro- 
hibited    262 

Constitutional  provisions  prohibiting  granting  special  or  exclusive 
privileges,  immunities  or  franchises,  etc 263,  264 

constitutional  provisions  prohibiting  creation  of  corporation  by 
special  act,  etc 265,  26t) 

hospitals;  act  as  to  not  special  act 260 


750  INDEX 

[References  are  to  Sections] 

STATE— Continued. 

legislative  powers  of;  generally 268 

Federal  and  State  legislative  powers  distinguished 269 

power  of  as  to  subject  of  interstate  commerce  when  Congress 

inactive 270 

Federal  and  State  legislative  power  distinguished;  interstate  and 

intrastate  commerce 270 

laws;  supremacy  of  Congress  over note,  270 

police  power;  definition  and  general  principles 271 

sovereign  power  or  State  is  source  of  grant  or  franchise;  grant  of 

monopoly 272 

legislative  power  to  grant  monopolies 274 

contract  with ;  construction  of 275 

municipality  a  creature  of 278 

Constitution ;  municipal  ordinances  must  not  conflict  with 279 

grant  by  of  exclusive  privilege  or  monopoly  to  make  and  vend 

gas,  etc.;  police  power 303 

legislative  grant  of  exclusive  privilege  or  monopoly  to  supply  gas, 

etc 303 

grant  of  exclusive  right  to  use  end  of  wharf  for  ferry  purposes ....  303 

control  of  streets;  street  railways;  e.xclusive  grants 316 

contract  by  with  telegraph  company;  exclusive  right  of  State.  .  .  .  318 

power  of,  to  grant  exclusive  privilege  to  water  company;  monopoly  327 

contract  with;  water  company;  due  process;  constitutional  law.  .  333 
and  municipal  legislation  or  contracts;   particular  instances.  .294-335 
See  Post  Roads  Act;  State  Statutes;  Statutes. 

STATEMENTS, 

of  parties  as  evidence 482,  485 

STATE  NORMAL  COLLEGE, 

act  as  to  not  special  act 266 

STATE  STATUTES, 

police  power  of  State;  restraining  right  of  contract;  generally. . . .  336 
police  power  of  State  as  to  contracts  and  combinations  in  re- 
straint of  trade;  generally 337 

police  power  of  State;  prevention  of  discrimination 338 

police  power  of  State;  prohibiting  giving  of  rebate 339 

police  power  of  State;  corporations;  limitations  in  Federal  Con- 
stitution; Fourteenth  Amendment 340 

police  power  of  State;  foreign  corporations;  Fourteenth  Amend- 
ment   341 

power  of  State  to  provide  mode  and  means  of  procedure  to  enforce 

statutes;  power  of  Supreme  Court  of  United  States 342 

power  of  legislature  as  affected  by  constitutional  provision  re- 
quiring pa.ssage  of  laws 343 

constitutionality  of  generally 344 

constitutionality;  liberty  of  contract;  due  process  of  law 345 

constitutionality;  class  legislation;  liberty  of  contract 346 


INDEX  751 

[References  are  to  Sectionfl] 

STATE  STATUTES— Co«/utu€(/. 

exception  an  to  labor  organizations note,  346 

constitutionality;  iliscrimination 347 

constitutional  provision  rcciuiring  legislature  to  enact  laws  con- 
strued   348 

contract  made  prior  to  passage  of  act  does  not  render  it  uncon- 
stitutional   349 

construction;  gont-ral  rules 350 

penal  statutes  strictly  construed 350 

construction;  ius  to  intont  of  legislature 351 

where  part  of  act  unconstitutional 352 

as  to  title  and  body  of  act 353 

rule  as  to  statutes  in  pari  materia 354,  355 

rule  as  to  additional  and  descriptive  words 356 

word  "arrangement "  construed 357 

word  "combination "  construed 358 

words    "commodity"    and    "convenience"    construed;   personal 

service  not ;  telephone  service  is 359 

word  "court"  construed 360 

words  "in  restraint  of  trade"  construed 361 

word  "  monopoly  "  construed 362 

word  "person"  construed;  whether  corporations  included 363 

words  "real  value"  construed 364 

word  "trade"  construed 365 

application  of  generally 366 

penalty   provisions  of   act;  review  by  United  States  Supreme 

Court 367 

territorial  legislation;  power  of  Congress;  delegation  of  power  to 

subordinate  bodies 368 

combination  to  fix  or  hmit  the  price  or  premium  for  insuring 

property  prohibited 370 

prohibiting  condition  of  sale  not  to  sell  goods  of  any  other  person .   371 

prohibiting  discrimination  in  prices  for  petroleum 372 

relieving  purchaser  from  combination  from  liability 373 

as  to  punishment;  fine  or  imprisonment;  forfeiture  of  charter; 

revocation  of  permit 374 

permitting  pooling  by  fanners  of  farm  products 375 

exception  in  as  to  sale  of  good  will  of  business;  agricultural  prod- 
ucts or  live  stock 376 

Donnelly  Anti-Trust  Act;  New  York 377 

violations;  contracts  and  combinations;  legality  and  illegality; 

general  principles 378 

violations;  intention  as  affecting;  presumption  as  to 379 

violations;  all  pro\isions  of  contract  should  be  considered;  pre- 
sumption as  to  legality 380 

mere  form  of  association  or  combination  not  controlling  te8t  of 

legality 381 

combination  to  carry  out  restrictions  prohibited:  when  combina- 
tion may  so  operate;  result  is  immaterial;  each  case  controlled 
by  own  facts 382 


752  INDEX 

[References  are  to  Sections] 

STATE  STATUTES— Continued. 

violation;  where  contract  legal  but  one  of  several  links  in  illegal 

combination 383 

violations;  where  contract  or  combination  involves  interstate 

commerce;  not  subject  to  State  Anti-Trust  law 385 

violations;  where  contract  made  or  combination  formed  outside 

of  State 386 

violations;  combination  formed  before  passage  of  statute 387 

foreign  corporations  subject  to  State  Anti-Trust  laws 388 

what  constitutes  a  trust;  Texas  statute 389 

violations;  consoUdation  of  several  corporations;  transfer  of  prop- 
erty to  one 390 

violations;  contracts  between  rival  corporations  each  obtaining 

interest  in  other 391 

permitting  consohdation  of  corporations 392 

violations;  piirchase  of  assets  of  corporations 393 

violations;  purchase  by  mining  corporation  of  stock 394 

\iolation8;  consolidation  parallel  and  competing  lines  railroad.  .  .   39,5 
violations;  contract  between  railroad  and  palace  car  company. .  .  396 

violations;  merger  of  street  railways 397 

violations;  contracts  between  railroad  companies  and  express  or 

transfer  companies ;  exclusive  right 398 

violations;  car  service  association  merely  agent  of  several  rail- 
roads   399 

violations;  agreements  between  steamboat  companies 400 

violations;  contracts  between  manufacturer  and  purchaser  not  to 
sell  below  certain  price;  proprietary  medicines;  uniform  jobbing 

price 401 

exclusive  rights;  contracts  between  vendor  and  purchaser;  when 

a  violation 402 

exclusive  rights;  contracts  between  vendor  and  purchaser;  when 

not  a  violation 403 

violation;  exclusive  contract;  sale  of  by-product  distinguished 

from  sale  of  entire  output 404 

violations;  contract  giving  exclusive  right  to  sell  goods  on  certain 

premises 405 

violations;  agreement  restraining  purchaser  using  premises  for 

certain  purposes 406 

violations;  agreement  between  agent  of  seller  and  purchaser;  coal 

oil 407 

violations;  contracts  between  principal  and  agent 408 

sale  of  business  and  good  will;  contracts  not  to  engage  in  com- 
petition   409 

violations;  sale  of  business  and  good  will;  contracts  not  to  en- 
gage in  competition;  exception  in  statute  as  to 410 

violations;  sale  of  business  and  good  will;  laundry  not  a  manu- 
facturing establishment 411 

violations;  agreement  to  refrain  from  entering  into  business.  .  . .   412 
violations;  agreements  between  brewers  not  to  sell  to  one  in- 
debted; to  raise  price 413 


INDEX  753 

[References  are  to  Sectiona] 

STATE  STATVTES— Continued. 

violations;  agreements  between  bricklayers'  union  and  mason  and 

builders'  association 414 

violations;  associations  of  cattle  owners,  buyers  and  sellers;  by- 
laws and  rules 415 

violations;  agreement  between  cotton  seed  oil  manufacturers; 

withdrawal  of  agent  by  one 416 

violations;  corporation  composed  of  crushed  granite  dealers;  agree- 
ment as  to  blueetone 417 

violations;  consolidation  of  gas  companies;  agreements  between.   418 

violations;  agreements  limiting  right  to  buy  grain 419 

violations;  agreements  between  ice  companies 420 

violations;  agreements  between  insurance  companies  or  agents  to 

fix  rates 421 

violations;  agreements  between  lumber  dealers 422 

violations;  contracts  between  proprietors  of  newspapers  and  job 

printing  establishments 423 

violations;  contracts  between  newspaper  publishers  and  carriers.   424 
violations;  agreements  between  packing  companies  to  control  the 

price  of  meat 425 

violations;  contracts  in  respect  to  patented  articles 426 

violations;  agreements  between  physicians;  schedule  of  prices. . . .  427 
violations;  physicians;  dissolution  of  partnership;  agreement  not 

to    practice 428 

violations;  agreements  between  dealers  in  plumbers'  supplies  and 

master  plumbers;  plumbers'  association 429 

violations;  agreements  between  publishers;  price  at  retail;  not  to 

sell  to  certain  class 430 

violations;  association  for  distributing  news 431 

violations;  agreements  between  retailers  not  to  purchase  from 

certain  wholesalers 432 

violations;  agreements  between  salt  manufacturers 433 

violations;  contracts  relating  to  telephone  service 434 

violations;  telegraph  companies;  service  of  is  not  a  commodity.  .  435 
violations;  agreements  between  theatrical  owners  or  managers; 

plaj'S  not  commodities 436 

violations;  combination  to  induce  employees  to  break  contract 

with  employees 437 

violations;  undertaking  by  corporations  to  induce  employees  to 

trade  with  another 438 

violations;  contract  to  instruct  in  treatment  of  scalp  and  hair;  to 

use  only  certain  remedies 439 

requiring  production  of  books  and  jmpers 494 

compelling  witnesses  to  testify;  immunity  statutes 495 

examination  of  witnesses  before  trial;  constitutionality  of 496 

See  Defenses;  Evidence;  Pleading;  Remedies;  Statutes. 

STATUTE, 

granting  special  privilege  to  printing  company  void note,      0 

granting  exclusive  privilege  to  construed note,       8 

48 


754  INDEX 

[References  are  to  Sections] 

STATUTE— Continued. 

"Uniform  Text  Book  Act"  construed note,       8 

as  to  receipt  and  transmission  of  telegraph  messages note,     16 

distinctions;  monopolies  resulting  from  grant  or  contract 46 

distinctions;  monopolies  and  combinations 48 

word  "monopolize"   is   synonymous   with  "aggregate"  or  con- 
centrate"      50 

term  "combination  in  the  form  of  trust"  is  synonymous  with 

"pooling" 51 

as  to  monopolies;  construction  generally 46 

distinction  between  State  Anti-Trust  statute  and  contracts  in  re- 
straint of  trade 52 

distinctions;  "restrictions  in  trade"  in  statute  not  synonymous 

with  restraint  of  trade 54 

granting  rights  strictly  construed 71 

history  of  coimtry  and  the  law;  should  not  close  eyes  to  in  con- 
struing      95 

of  State;  effect  of  upon  illegality  of  contract  in  restraint  of  trade    98 

construction  of;  territorial  limits 117 

as  to  dams  construed 266 

restricting  interstate  commerce  construed note,  206 

whether  "law"  appUes  only  to;  impairment  of  obUgation  of  con- 
tracts   210 

prior  construction  of  changed  by  judicial  decision;  obligation  of 

contract  not  impaired note,  212 

obUgation  of  contract  clause  refers  to  subsequently  enacted  law 

of  State 213 

nature  of  laws  prohibited  by  obligation  of  contracts  clause 215 

contracts  prohibited  by  not  protected  by  obUgation  of  contracts 

clause 216 

exclusive  grant;  bridge;  impairment  contract  obligation 219 

powers  reserved  to;  Tenth  Amendment  to  Federal  Constitution .  .  226 
Anti-Trust;  constitutionality  under  due  process  clause.  .  .  .note,  230 
prohibiting  combinations,  etc.;  liberty  to  or  freedom  of  contract; 

instances 236 

validity  of  Anti-Trust  Act  of  Tennessee  of  1903 note,  237 

void;  violation  Fourteenth  Amendment 249 

permitting  surety  company  to  become  sole  surety  held  constitu- 
tional   264 

as  to  insurance  companies;  prohibitory;  held  constitutional 264 

as  to  building  and  loan  associations  held  constitutional 264 

as  to  acquiring  and  operating  street  railways  constitutional 264 

as  to  formation  of  ga^  companies  held  constitutional 264 

as  to  ferry  company  acquiring  additional  slips  constitutional ....   264 

powers  to  municipality  hold  constitutional 264 

as  to  taxes;  constitutionality 264 

granting  rights  to  railroad  company;  constitutionality 264 

constitutional  provisions  prohibiting  the  creation  of  corporations 

by  special  act 265,  266 

in  exercise  of  police  power;  generally 271 


INDEX  755 

[References  arc  to  Sections] 

STATUTE— Continued. 

construed;  exemption  from  taxation;  insurance  companies . note,  275 

grants  strictly  construed 275 

English  statute  as  to  monopolies  declaratory  of  common  law. note,  276 

Colonial  Act  of  Massachusetts  of  1041  construed note,  276 

patent  system  rests  on  Acts  of  Congress  under  Confltitution 282 

of  monopolies  in  luigland 282 

copyright  statute  of  United  States 286 

common  law  and  statutory'  rights  as  to  copyrights  distinguished .  .  287 

of  several  States  protect  property  in  trade-marks 288 

property  in  trade-marks  docs  not  derive  existence  from  acts  of 

Congress 288 

Post  Roads  Act  prohibits  State  monopolies  in  commercial  inter- 
course by  t  elegraph 292 

construction  of  as  to  electric  lighting 299 

when  unconstitutional  as  granting  monopoly  as  to  ferry 300 

not  void  as  creating  corporation  by  special  act;  exclusive  right 

or  monopolj'  to  supply  gas,  etc 303 

acquisition  railroad  corporation's  lands;  not  a  special  privilege.  .  .   313 
when  no  special  privilege  granted  by  in  authorizing  acquisition  of 

railroad  lands 313 

authorizing  railroad  company  to  take  capital  stock  of  other  rail- 
roads by  condemnation;  no  exclusive  privilege  granted 313 

providing  for  uniform    series  of    school   text-books;   exclusive 

privileges;  monopoly;  contracts 314 

as  to  special,  etc.,  laws;  street  railways;  exclusive  grants  to 316 

prohibiting  grants  of  exclusive  rights  by  city;  contract  when  void  317 

violations;  where  by-laws  of  associations  show  illegality 3S4 

providing  for  punishment;  word  "may"  construed 442 

liability  where  agreement  legal  when  made;  effect  of  subsequent 

statute 443 

construed  by  highest  court  of  State;  review  by  United  States 

Supreme  Court 444 

of  State  requiring  production  of  books  and  papers 494 

of  State  compelling  witnesses  to  testify;  immunity  statutes 495 

as  to  examination  of  witnesses  before  trial;  constitutionality  of 

statute 1^ 

giving  exclusive  rights.  See  Exclusive  Grants;  Federal  Legisla- 
tion; Interstate  Commerce  Act;  See  Labor  or  Trade  Unions; 
Post  Roads  Act;  Sherman  Anti-Trust  Act;  State  Statutes; 
Wilson  Tariff  Act,  Amendments  to. 

STATUTE  OF  LIMITATIONS, 

plea  of;  indictment  under  Sherman  Anti-Trust  Act ISO 

action  for  damages;  Sherman  Anti-Trust  Act 190 


STEAMBOAT, 

companies;  agreements  between;  violation  State  statute 400 

Sec  Shipowners. 


756  INDEX 

[References  are  to  Sections] 

STOCK, 

in  corporation;  majority  of  held  by  another  corporation;  viola- 
tions Sherman  Anti-Trust  Act 131 

exchange  of  shares  of;  holding  corporation;  violations  of  Sherman 

Anti-Trust  Act 132 

pledge  of;  pleading  combination;  Sherman  Anti-Trust  Act 175 

right  to  return  of;  distribution  of  shares  of  holding  corporation.  .   193 

purchase  by  mining  corporation  of;  violation  State  statute 394 

See  Corporations. 

STOCKHOLDERS, 

not  criminally  liable  for  violation  by  corporation 128 

of  raihoad  companies;  combination  of  to  obtain  control;  Sherman 

Anti-Trust  Act 132 

of  railroads;  contracts  between  to  obtain  control;  Sherman  Anti- 
Trust  Act 151 

charging  of  in  indictment;  Sherman  Anti-Trust  Act 179 

right  of  to  enforce  forfeiture  of  franchise;  annulment  of  charter. .  445 
See  Corporations. 

STREET  RAILWAYS, 

construction  of  grants  to 71 

companies;  statutes  as  to  operating;  constitutional 264 

regulation  as  to  fares  not  special  act 266 

public  rights;  private  rights  under  franchise note,  275 

constitutional  law;  contract;  municipality 294 

consolidation  of 335 

merger  of;  violation  State  statutes 397 

See  Railroads. 

STREETS, 

municipal   control   of,   electric   lighting;   exclusive   contract   or 

monopoly 298,  299 

control  of,  where  vested 299 

use  of  to  lay  pipes,  etc.,  for  exclusive  gas  supply 304 

control  of;  street  railways;  exclusive  grants;  municipalities 316 

exclusive  grant  to  use.  See  Electric  Lighting;  Exclusive  Grant; 
Gas;  Street  Railways;  Telegraph  Companies;  Telephone  Com- 
panies; Waterworks. 

STRIKE, 

defined 41 

legal  strike  defined 42 

and  boycott  distinguished 43 

See  Labor  or  Trade  Unions. 

SUBPCENA  DUCES  TECUM, 

proceeding  under  Sherman  Anti-Trust  Act 186 

See  Evidence;  Procedure. 


INDEX  757 

(References  are  to  Sectional 

SUBPCENAS, 

under  Sherman  Anti-TriLst  Act 13 

under  amendments  to  Wilson  Tariff  Act 14 

See  Evidence;  Procedure. 

SUBWAYS, 

in  city  streets;  statutory  grants  to  telephone  company;  no  exclu- 
sive right 317 

SUFFICIENCY, 

of  evidence.     See  Evidence. 

SUGAR, 

refining  companies;  violations;  Sherman  Anti-Trust  Act 147 

SUIT, 

by  individual  under  Sherman  Anti-Trust  Act;  injury  to  "business 

or  property  " 160 

by  attorney  general;  Sherman  Anti-Trust  Act 161 

right  of  creditor;  Sherman  Anti-Trust  Act 162 

right  of  stockholder;  Sherman  Anti-Trust  Act 162 

right  of  member  of  combination;  Sherman  Anti-Trust  Act 163 

by  municipality;  Sherman  Anti-Trust  Act 164 

by  receiver;  Sherman  Anti-Trust  Act 166 

Sherman  Anti-Truist  Act;  time  of  entering  into  combination  as 

affecting  right  to  recover 167 

See  Action;  Injunction;  Pleading. 

SUMMONING, 

parties  under  Sherman  Anti-Trust  Act 13 

of  parties;  jurisdiction;  Sherman  .Vnti-Trust  Act 169 

of  parties;  not  restricted  by  Judiciary  Act;  Sherman  Anti-Trust 

Act 170 

of  parties;  exercise  of  jurisdiction  not  discretionary;  Sherman 

Anti-Trust  Act 171 

See  Parties;  Witnesses. 


SUPREME  COURT, 

appeal  to  and  revision  by;  Anti-Trust  cases note,     14 

summoning  parties;  Sherman  Anti-Trust  Act 169 

See  Federal  Supreme  Court;  United  States  Supreme  Court. 

SURETY  COMPANY, 

statute  permitting  to  become  sole  surety  constitutional 264 

SYNONYMS,     See  Distinctions  and  Synonyms. 


758  INDEX 

[Reference  are  to  Sectional 
T 

TAXES, 

statutes  as  to;  constitutionality 264 

statutes  exempting  insurance  companies  from  construed . . .  note,  275 

TEA  TRADE, 

combination  of  shipowners  to  obtain  monopoly  of 59 

TELEGRAPH, 

intercourse  by  is  commerce note,     16 

and  telephone  company;  exclusive  contract  between  void 92 

company;  exclusive  right  to  by  railroad  company 93 

companies;  police  power note,  271 

Post  Roads  Act  prohibits  State  monopolies  in  commercial  inter- 
course by  telegraph 292 

railroad  right  of  way;  telegraph  line;  exclusive  contract;  monopoly  293 

exclusive  right  of  State  under  contract  with 318 

interstate  commercial  transactions  affected  by  common  law 318 

exclusive  grants  by  State  Post  Roads  Acts 318 

service;  contracts  as  to;  violation  State  statutes;  service  not  a 
commodity 435 

TELEPHONE, 

an  instrument  of  commerce note,     16 

and  telegraph  company;  exclusive  contract  between  void 92 

company;  exclusive  grant  to;  impairment  of  contract  obligation.  .   222 

companies;  whether  Post  Roads  Act  includes 292 

company;  conduits  in  city  streets;  statutory  grants;  no  exclusive 

right 317 

companies;  exclusive  grants  or  privileges 317 

service  as  a  "convenience" 359 

service;  contracts  relating  to;  violations  State  statute 434 

TENNESSEE, 

Constitution;  monopolies  prohibited 256 

TENTH  AMENDMENT, 

to  Federal  Constitution;  powers  reserved  to  the  States 226 

TERMINAL, 

facihties;  contracts  between  railroads  to  better;  Sherman  Anti- 

Trust  Act 151 

See  Railroads. 

TERMS.     See  Definitions;  Words  and  Phrases. 

TERRITORIAL, 

legislation;  power  of  Congress;  delegation  of  power  to  subordinate 
bodies 368 


INDEX  7.59 

[References  are  to  SectionB] 

TERRITORY, 

covered;  reasonableneflfl  aa  to  of  contract  in  restraint  of  trade. . .   108 

TESTIFYING, 

exemptions  from;  perjuries  excepted;  enforcing  trust  and  inter- 

Btate  commerce  laws not<',     14 

See  Evidence;  Witnesses. 

TESTIMONY.    See  Evidence;  Witnesses. 

TEXAS, 

Constitution ;  monopolies  prohibited 257 

TEXT-BOOK, 

statutes  as  to  uniform  series  of  in  schools;  exclueive  privilege; 
monopoly;  contracts 314 

THEATERS, 

agreements  between  owners  or  managers  of 436 

THREATS, 

use  of  by  strikers.    See  Labor  or  Trade  Union. 

TICKET  BROKERS, 

action  by  member  of  combination  against 163 

TILES, 

association  dealing  in;  Sherman  Anti-Trust  Act 146 

TIME, 

of  formation  of  combination;  allegation  as  to;  Sherman  Anti-Trust 

Act 178 

of  entering  into  conspiracy;  suflSciency  of  evidence 491 

TOBACCO, 

combination  of  jobbers  and  manufacturers  of;  Sherman  ^Vnti- 
Truat  Act 144 

TOLL, 

exclusive  right  to  at  ferry  or  bridge  not  a  monopoly note,  296 

exclusive  right  to  control  waterway  and  collect,  not  a  monopoly   .   334 

TOLL  BRIDGES, 

exclusive  grants 319 

TOLL  ROADS, 

municipal  grant ;  not  a  monopoly 320 

TOLL  WHARF, 

legislature  may  grant  exclusive  right  for 321 


760  INDEX 

[References  are  to  Sections] 

"TO  MONOPOLIZE," 

test  of  meaning  of 67 

TOWN, 

delegation  of  powers  to 278 

when  may  provide  for  market  house;  monopoly 310 

board;  contract  giving  exclusive  right  to  gas  company  when  void 

as  monopoly 306 

See  Municipality. 

TRADE, 

defined 25 

construed 365 

and  commerce  synonymous;  Sherman  Anti-Trust  Act 58 

restraint  of;  exclusive  combination;  unlawfulness 59 

nature,  essentials  or  test;  contracts  in  restraint  of 86-109 

contracts  in  restraint  of;  public  policy  as  test 86 

contracts  in  restraint  of;  public  policy  as  test;  degree  of  injury  to 

public 87 

where  chief  object  of  agreement  is  to  increase;  Sherman  Anti- 
Trust  Act 121 

board  of;  contracts  as  to  quotations;  Sherman  Anti-Trust  Act. . .   150 

controlled  in  England  by  the  crown;  statute  of  monopolies 282 

restraint  of.    See  Contracts  in  Restraint  of  Trade;  Restraint  of 

Trade, 
reasonable  or  unreasonable  restraint  of.  See  Contracts  in  Restraint 
of  Trade;  Sherman  Anti-Trust  Act. 

TRADE-MARK, 

suit  for  infringement  of;  illegality  of  combination  as  defense; 

Sherman  Anti-Trust  Act 169 

existence  of  property  in,  not  derived  from  acts  of  Congress 288 

protected  by  common  law  and  statutes  of  States 288 

monopoly;  exclusive  rights 288 

nature  of 288 

personal  one  not  a  subject  of  monopoly 288 

extent  of  exclusive  right  or  monopoly  therein 288-291 

intent  of  injunction  bill  to  extend  monopoly  of;  loss  of  right  to 

individual  appropriation 290 

loss  of  right;  expiration  of  patent;  use  of  general  name 291 

TRADE-NAMES, 

monopoly;  exclusive  rights 288 

when  unfair  competition  cannot  be  predicated  on  use  of 289 

when  party  guilty  of  unfair  trade note,  289 

intent  of  injunction;  bill  to  extend  monopoly  of;  loss  of  right  to 
individual  appropriation 290 

TRADE-SECRET, 

when  party  guilty  of  unfair  trade note,  289 


INDEX  761 

(References  are  to  Sectiona] 

TRADE  UNION, 

defined 38,  44 

blacklist  defined 30 

See  Labor  or  Trade  Unions. 

TRAFFIC, 

defined 26 

TRAFFIC  ARRANGEMENT, 

held  void 197 

See  Freights;  Interstate  Commerce  Act;  Pooling  of  Freights. 

TRAFFIC  RATES, 

contracts  between  railroads;  Sherman  Anti-Trust  Act 151 

TRANSFER, 

company  and  railroad  company;  contracts;  exclusive  right 398 

TRANSPORTATION, 

defined 27 

within  the  State  defined 28 

purpose  of  Sherman  Anti-Trust  Act  as  to  rates  of 112 

contracts  a.s  to  rates  for;  Sherman  Anti-Trust  Act 151 

prohibited;  North  Dakota  Constitution 253 

monopolies  to  control  prohibited;  South  Dakota  Constitution.  .  .   255 

combinations  to  control  prohibited;  Utah  Constitution 257 

combinations  to  control  prohibited;  Washington  Constitution.  .  .   259 
not  part  of  essential  functions  of  State  to  provide 268 

TREATMENT, 

of  scalp  and  hair;  contracts  as  to;  to  use  only  certain  remedies. . . .  439 

TRUST, 

defined 12 

Sherman  Anti-Trust  Act 13 

meaning  of  in  Montana  Constitution 251 

what  constitutes;  Texas  statute 389 


U 

ULTRA  VIRES, 

contracts  not  protected  by  obligation  of  contracts  clause 216 

UNFAIR  COMPETITION, 

when  cannot  be  predicated  solely  on  use  of  trade-name 289 

"UNIFORM  TEXT-BOOK  ACT," 

construed ""<*•.       ^ 

exclusivo  priviletrcs;  monopoly;  cnntracta 314 


762  INDEX 

[Reference8.are  to  Sections] 

UNIONIZE, 

shops;  combinations  to;  Sherman  Anti-Trust  Act 139 

See  Labor  or  Trade  Unions. 

UNION  LABEL, 

on  city  printing;  when  a  monopoly 322 

See  Labor  or  Trade  Unions. 

UNION  LABOR, 

city  requirement  that  only  union  labor  be  employed 323 

See  Labor  or  Trade  Unions. 

UNION  MEN, 

combination  to  compel  employment  of;  Sherman  Anti-Trust  Act  139 
See  Labor  or  Trade  Unions. 

UNIONS.     See  Labor  or  Trade  Unions. 

UNION  SHOP, 

defined 45 

city  requirement  that  only  union  shops  be  employed 323 

See  Labor  or  Trade  Unions. 

UNITED  STATES, 

conspiracy  to  commit  offense  against ;  overt  acts 64 

conspiracy  to  defraud;  overt  act;  indictment note,     64 

conspiracy  against;  place  of  doing  overt  act;  when  crime  complete 

note,  64 
conspiracy  to  commit  offense  against  not  felony  at  common  law 

note,     64 

government  no  inherent  powers  of  sovereignty 269 

powers  of.     See  Constitutional  Law;  Federal  Constitution. 

UNITED  STATES  ATTORNEY, 

suits  by  under  Sherman  Anti-Trust  Act 161 

UNITED  STATES  CIRCUIT  COURTS, 

Anti-Trust  cases  given  precedence  in note,     14 

UNITED  STATES  CONSTITUTION, 

legislative  powers  under 269,  270 

See  Federal  Constitution. 

UNITED  STATES  SUPREME  COURT, 

appeal  to  and  revision  by;  Anti-Trust  cases note,     14 

authority  of;  obligation  of  contracts;  legal  and  legislative  con- 
tracts; construction  of  contract 218 

review  by  of  decision  of  State  court 367 

review  by;  statute  construed  by  highest  court  of  State 444 

See  Federal  Sujirerae  Court. 


INDEX  7ti3 

(References  are  to  Sections] 

UNREASONABLE, 

restraint  of  trade.    See  Contracts  in  Restraint  of  Trade;  Restraint 
of  Trade;  ShtTman  Anti-Trust  Act. 

UNREASONABLY, 

in  Alabama  Constitution  construed 241 

UTAH, 

Constitution;  combinations  to  control  prices,  cost  of  exchange  or 
transportation  prohibited;  duty  of  legislature 258 


V 

VENDEE, 

action  against;  when  illegality  of  combination  no  defense;  Sher- 
man Anti-Trust  Act 155,  156 

action  against;  when  illegality  of  combination  a  defense;  Sherman 

Anti-Trust  Act 157 

of  exclusive  right  to  supply  gas;  rights  of 307 

See  Business;  Good  Will;  State  Statutes. 

VENDOR, 

and  purchaser;  contracts  between;  exclusive  rights;  when  violation 

of  State  statute 402 

and  purchaser;  contracts  between:   exclusive  rights;  when  not 

violation  of  State  statute 403 

and    purchaser;  sale  of   by-product   distinguished   from  sale  of 

entire  output 404 

and  purchaser;  agreement  restraining  purchaser  from  certain  use 

of 406 

agreement  between  purchaser  and  agent  of;  coal  oil 407 

See  Business;  Good  Will;  State  Statutes. 

VESSELS, 

contracts  between  owners  of;  Sherman  Anti-Trust  Act 152 

See  Shipowners;  Steamboats. 

VILLAGE, 

authorities  cannot  create  monopoly 280 

or  city;  when  cannot  create  monopoly  as  to  slaughter  or  market 

house 315 

See  Municipality;  Town. 

VIOLATIONS, 

Sherman  Anti-Trust  Act;  what  essential  to  constitute 123 

Sherman  Anti-Tru.st  Act;  injunctions  against 123 

Sherman  Anti-Trust  Act;  essential  of  contracts  in  order  to  con- 
stitute     12 1 

Sherman  Anti-Trust  Act;  what  constitute;  generally 125 


4 64  INDEX 

[References  are  to  Sections] 

YIOLATIO'SS—Contmued. 

Sherman  Anti-Trust  Act;  size  or  extent  of  business  not  alone  test  126 
Sherman  Anti-Trust  Act;  combinations  entered  into  before  pas- 
sage of  act 127 

Sherman  Anti-Trust  Act;  by  combinations;  stockholder  not  crim- 
inally liable 128 

Sherman  Anti-Trust  Act;  defenses;  generally 129 

Sherman  Anti-Trust  Act;  purchase  of  business  and  good  will.  .  .  .   130 
Sherman  Anti-Trust  Act;  where  corporation  holds  majority  of 

stock  of  another  corporation 131 

Sherman  Anti-Trust  Act;  exchange  of  share  of  stock;  holding  cor- 
poration    132 

Sherman  Anti-Trust  Act;  contracts  between  holders  of  copyrights  133 
Sherman  Anti-Trust  Act;  contracts  between  owners  of  patents.  .  134 
Sherman  Anti-Trust  Act;  patents;  licenses;  conditions;  generally  135 
Sherman  Anti-Trust  Act;  patent  licenses;  conditions  in  generally  135 
Sherman  Anti-Trust  Act;  particular  conditions  in  patent  licenses  136 
Sherman  Anti-Trust  Act;  right  to  modify  terms  of  patent  hcenses  137 
Sherman  Anti-Trust  Act;  contracts  as  to  proprietary  medicines. .  138 
Sherman  Anti-Trust  Act;  acts  and  combinations  of  labor  organiza- 
tions      139 

Sherman  Anti-Trust  Act;  contracts  between  manufacturers 141 

Sherman     Anti-Trust     Act;    combinations;     manufacturers    of 

shingles 142 

Sherman  Anti-Trust  Act;    combination;    manufacturers   of  iron 

pipes 143 

Sherman  Anti-Trust  Act;   combination;  tobacco  manufacturers 

and  jobbers 144 

Sherman  Anti-Trust  Act;  combinations;  manufacturers  of  hquo- 

rice  paste 145 

Sherman  Anti-Trust  Act;  association  dealing  in  tiles,  mantels  and 

grates 146 

Sherman  Anti-Trust  Act;  sugar  refining  companies 147 

Sherman  Anti-Trust  Act;  dealers  in  fresh  meat 148 

Sherman  Anti-Trust  Act;  association  of  cattle  dealers 149 

Sherman  Anti-Trust  Act;  board  of  trade;  contract  as  to  quota- 
tions     150 

Sherman  Anti-Trust  Act;  railroad  companies 151 

Sherman  Anti-Trust  Act;  owners  of  vessels 152 

Sherman  Anti-Trust  Act;  mining  contracts 153 

Sherman  Anti-Trust  Act;  contracts  between  coal  companies.  . .  .    154 

of  statute  as  to  insurance  combinations note,  370 

of  statute;  forfeiture  of  charter  of  corporation 374 

of  State  statutes;  contracts;  combinations;  legality  and  illegality; 

general  principle 378 

of  State  statute;  intention  as  affecting;  presumption  as  to 379 

of  State  statute;  all  provisions  of  contract  should  be  considered; 

presumption  as  to  legality 380 

of  State  statutes;  mere  form  of  association  or  combination  not 
controlling  test  of  legality 381 


INDEX  765 

[Referencea  are  to  Sections] 

VIOLATIONS— Con<inu€<i . 

of  State  Btatutes;  combinations  to  carry  out  restrictions  pro- 
hibited; where  combination  may  b<j  operate;  result  is  im- 
material; each  case  controlled  by  own  facts 382 

of  State  statutes;  where  contract  legal  but  one  of  several  links  in 

illegal  combination 383 

of  State  statutes;  where  by-laws  of  ai^socialion  show  illegality.  .  .   384 
of  State  statutes;  where  contract  or  combination  involves  inter- 
state commerce;  not  subject  to  State  Anti-Triust  Law 385 

of  State  statutes;  where  contract  made  or  combination  formed 

outside  of  State 386 

of  State  statute;  combination  formed  before  passage  of  statute.  .   387 

of  State  statute;  what  constitutes  a  trust;  Texas  statute 389 

of  State  statute;  foreign  corporations  subject  to  State  Anti-Trust 

Laws 388 

of  State  statutes.  See  particular  violations;  Remedies;  State 
Statutes. 

VOLUNTARY  PURCHASER, 

contract  with  combination;  illegality  of  combination  no  defense; 
Sherman  Anti-Trust  Act 155,  156 


W 

WAREHOUSES, 

when  monopoly  in  business  of  not  a  monopoly 324 

WASHINGTON, 

Constitution;  monopolies  and  trusts  prohibited;  combinations  to 
control  prices,  production,  transportation  or  to  prevent  com- 
petition prohibited;  duty  of  legislature 259 

Constitution  continued ;  its  provisions  not  self-executing 260 

Constitution  continued;  combinations  of  common  carriers  to  share 
earnings  prohibited 261 

WATER, 

instance  of  exclusive  grant  of  right  to  furnish note,       6 

company;  sale  of  exclusive  agency  of  for  a  flume  company,  .note,       S 
exclusive  contracts;  grants  or  privileges,  impairment  of  contract 

obligation 225 

supply;  police  power  of  municipality 225 

ordinance  regulating  water  rates;  obligation  of  contract.  . .  .note,  225 
exclusive  privilege  to  supply;  due  process  clause  of  Fourteenth 

Amendment note,  230 

exclusive  contract  to  supply;  when  no  breach 225 

companies;  construction  of  grants  to '1 

company;  exclusive  grant  to;  not  special  act 266 

not  part  of  e.s.sential  functions  of  State  to  proxide 268 

supply  of;  police  power note,  271 


766  INDEX 

[References  are  to  Sections] 

WATER— Continued. 

exclusive  privilege  to  supply;  obligation  of  contract;  municipal 

corporation note,  275 

supply;  condemnation  of;  no  exclusive  privilege  beyond  recall 

note,  275 
contract  to  supply;  exclusive  right;  power  of  city  to  construct 

plant note,  275 

See  Waterworks. 

WATERWAYS, 

exclusive  right  to  collect  tolls  and  control  waterway;  not  a  monop- 
oly   334 

See  Water;  Waterworks. 

WATER  WORKS, 

company;  ordinance  granting  exclusive  privilege  to note,       8 

maintained  by  municipality;  business  injured  by  unlawful  combi- 
nation; action  by  municipality;  Sherman  Anti-Trust  Act 164 

act  as  to  board  of  not  sj)ecial  act 266 

municipal  contracts  as  to,   conferring  special  privilege  or  im- 
munity or  monopoly;  constitutional  law 294 

or  water  supply;  power  of  municipality 325 

or  water  supply;  exclusive  right  of  municipality  and  of  private 

corporation  distinguished 326 

or  water  supply;  grant  by  State  of  exclusive  privilege  or  monopoly  327 
or  water  supply;  grant  by  municipality  of  exclusive  right  or 

monopoly 328 

or  water  supply;  instances  of  vahd  and  void  contracts  by  city; 

exclusive  rights;  monopoly 329,  330 

or  water  supply;  when  no  defense  that  contract  creates  monopoly  331 

or  water  supply;  injunction  restraining  municipahty 332 

See  Water;  Waterways. 

"WAY," 

in  statute  providing  for  punishment  construed 442 

WEIGHT, 

of  evidence.    See  Evidence. 

WHARF, 

grant  of  exclusive  right  to  use  end  of,  for  ferry  purposes 302 

right  to  exclusive  occupation  of,  and  public  use note,  321 

See  Toll  Wharf. 

WILSON  TARIFF  ACT, 

amendments  to 14 

WITNESSES, 

power  to  summon;  Sherman  Anti-Trust  Act 169 

power  of  court  as  to;  violation  Sherman  Anti-Trust  Act 186 


INDEX  7t)7 

(References  are  to  Sections] 

WITNESSES— Con/inuerf . 

examination  of  a  "proceeding";  Sherman  Anti-Trust  Act 187 

compelling  of  to  testify;  State  statutes;  immunity  statutea 495 

See  Evidence. 

WORDS  AND  PHRASES, 

"Any  part"  in  Sherman  Anti-Trust  Act.     See  "Appendix  A." 
"Attempts  to  monopolize."     See  "Appendix  A." 

civil  conspiracy  defined 4 

closed  shop  defined 37 

"combination  in  the  form  of  trust"  used  in  statute  synonymous 

with  "pooling" 51 

"commerce"  in  Sherman  Anti-Trust  Act 115 

commerce  with  foreign  nations  defined 16 

competing  fine  defined 19 

conspiracy  in  restraint  of  trade  defined 20 

contract  in  restraint  of  trade  defined 23 

"contract  in  restraint  of   trade"  analogous  to  "monopolize"; 

Sherman  .^Vnti-Trust  Act 58 

due  process note,  230 

exclusive  right 6 

holding  corporation  defined 29 

"in  restraint  of  trade"  synonymous  with  "trade  or  commerce"; 

Sherman  Anti-Trust  Act 58 

in  restraint  of  trade  or  commerce  defined 24 

in  restraint  of  trade 361 

interstate  commerce  defined 15 

intrastate  commerce  defined 17 

labor  organization  defined 38 

labor  union  defined 38 

law  of  the  land 203 

legal  strike  defined 42 

"monopolize"  u.sed  in  statute  synonymous  with  "aggregate"  or 

"concentrate" 50 

"monopohze";  Sherman  Anti-Trust  Act 123 

"monopolize."     See  "Appendix  A." 

open  shop  defined 40 

parallel  line  defined 19 

"real  value"  construed 364 

"reasonable  competition"  in  Alabama  Constitution 241 

restraint  of  trade  defined 24 

"restraint  of  trade"  in  Sherman  Anti-Trust  Act 115 

"restraint  of  trade."    See  "Appendix  A." 

"restrictions  in  trade"  not  synonymous  with  "restraint  of  trade"  54 

"to  monopolize" 67 

"to  monopolize."    Sec  "Appendix  A." 

"trade"  and  "commerce"  synonymous;  Sherman  Anti-Trust  Act  58 

trade  and  manufacture note,  25 

trade  union  defined 38 

trading  or  mercantile  business  defined note,  25 


768  INDEX 

[References  are  to  Sections] 

WORDS  AND  FRRASES—Continued. 

transportation  companies  construed note,    27 

transportation  within  the  State  defined 28 

union  shop  defined 45 

"unreasonably"  in  Alabama  Constitution 241 

See  Definitions. 

WORKINGMEN.    See  Labor  or  Trade  Unions. 

WYOMING;'' 

Constitution;  monopolies  prohibited;  combinations  to  prevent 
competition,  control  production  or  prices,  etc.,  prohibited 262 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


FEB  2  4 1982 


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